6-K/A
FORM
6 – K/A
(Amendment No. 1)
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C. 20549
Report of Foreign Issuer
Pursuant to Rule 13a
– 16 or 15d – 16
of the Securities Exchange Act of 1934
For the Month of
November 2007
B.O.S. Better Online
Solutions Ltd.
(Translation of
Registrant’s Name into English)
20 Freiman Street,
Rishon LeZion, 75100, Israel
(Address of Principal
Corporate Offices)
Indicate by check mark whether the
registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F x
Form 40-F o
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation
S-T Rule 101(b)(1): ___________
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation
S-T Rule 101(b)(7): ___________
Indicate by check mark whether the registrant
by furnishing the information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act
of 1934.
Yes o
No x
If “Yes” is marked,
indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): N/A
THIS IMMEDIATE REPORT ON FORM 6-K/A IS
HEREBY INCORPORATED BY REFERENCE INTO THE REGISTRANT’S REGISTRATION STATEMENTS ON
FORM F-3 (NO. 333-130048) AND FORM S-8 (NOS. 333-136957, 333-110696, 333-100971 AND
333-11650), AND TO BE A PART THEREOF FROM THE DATE ON WHICH THIS REPORT IS SUBMITTED, TO
THE EXTENT NOT SUPERSEDED BY DOCUMENTS OR REPORTS SUBSEQUENTLY FILED OR FURNISHED.
Attached hereto and incorporated by
reference are the Unaudited Interim Consolidated Financial Statements of the Registrant as
of June 30, 2007.
Explanatory Note:
This report on Form 6-K/A amends
the Registrant's Unaudited Interim Consolidated Financial Statements as of June 30, 2007 originally furnished by the Registrant under Form 6-K on October 1, 2007.
This immediate report on Form 6-K/A is filed in order to correct and
supplement a description of a claim brought against B.O.S Better Online Solutions
Ltd. (“BOS”) by BosaNova EURL, a French company and former distributor
of BOS, in France.
In Note 8 to the Unaudited Financial
Statements it was mistakenly reported that the claim was filed in March 2005, for the
amount of 1.4 million Euros whereas the claim was served on BOS in April 2006, for
approximately 3.3 million Euros and additional remedies. Except for the
aforementioned, and an update on the claim in Note 11.b, no other changes have been made
to the Unaudited Interim Consolidated Financial Statements of BOS as of June 30, 2007.
Signature
Pursuant to the requirements of the
Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
|
|
B.O.S. Better Online Solutions Ltd.
(Registrant)
By: /s/ Shmuel Koren
——————————————
Shmuel Koren
President and CEO |
Dated: November 28, 2007
B.O.S.
BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED
FINANCIAL STATEMENTS
AS OF JUNE 30, 2007
U.S. DOLLARS IN
THOUSANDS
UNAUDITED
INDEX
|
B.O.S. BETTER ONLINE SOLUTIONS LTD.
AND ITS SUBSIDIARIES |
| |
| CONSOLIDATED BALANCE SHEETS |
|
| U.S. dollars in thousands |
|
June
30, 2007
|
December
31, 2006
|
|
(Unaudited)
|
|
| |
|
|
|
|
|
|
|
|
| ASSETS |
|
|
| |
|
| |
|
| | | |
| CURRENT ASSETS: | | |
| Cash and cash equivalents | | |
$ | 5,616 |
|
$ | 2,033 |
|
| Trade receivables | | |
| 5,501 |
|
| 5,632 |
|
| Other accounts receivable and prepaid expenses | | |
| 1,041 |
|
| 858 |
|
| Inventories | | |
| 4,570 |
|
| 4,017 |
|
|
| |
| |
| | | |
| Total current assets | | |
| 16,728 |
|
| 12,540 |
|
|
| |
| |
| | | |
| LONG-TERM ASSETS: | | |
| Severance pay fund | | |
| 527 |
|
| 741 |
|
| Investment in other companies | | |
| 8,082 |
|
| 8,082 |
|
| Other | | |
| 24 |
|
| 65 |
|
|
| |
| |
| | | |
| Total long-term assets | | |
| 8,633 |
|
| 8,888 |
|
|
| |
| |
| | | |
| PROPERTY, PLANT AND EQUIPMENT, NET | | |
| 561 |
|
| 520 |
|
| CUSTOMER LIST, NET | | |
| 1,527 |
|
| 1,629 |
|
| GOODWILL | | |
| 952 |
|
| 952 |
|
|
| |
| |
| | | |
| | | |
| 3,040 |
|
| 3,101 |
|
|
| |
| |
| | | |
| | | |
$ | 28,401 |
|
$ | 24,529 |
|
|
| |
| |
- 2 -
|
B.O.S. BETTER ONLINE SOLUTIONS LTD.
AND ITS SUBSIDIARIES |
| |
| CONSOLIDATED BALANCE SHEETS |
|
| U.S. dollars in thousands |
|
June
30, 2007
|
December
31, 2006
|
|
(Unaudited)
|
|
| |
|
|
|
|
|
|
|
|
| LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
| |
|
| |
|
| | | |
| CURRENT LIABILITIES: | | |
| Short term bank loans | | |
$ | 2,844 |
|
$ | 2,931 |
|
| Current maturities of long-term bank loans and convertible note | | |
| 569 |
|
| 1,157 |
|
| Trade payables | | |
| 2,890 |
|
| 3,844 |
|
| Employees and payroll accruals | | |
| 438 |
|
| 460 |
|
| Deferred revenues | | |
| 148 |
|
| 103 |
|
| Accrued expenses and other liabilities | | |
| 753 |
|
| 999 |
|
|
| |
| |
| | | |
| Total current liabilities | | |
| 7,642 |
|
| 9,494 |
|
|
| |
| |
| | | |
| LONG-TERM LIABILITIES: | | |
| Bank loans (net of current maturities) | | |
| 982 |
|
| - |
|
| Convertible note (net of current maturities) | | |
| - |
|
| 1,171 |
|
| Deferred taxes | | |
| 345 |
|
| 362 |
|
| Accrued severance pay | | |
| 658 |
|
| 916 |
|
| Other long-term liabilities | | |
| 237 |
|
| 237 |
|
|
| |
| |
| | | |
| Total long-term liabilities | | |
| 2,222 |
|
| 2,686 |
|
|
| |
| |
| | | |
| SHAREHOLDERS' EQUITY | | |
| Ordinary shares of NIS 4.00 par value- Authorized: 35,000,000 shares at | | |
| June 30, 2007 and December 31, 2006; Issued and Outstanding 9,601,033 and | | |
| 6,744,798 shares at June 30, 2007 and December 31, 2006, respectively; | | |
| 9,346 |
|
| 6,571 |
|
| Additional paid-in capital | | |
| 52,891 |
|
| 48,330 |
|
| Accumulated other comprehensive income | | |
| 19 |
|
| 19 |
|
| Accumulated deficit | | |
| (43,719 |
) |
| (42,571 |
) |
|
| |
| |
| | | |
| Total shareholders' equity | | |
| 18,537 |
|
| 12,349 |
|
|
| |
| |
| | | |
| Total liabilities and shareholder's equity | | |
$ | 28,401 |
|
$ | 24,529 |
|
|
| |
| |
The accompanying notes are an
integral part of the interim consolidated financial statements.
- 3 -
|
B.O.S. BETTER ONLINE SOLUTIONS LTD.
AND ITS SUBSIDIARIES |
| |
| CONSOLIDATED STATEMENTS OF OPERATIONS |
|
| U.S. dollars in thousands, except per share data |
|
Six months ended
June 30,
|
Year ended
December
31,
2006
|
|
2007
|
2006
|
|
(Unaudited)
|
|
| |
|
|
|
|
|
|
|
| Revenues |
|
|
$ | 11,072 |
|
$ | 9,559 |
|
$ | 20,917 |
|
| | | |
| Cost of revenues | | |
| 8,666 |
|
| 7,240 |
|
| 16,200 |
|
|
| |
| |
| |
| | | |
| Gross profit | | |
| 2,406 |
|
| 2,319 |
|
| 4,717 |
|
|
| |
| |
| |
| | | |
| Operating costs and expenses: | | |
| Research and development | | |
| 222 |
|
| 289 |
|
| 486 |
|
| Sales and marketing | | |
| 1,470 |
|
| 996 |
|
| 2,019 |
|
| General and administrative | | |
| 973 |
|
| 1,534 |
|
| 3,268 |
|
|
| |
| |
| |
| Total operating costs and expenses | | |
| 2,665 |
|
| 2,819 |
|
| 5,773 |
|
|
| |
| |
| |
| | | |
| Operating loss | | |
| (259 |
) |
| (500 |
) |
| (1,056 |
) |
| Financial expenses, net | | |
| (354 |
) |
| (206 |
) |
| (626 |
) |
| Expenses related to conversion of convertible note | | |
| (611 |
) |
| - |
|
| - |
|
| Other income (expenses), net | | |
| 31 |
|
| (39 |
) |
| - |
|
|
| |
| |
| |
| Loss before taxes on income | | |
| (1,193 |
) |
| (745 |
) |
| (1,682 |
) |
| Tax benefit | | |
| 43 |
|
| 13 |
|
| 89 |
|
|
| |
| |
| |
| Loss from continuing operations | | |
| (1,150 |
) |
| (732 |
) |
| (1,593 |
) |
| Income related to discontinued operations | | |
| - |
|
| 906 |
|
| 1,685 |
|
|
| |
| |
| |
| Net income (loss) | | |
$ | (1,150 |
) |
$ | 174 |
|
$ | 92 |
|
|
| |
| |
| |
| | | |
| Basic and diluted net loss per share from continuing operations | | |
$ | (0.15 |
) |
$ | (0.10 |
) |
$ | (0.24 |
) |
| | | |
| Diluted net earnings per share from discontinued operations | | |
| - |
|
$ | 0.13 |
|
$ | 0.25 |
|
| | | |
| Basic and diluted net earnings (loss) per share | | |
$ | (0.15 |
) |
$ | 0.03 |
|
$ | 0.01 |
|
The accompanying notes are an integral
part of the interim consolidated financial statements.
- 4 -
|
B.O.S. BETTER ONLINE SOLUTIONS LTD.
AND ITS SUBSIDIARIES |
| |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
| U.S. dollars in thousands Unaudited |
|
Six months ended
June 30,
|
Year ended
December 31,
2006
|
|
2007
|
2006
|
|
(Unaudited)
|
|
| |
|
|
|
|
|
|
|
| Cash flows from operating activities: |
|
|
| |
|
| |
|
| |
|
| | | |
| Net income (loss) | | |
$ | (1,150 |
) |
$ | 174 |
|
$ | 92 |
|
| Adjustments to reconcile net income (loss) to | | |
| net cash used in operating activities: | | |
| Loss (income) from discontinued | | |
| operations (see Note 1b) | | |
| - |
|
| (906 |
) |
| (1,685 |
) |
| Depreciation and amortization | | |
| 158 |
|
| 200 |
|
| 378 |
|
| Increase (decrease) in accrued severance pay, net | | |
| (44 |
) |
| (87 |
) |
| (75 |
) |
| Impairment of investment in company | | |
| - |
|
| 39 |
|
| 39 |
|
| Stock-based compensation to employees and directors | | |
| 288 |
|
| 143 |
|
| 431 |
|
| Stock-based compensation related to warrants issued to service providers | | |
| - |
|
| 262 |
|
| 296 |
|
| Expenses related to conversion of convertible note | | |
| 611 |
|
| - |
|
| - |
|
| Amortization of issuance expenses in connection with | | |
| long-term convertible note | | |
| 99 |
|
| 51 |
|
| 162 |
|
| Decrease (increase) in trade receivables | | |
| 132 |
|
| 379 |
|
| (788 |
) |
| Increase in other accounts receivable and prepaid expenses | | |
| (285 |
) |
| (131 |
) |
| (595 |
) |
| Decrease (increase) in inventories | | |
| (553 |
) |
| 67 |
|
| (697 |
) |
| Increase (decrease) in trade payables | | |
| (1,109 |
) |
| (935 |
) |
| 790 |
|
| Decrease in employees and payroll accruals, deferred revenues, accrued | | |
| expenses and other liabilities | | |
| (223 |
) |
| (546 |
) |
| (231 |
) |
| Decrease in deferred taxes | | |
| (15 |
) |
| (33 |
) |
| (70 |
) |
|
| |
| |
| |
| | | |
| Net cash used in operating activities from continuing operations | | |
| (2,091 |
) |
| (1,323 |
) |
| (1,953 |
) |
| Net cash used in operating activities from discontinued operations | | |
| - |
|
| (79 |
) |
| (446 |
) |
|
| |
| |
| |
| | | |
| Net cash used in operating activities | | |
| (2,091 |
) |
| (1,402 |
) |
| (2,399 |
) |
|
| |
| |
| |
| | | |
| Cash flows from investing activities: | | |
| | | |
| Purchase of property, plant and equipment | | |
| (97 |
) |
| (24 |
) |
| (24 |
) |
| Investment in other companies | | |
| (15 |
) |
| (376 |
) |
| (676 |
) |
| Proceeds from sale of marketable securities | | |
| - |
|
| 1,327 |
|
| 1,331 |
|
|
| |
| |
| |
| | | |
| Net cash (used in) provided by investing activities from continuing operations | | |
| (112 |
) |
| 927 |
|
| 631 |
|
| Net cash used in investing activities from discontinued operations | | |
| - |
|
| (221 |
) |
| (221 |
) |
|
| |
| |
| |
| Net cash provided by (used in) investing activities | | |
| (112 |
) |
| 706 |
|
| 410 |
|
|
| |
| |
| |
The accompanying notes are an
integral part of the interim consolidated financial statements.
- 5 -
|
B.O.S. BETTER ONLINE SOLUTIONS LTD.
AND ITS SUBSIDIARIES |
| |
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
|
| U.S. dollars in thousands |
|
Six months ended
June 30,
|
Year ended
December 31,
2006
|
|
2007
|
2006
|
|
(Unaudited)
|
|
| |
|
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
| |
|
| |
|
| |
|
| | | |
| Repayment of short-term and long-term bank loans | | |
| (533 |
) |
| (15 |
) |
| (26 |
) |
| Proceeds from long-term bank loans | | |
| 1,441 |
|
| - |
|
| - |
|
| Proceeds from short-term bank loans | | |
| 539 |
|
| 884 |
|
| 686 |
|
| Proceeds from issuance of shares and exercise of options, net | | |
| 4,690 |
|
| 54 |
|
| 135 |
|
| Proceeds from long-term convertible note, net of issuance expenses | | |
| - |
|
| (13 |
) |
| 1,319 |
|
| Payment of long-term convertible note | | |
| (351 |
) |
| (90 |
) |
| (438 |
) |
|
| |
| |
| |
| Net cash provided by financing activities | | |
| 5,786 |
|
| 820 |
|
| 1,676 |
|
|
| |
| |
| |
| | | |
| Increase (decrease) in cash and cash equivalents | | |
| 3,583 |
|
| 124 |
|
| (313 |
) |
| Increase in cash and cash equivalents of discontinued operations | | |
| - |
|
| 114 |
|
| 114 |
|
| Cash and cash equivalents at the beginning of the period | | |
| 2,033 |
|
| 2,232 |
|
| 2,232 |
|
|
| |
| |
| |
| Cash and cash equivalents at the end of the period | | |
$ | 5,616 |
|
$ | 2,470 |
|
$ | 2,033 |
|
|
| |
| |
| |
| | | |
| Supplemental disclosure of cash flow activities: | | |
| (a) Non-cash activities: | | |
| Conversion of convertible note into shares | | |
$ | 1,897 |
|
$ | - |
|
$ | - |
|
|
| |
| |
| |
| Sales of the communication segment in consideration | | |
| for shares in Qualmax | | |
| - |
|
| 958 |
|
$ | 958 |
|
|
| |
| |
| |
| Conversion of Qualmax's debt into New World Brand's shares | | |
$ | - |
|
$ | - |
|
$ | 1,480 |
|
|
| |
| |
| |
| | | |
| (b) Net cash paid during the period for | | |
| Interest | | |
$ | 303 |
|
$ | 173 |
|
$ | 532 |
|
|
| |
| |
| |
| Income tax | | |
$ | 32 |
|
$ | 59 |
|
$ | 180 |
|
|
| |
| |
| |
The accompanying notes are an integral
part of the interim consolidated financial statements.
- 6 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| |
a. |
B.O.S.
Better Online Solutions Ltd. (together with its subsidiaries “the
Company”), manages its business in two reportable segments, which
consist of Software Solutions and the Supply-Chain Solutions. A third
segment, Communication Solutions, existed until it was sold in the fourth
quarter of 2005 (see b). |
| |
The
Company’s wholly owned subsidiaries include: |
| |
(2)
Odem, which we purchased on November 18, 2004 from Odem’s previous
shareholders, and in which, by November 2005, our holdings increased to 100%.
Odem, an Israeli company, is a major solution provider and distributor of RFID
and electronics components and advance technologies in the Israeli market; and |
| |
(3)
Quasar Telecom (2004) Ltd.. The assets of Quasar Telecom were sold as part of
the sale of the Communications Segment in the fourth quarter of 2005. |
| |
(1)
Ruby-Tech Inc., a wholly owned subsidiary of Odem; |
| |
(2)
Lynk USA Inc., a subsidiary of BOS, and its subsidiary PacInfo (both Delaware
corporations) and PacInfo’s subsidiary, Dean Tech Technologies Associates,
LLC., a Texan corporation; and |
| |
(3)
BOS Delaware Inc. a Delaware corporation. |
| |
In
the U.S., only Ruby-Tech is still operational. |
| |
In
Europe – BOScom had a UK subsidiary, Better On-Line Solutions Ltd., and its
subsidiary, Better On-Line Solutions S.A.S in France. Since mid-2003 the operations of
all the company in Europe were ceased. |
| |
In
addition, the Company holds shares in two other companies: |
| |
1. |
Surf
Communication Systems Ltd. (“Surf”), a developer and supplier of
access and network convergence software solutions to the wire line and wireless
telecommunications and data communications industries. The Company holds 7.8%
of Surf’s issued and outstanding shares (see Note 6). |
| |
2. |
Qualmax
Inc. (“Qualmax”), a U.S. public corporation listed on the Pink
Sheets (“QMXI.PK”), and its subsidiaries New World Brands Inc.
(OTC: NWBD.OB) and IPGear. Qualmax and its subsidiaries are developers and
suppliers of voiceover IP technology products and services. The Company
holds 18% of the issued and outstanding
shares of Qualmax Inc. and holds 3.9% of the issued and outstanding shares of New World
Brands Inc.. The Company’s holdings in Qualmax were received as the consideration for
the sale of its communication segment (see Note 6). |
- 7 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 1: |
– |
GENERAL (Cont.) |
| |
b. |
Discontinued
operations: |
| |
1. |
Sale
of communication segment: |
| |
On
December 31, 2005, the Company sold its communication segment, including its property and
equipment, goodwill, technology, trade name, existing distribution channels and related
contingent liability to the Office of the Chief Scientist to IP Gear Ltd. (“IP Gear”),
a wholly owned Israeli subsidiary of Qualmax. The consideration paid to the Company in
the transaction was approximately 3.2 million Qualmax shares of Common stock constituting
approximately 16% of Qualmax’s total issued and outstanding Common stock and $800 in
royalties to be paid at a rate of 4% from future revenues IP Gear will generate from the
disposed segment (“Royalties”) with the entire $800 due no later than 90 days
from the third anniversary of the closing of the transaction. Additional shares could be
issued to the Company at the end of four consecutive fiscal quarters following the
closing of the transaction, contingent upon IP Gear generating by then a certain level of
revenues from the disposed segment (“Earn Out Shares”). The maximum number of
Earn Out Shares could have further been issued to the Company is approximately 1 million,
constituting an additional 5% of Qualmax outstanding shares. In June 2006, the Company
received 250,000 of Qualmax shares, valued at $1.43 per share, as part of the Earn Out
Shares consideration. |
| |
The
Company received certain piggy-back registration rights with respect to the Qualmax
shares. The Company does not have a representative on the Board of Qualmax. |
| |
In
addition, the Company and IP Gear entered into an Outsourcing Agreement, pursuant to
which the Company provided IP Gear with certain operating services relating to the sold
communication segment through December 31, 2006. In accordance with the Outsourcing
Agreement, the first three months of services were provided for no charge. For services
rendered from April 2006 through December 2006, the Company charged IP Gear $240, which
was paid by issuing the Company Qualmax subsidiary’s shares in December 2006, as
part of an agreement signed by the parties (see below). |
| |
The
Company also granted a bridge loan to IP Gear in the amount of $1,000. The term of the
loan is three years and it bears interest equal to the Prime rate plus 2.5%, up to a
maximum of 12%. In the first 18 months, IP Gear shall pay only the interest accrued on
the loan and monthly principal and interest payments shall commence thereafter. The loan
granted to IP Gear is secured by a first priority floating charge, which may be
subordinated to a charge in favor of a major financial institution in the event such
charge is recorded. In addition, repayment is guaranteed by Qualmax Inc. |
- 8 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 1: |
– |
GENERAL (Cont.) |
| |
The
loan agreement provides that if the disposed segment would incur in the first quarter of
2006, losses that exceed $250, the principal amount to be repaid under the loan shall be
reduced by the excess losses. In such event, Qualmax shall issue to the Company
additional shares of Common stock against such reduction, valued at a predetermined price
of $1.43 per share. Pursuant to this provision, in May 2006, Qualmax issued to the
Company 244,755 shares, at a price of $1.43 per share, resulting in an amount of $350. In
June 2006, Qualmax issued BOS an additional 174,825 shares, reducing the principal amount
of the loan to $400 following which, the Company holds approximately 17.8% of Qualmax’s
total issued and outstanding Common stock. As part of the agreement signed between the
parties in December 2006, the loan was fully repaid by issuance of additional shares of
Qualmax (see below). |
| |
Qualmax
also issued to the Company a five-year warrant for the purchase of up to 107,143 shares,
constituting less the 1%, of its outstanding shares in Qualmax, at the exercise price of
$2.80 per share (“Warrants”). The Company received certain piggy-back
registration rights with respect to the shares underlying the warrants. |
| |
The
Company signed in December 2006 an agreement with Qualmax and its subsidiaries, New World
Brands Inc. (“NWB”) and IP Gear, pursuant to which, the outstanding debt of
Qualmax to the Company, in the amount of $1,480 (which included long-term debt,
outsourcing fees, royalties and other debts), was repaid to the Company through the
issuance of 5.506652 shares of series A Convertible Preferred stock of NWB which are
convertible into approximately 16,450,000 shares of NWB Common stock. On April 24, 2007
series A Preferred stock converted into Common stock. As of June 30, 2007, the Company
holds 18% in Qualmax and 3.9% in NWB. The Company’s registration rights with respect
to the Qualmax shares also apply to NWB shares. |
| |
In
connection with the transaction, the Company agreed to grant NWB, contingent upon the
satisfaction of certain conditions, a three-year option to purchase up to 30% of the NWB’s
shares held by the Company, at prices ranging from $0.12 to $0.24 per share of Common
stock. |
| |
In
addition, the Company agreed to enter into a lock up agreement, restricting the transfer
of the share holdings in Qualmax and in NWB, for up to two years. |
| |
The
Company accounts for its holdings in Qualmax shares on the cost basis since it is unable
to exercise significant influence over Qualmax financial policies and since the shares
held in Qualmax are restricted stock which do not meet the fair value availability
criteria of FAS 115. |
- 9 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 1: |
– |
GENERAL (Cont.) |
| |
For
the six months ended June 30, 2006 and for the year ended December 31, 2006 the Company’s
consolidated financial statements reflected a capital gain from the sale of the
communication segment, which was determined as follows: |
| |
|
Six months
ended
June 30, 2006
|
Year ended
December
31,2006
|
| |
|
(Unaudited)
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Consideration: |
|
|
| |
|
| |
|
| |
Ordinary shares of Qualmax (1) | | |
$ | 957 |
|
$ | 957 |
|
| |
5.50652 series A Preferred stock of NWB (2) | | |
| - |
|
| 1,480 |
|
| |
Royalties | | |
| 51 |
|
| - |
|
| |
|
| |
| |
| |
| | |
| |
Total consideration | | |
| 1,008 |
|
| 2,437 |
|
| |
|
| |
| |
| |
| | |
| |
Cost: | | |
| |
Expenses | | |
| 102 |
|
| - |
|
| |
Disposal of assets (liabilities) related to the communication segment | | |
| - |
|
| 752 |
|
| |
|
| |
| |
| |
| | |
| |
Total cost | | |
| 102 |
|
| 752 |
|
| |
|
| |
| |
| |
| | |
| |
Capital gain | | |
$ | 906 |
|
$ | 1,685 |
|
| |
|
| |
| |
| |
(1) |
Valuated
at $1.43 per share. |
| |
(2) |
5.50652
series A Preferred stock convertible into 16.5 million Common stock of NWB.
Each Common stock is valuated at $0.09 per share. |
| |
Following
the agreement, signed in December 2006, the Company has accounted for the communication
segment as a “discontinued operation”, in accordance with EITF 03-13 “Applying
the Conditions in Paragraph 42 of FASB Statement 144 in Determining Whether to Report
Discontinued Operations”. As such, the results of operations, including revenues,
cost of revenues, operating expenses, and other income and expenses of the communication
segment for 2006 have been reclassified in the accompanying statements of operations as
discontinued operations. |
| |
The
results of operations, including revenues, cost of revenues, operating expenses and other
income and expenses of the communication segment and PacInfo’s operations for 2006
have been reclassified in the statements of operations. Taxes were not attributed to the
discontinued operations due to utilization of losses from previous years, for which a
valuation allowance was provided. |
- 10 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 1: |
– |
GENERAL (Cont.) |
| |
Summarized
selected financial information and cash flows of the discontinued operations are as
follows: |
| |
|
Six months ended
June 30, 2006
|
Year ended
December 31, 2006
|
| |
|
(Unaudited)
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Cash flows from operating activities |
|
|
| |
|
| |
|
| |
Gain from discontinue operations | | |
$ | 906 |
|
$ | 1,685 |
|
| |
Capital gain | | |
| (906 |
) |
| (2,052 |
) |
| |
Adjustments due to changes in working capital | | |
| (79 |
) |
| (79 |
) |
| |
|
| |
| |
| |
| | |
| |
Net cash flows used in operating activities | | |
$ | (79 |
) |
$ | (446 |
) |
| |
|
| |
| |
| |
| | |
| |
Cash flows from investing activities | | |
| |
Communication sales costs | | |
$ | (221 |
) |
$ | (221 |
) |
| |
|
| |
| |
| |
| | |
| |
Net cash flows used in investing activities | | |
$ | (221 |
) |
$ | (221 |
) |
| |
|
| |
| |
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES |
| |
a. |
The
significant accounting policies followed in the preparation of these
financial statements are identical to those applied in the preparation of
the latest annual financial statements except as detailed in below. |
| |
b. |
Recently
issued accounting pronouncements: |
| |
In
July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty
in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”).
FIN 48 clarifies the accounting for income taxes by prescribing the minimum recognition
threshold a tax position is required to meet before being recognized in the financial
statements. FIN 48 utilizes a two-step approach for evaluating tax positions. Recognition
(step one) occurs when an enterprise concludes that a tax position, based solely on its
technical merits, is more-likely-than-not to be sustained upon examination. Measurement
(step two) is only addressed if step one has been satisfied (i.e., the position is
more-likely-than-not to be sustained). Under step two, the tax benefit is measured as the
largest amount of benefit, determined on a cumulative probability basis that is
more-likely-than-not to be realized upon ultimate settlement. |
| |
FIN
48 applies to all tax positions related to income taxes subject to the Financial
Accounting Standard Board Statement No. 109, “Accounting for Income Taxes”(“SFAS
109”). This includes tax positions considered to be “routine”as well as
those with a high degree of uncertainty. |
- 11 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 2: |
– |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| |
FIN
48 has expanded disclosure requirements, which include a tabular roll-forward of the
beginning and ending aggregate unrecognized tax benefits as well as specific details
related to tax uncertainties for which it is reasonably possible the amount of
unrecognized tax benefit will significantly increase or decrease within twelve months.
These disclosures are required at each annual reporting period unless a significant
change occurs in an interim period. |
| |
FIN
48 is effective for fiscal years beginning after December 15, 2006. The cumulative effect
of applying FIN 48 will be reported as an adjustment to the opening balance of retained
earnings. The Company has adopted FIN 48 commencing January 1, 2007 and it has no effect
on its financial position and results of operations. |
| NOTE 3: |
– |
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
| |
The
accompanying unaudited interim consolidated financial statements have been prepared in
accordance with generally accepted accounting principles in the United States for interim
financial information. Accordingly, they do not include all the information and footnotes
required by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating results for
the six months ended June 30, 2007 are not necessarily indicative of the results that may
be expected for the year ended December 31, 2007. |
| |
|
June
30, 2007
|
December 31, 2006
|
| |
|
(Unaudited)
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Raw materials (including packaging materials) |
|
|
$ | 109 |
|
$ | 120 |
|
| |
Finished products | | |
| 4,461 |
|
| 3,897 |
|
| |
|
| |
| |
| |
| | |
| |
| | |
$ | 4,570 |
|
$ | 4,017 |
|
| |
|
| |
| |
| |
The
inventories are presented net of provision for technological obsolescence and slow-moving
items of $ 87 and $ 100 as of June 30, 2007 and December 31, 2006, respectively. |
- 12 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 5: |
– |
CUSTOMER LIST, NET |
| |
|
June
30, 2007
|
December 31, 2006
|
| |
|
(Unaudited)
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Cost |
|
|
$ | 2,010 |
|
$ | 2,010 |
|
| |
Accumulated amortization | | |
| 483 |
|
| 381 |
|
| |
|
| |
| |
| |
| | |
| |
Amortized cost | | |
$ | 1,527 |
|
$ | 1,629 |
|
| |
|
| |
| |
| |
Amortization
expenses with respect to the customer list amounted to $ 102 and $ 207 for the six
months ended June 30, 2007 and for year ended December 31, 2006, respectively. |
| |
Amortization
expenses for the years ended December 31: |
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
2007 |
|
|
$ | 207 |
|
| |
2008 | | |
$ | 207 |
|
| |
2009 | | |
$ | 207 |
|
| |
2010 | | |
$ | 207 |
|
| |
2011- 2013 | | |
$ | 699 |
|
| NOTE 6: |
– |
INVESTMENT IN OTHER COMPANIES |
| |
The
Company’s investments in companies comprise of: |
| |
|
June 30,
|
December 31,
|
| |
|
2007
|
2006
|
| |
|
(Unaudited)
|
|
| |
|
|
|
| |
|
|
|
| |
Surf Communication Systems Ltd. |
|
|
$ | 983 |
|
$ | 983 |
|
| |
| | |
| |
Qualmax Inc. (see note 1b) | | |
| 5,619 |
|
| 5,619 |
|
| |
| | |
| |
New World Brands Inc. (see note 1b) | | |
| 1,480 |
|
| 1,480 |
|
| |
|
| |
| |
| |
| | |
| |
| | |
$ | 8,082 |
|
$ | 8,082 |
|
| |
|
| |
| |
- 13 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 6: |
– |
INVESTMENT IN OTHER COMPANIES (Cont.) |
| |
Investment
in Surf Communication Systems Ltd.: |
| |
During
the years 2001 through 2005 the company participated in several investment rounds in
Surf. In June 2006, as part of the investment round, the Company invested $300 in Surf,
following which, the Company holds 7.8% of Surf’s issued and outstanding shares. The
investment is accounted for based on the cost accounting method. |
| NOTE 7: |
– |
LONG-TERM CONVERTIBLE NOTE |
| |
In
September 2005, the Company entered into a Securities Purchase Agreement (“the
Purchase Agreement”) with Laurus Master Fund (“Laurus”), an a U.S. based
fund making investments in public companies, under which the Company issued to Laurus in
a private placement (i) a Secured Convertible Term Note of a $ 1,500 principal amount,
due September 2008 (“the Note”), and (ii) a warrant to purchase 73,052 Ordinary
shares at an exercise price of $ 4.04 per share (“the Warrant”). According to
the agreement, several fees in the total amount of $ 116 were paid to the investor.
These fees are presented as a discount of the principal convertible loan. The Note is
convertible into Ordinary shares at a price of $ 3.08 per share. The principal amount of
the Note is repayable in monthly installments, commencing as of January 2006, in the
initial amount of $ 15 eventually increasing to $ 55. The Note bears Prime interest rate
plus 1.5% which is subject to reduction under certain conditions. The Warrant is
exercisable, in whole or in part, until September 29, 2012. |
| |
The
fair value of the Warrants was calculated using the Black-Scholes option pricing model
with the following assumptions: a risk-free interest rate of 4.08%, a dividend yield of
0%, a volatility of the expected market price of the Company’s Ordinary shares of
100% and a weighted-average contractual life of seven years. The fair value of the
Warrants in the amount of $ 144 is offset against the Note, amortized over the
period of the Note and presented as a component in shareholders’ equity. |
| |
On
August 17, 2006, the Company entered into an additional financing transaction with
Laurus. The third financing consisted of a $ 1.5 million Secured Convertible Term Note
with a term of three years. In addition, the Company granted to Laurus a warrant to
purchase up to 73,052 Ordinary shares, which is exercisable, in whole or in part, until
August 16, 2013 at an exercise price of $ 4.04 per share for the first 24,351 Ordinary
shares acquirable there under and of $ 5.30 per share for the additional 48,701 shares
acquirable hereunder. The fair value of the warrants was calculated using the
Black-Scholes option pricing model with the following assumptions: a risk-free interest
rate of 4.83%, a dividend yield of 0%, a volatility of the expected market price of the
Company’s Ordinary shares of 81% and a weighted-average contractual life of seven
years. The fair value of the warrants in the amount of $ 131 is offset against the
Note, amortized over the period of the Note and presented as a component in shareholders’ equity.
The Note bears interest which begins at the Prime rate plus 1.5%. |
| |
The
conversion rate under the Note is $ 3.08 per share for the first $ 500 of the principal
amount payable there under and $ 4.08 for any additional amount payable there under
(subject to adjustment). The principal amount of the Note is repayable in monthly
installments commencing as of December 1, 2006, and may be paid in cash or, subject to
certain conditions, in Ordinary shares. Interest on the Note is payable monthly and may
be paid in cash or, subject to certain conditions, in Ordinary shares. The Note is
secured by a security interest in certain assets of the Company. |
- 14 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 7: |
– |
LONG-TERM CONVERTIBLE NOTE (Cont.) |
| |
The
registration statement filed in this respect became effective on December 6, 2006. |
| |
On
June 21, 2007, the company reduced the conversion price of the Note to $2.53 and Laurus
converted the entire outstanding principal amount under the Notes, of approximately $
2,223,000, into 878,670 Ordinary Shares of the company. As a result the Company recorded
expenses of $611 in the first six months of year 2007. |
| |
The
maturity of the loan is as follows: |
| |
|
June 30,
2007
|
December 31,
2006
|
| |
|
(Unaudited)
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
First year (current maturities) |
|
|
$ | - |
|
$ | 1,139 |
|
| |
Second year | | |
| - |
|
| 1,104 |
|
| |
Third year | | |
| - |
|
| 331 |
|
| |
|
| |
| |
| |
| | |
| |
| | |
| - |
|
| 2,574 |
|
| |
Less - discount | | |
| - |
|
| 264 |
|
| |
|
| |
| |
| |
| | |
| |
| | |
$ | - |
|
$ | 2,310 |
|
| |
|
| |
| |
| NOTE 8: |
– |
COMMITMENTS AND CONTINGENT LIABILITIES |
| |
In April 2006, BOSâNOVA EURL, a
French company and former distributor of the Company, served the Company with a claim
filed with the French Trade Tribunal, alleging breach of exclusive distributor rights in
France and asserting ownership to certain intellectual property rights in the
Company’s products. The plaintiff seeks an amount of approximately 3.3 million Euros
and additional remedies. This claim follows a previous motion for temporary injunctive
relief that was filed against the Company’s new French distributor, said motion
ultimately denied by the French Trade Tribunal. The Company assesses the prospects of
claim to prevail and recover a significant amount, as remote. The Company’s financial
statements include a provision in this respect. |
| |
In
1998, as part of PacInfo Share Purchase Agreement between the Company and Mr. Lee
and Ms. Lee (“the Sellers”), the Company may be obligated to grant the Sellers
a loan on a full recourse basis for certain tax payments the Sellers may be liable for
and reimburse the Sellers for certain interest on taxes that they may owe, currently
estimated at approximately $2 million. The Company will receive a security interest in
shares of the Company that the Sellers holds at the time of the loan with a fair market
value as of the date of the loan of at least 125% of the amount of the loan as security
for the repayment of the loan. It is possible that the windup of PacInfo during 2002 and
2003 may have triggered such a tax event for the Sellers, which would result in an
obligation by the Company to lend the Sellers such amount and to reimburse them for
interest expenses incidental to the tax event. Based on the Company’s legal counsel
opinion and management estimation, no provision was recorded. |
- 15 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 8: |
– |
COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
| |
The
facilities of the Company are rented under lease agreements that expire on various dates
ending in 2012. Minimum future rental payments are as follows: |
| |
Period: |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
7-12/2007 |
|
|
$ | 53 |
|
| |
2008 | | |
| 64 |
|
| |
2009 | | |
| 58 |
|
| |
2010 | | |
| 46 |
|
| |
2011 | | |
| 45 |
|
| |
2012 | | |
| 4 |
|
| |
The
Company’s motor vehicles are rented under various cancelable operating lease
agreements. The lease agreements for the motor vehicles expire on various dates ending in
2010. The maximum breach of contract fees can amount to $ 39. |
| |
Lease
payments for the facilities occupied by the Company and the Company’s motor vehicles
in the first six months of 2007 and 2006 amounted to $ 197 and $ 408, respectively. |
| |
As
of June 30, 2006, Odem has bank guarantees in the amount of $ 271 in favor of certain
third parties. |
| NOTE 9: |
– |
SHAREHOLDERS’ EQUITY |
| |
In
March 25, 2007 the company granted to its employee 627,000 options in exercise price of
$2.52 per share. The options shall vest and become exercisable in 4 equal annual
installments with the first installment vesting upon the lapse of a year from grant. |
| |
In
April 2007 the Company completed rights offering in which it issued 1,739,398 ordinary
shares at a share price of $2.5. The gross proceeds amounted to $4.4 million. |
| |
On
June 21, 2007 B.O.S. Laurus Master Fund Ltd., converted the entire outstanding principal
amount under the Notes, of approximately $ 2,223,000, into 878,670 Ordinary Shares of
BOS. |
| |
On
June 26, 2007 BOS entered into a definitive private placement agreement with a European
private investor for the issuance of 226,415 Ordinary Shares at a price per share of
$2.65. |
- 16 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 9: |
– |
SHAREHOLDERS’ EQUITY (Cont.) |
| |
The
Company’s outstanding warrants to shareholders as of June 30, 2007 are as follows: |
| |
Issuance date
|
Warrants for
Ordinary shares
|
Exercise price
per
share
|
Warrants exercisable
|
Exercisable through
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
June 2005 |
|
|
| 441,785 |
|
$ | *) 2.75 |
|
| 441,785 |
|
June 2008 |
|
|
| |
July 2005 | | |
| 130,434 |
|
$ | *) 2.75 |
|
| 130,434 |
|
June 2008 | | |
| |
|
| |
| |
| |
| |
| |
| | |
| |
| | |
| 572,219 |
|
| |
|
| 572,219 |
|
| | |
| |
|
| |
| |
| |
| |
| |
(*) |
The
exercise price of the warrants will increases to $ 3.03 per Ordinary share, on
July 2007 |
| |
A
summary of employee option activity under the Company’s stock option plans as of
June 30, 2007 and changes during the six months ended June 30, 2007 are as follows: |
| |
|
Number
of options
|
Weighted
average
exercise
price
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
Options outstanding at beginning of period |
|
|
| 822,660 |
|
$ | 3.36 |
|
| |
Changes during the period: | | |
| |
Granted | | |
| 627,000 |
|
$ | 2.52 |
|
| |
Exercised | | |
| (8,239 |
) |
$ | 2.00 |
|
| |
Forfeited or cancelled | | |
| (42,425 |
) |
$ | 15.16 |
|
| |
|
| |
| |
| |
| | |
| |
Options outstanding at the end of the period | | |
| 1,398,996 |
|
$ | 2.63 |
|
| |
|
| |
| |
| |
| | |
| |
Options exercisable at the end of the period | | |
| 287,749 |
|
$ | 3.48 |
|
| |
|
| |
| |
| |
The
weighted-average grant-date fair value of options granted during the six months ended
June 30, 2007 and during the year ended December 31, 2006 was $ 2.57 and $ 1.45,
respectively. As of June 30, 2007, there was $ 1,321 of total unrecognized
compensation cost related to non-vested share-based compensation arrangements granted to
employees and directors under the Company’s stock option plans. That cost is
expected to be recognized over a weighted-average period of 1.7 years. |
- 17 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 9: |
– |
SHAREHOLDERS’ EQUITY (Cont.) |
| |
The
fair value of the Company’s stock options granted to employees and directors for the
six months ended June 30, 2007 was estimated using the following weighted average
assumptions: |
| |
|
Six months ended
June 30, 2007
|
| |
|
(Unaudited)
|
| |
|
|
| |
|
|
| |
|
|
| |
Risk free interest |
|
|
| 5.03 |
% |
| |
Dividend yields | | |
| 0 |
% |
| |
Volatility | | |
| 60 |
% |
| |
Expected term (in years) | | |
| 4 |
|
| |
The
options granted to employees outstanding as of June 30, 2007 have been separated into
ranges of exercise prices, as follows: |
| |
Range of
exercise
price
|
Options
outstanding
as of
June 30,
2007
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
life (years)
|
Options
exercisable
as of
June 30,
2007
|
Weighted average
exercise
price of
options
exercisable
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| |
$ 0 |
|
|
| 73,000 |
|
$ | 0.00 |
|
| 7.39 |
|
| - |
|
$ | 0.00 |
|
| |
$ 1.84-2.00 | | |
| 59,722 |
|
$ | 1.88 |
|
| 2.43 |
|
| 59,722 |
|
$ | 1.88 |
|
| |
$ 2.28-3 | | |
| 1,247,237 |
|
$ | 2.61 |
|
| 7.18 |
|
| 208,990 |
|
$ | 2.74 |
|
| |
$ 6.8 | | |
| 9,937 |
|
$ | 6.80 |
|
| 2.31 |
|
| 9,937 |
|
$ | 6.80 |
|
| |
$ 18.00 | | |
| 600 |
|
$ | 18.00 |
|
| 2.37 |
|
| 600 |
|
$ | 18.00 |
|
| |
$ 28.00 | | |
| 8,500 |
|
$ | 28.00 |
|
| 1.77 |
|
| 8,500 |
|
$ | 28.00 |
|
| |
|
| |
| |
| |
| |
| |
| |
| | |
| |
| | |
| 1,398,996 |
|
$ | 2.63 |
|
| 2.91 |
|
| 287,749 |
|
$ | 3.48 |
|
| |
|
| |
| |
| |
| |
| |
| |
Options
issued to service providers: |
| |
The
Company accounts for these options in accordance with the provisions of SFAS 123 and EITF
96-18. There were no grants of options to service providers during the six months ended
June 30, 2007. The fair value for these options was estimated at the date of grant using
Black-Scholes option pricing model with the following assumptions for the 6 months ended
June 2006 and the year ended December 31, 2006: risk-free interest rate of 4.8%, and
4.9%, respectively, dividend yields of 0% and 0%, respectively, volatility of 76% and
77%, respectively, and an expected life of 2.6 years and 2.6 years, respectively |
| |
The
compensation expenses that have been recorded in the consolidated financial statements
regarding these warrants for the six months ended June 30, 2007 and for the year ended
December 31, 2006 were $ 1 and $ 116, respectively. |
- 18 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 9: |
– |
SHAREHOLDERS’ EQUITY (Cont.) |
| |
The
Company’s outstanding options to service providers as of June 30, 2007 are as
follows: |
| |
Issuance date
|
Options for
Ordinary
shares
|
Exercise price
per
share
|
Options exercisable
|
Exercisable through
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
October 2002 |
|
|
| 75,000 |
|
$ | 4.00 |
|
| 75,000 |
|
| December 2008 |
|
| |
June 2004 | | |
| 130,000 |
|
$ | 4.04 |
|
| 130,000 |
|
| June 2011 |
|
| |
March 2005 | | |
| 10,000 |
|
$ | 3.08 |
|
| 3,334 |
|
| March 2010 |
|
| |
September 2005 | | |
| 73,052 |
|
$ | 4.04 |
|
| 73,052 |
|
| September 2012 |
|
| |
March 2006 | | |
| 10,000 |
|
$ | 2.30 |
|
| 10,000 |
|
| December 2008 |
|
| |
August 2006 | | |
| 48,701 |
|
$ | 5.30 |
|
| 48,701 |
|
| August 2013 |
|
| |
August 2006 | | |
| 24,351 |
|
$ | 4.04 |
|
| 24,351 |
|
| August 2013 |
|
| |
|
| |
| |
| |
| |
| |
| | |
| |
| | |
| 371,104 |
|
| |
|
| 364,438 |
|
| |
|
| |
|
| |
| |
| |
| |
| NOTE 10: |
– |
SEGMENTS AND GEOGRAPHICAL INFORMATION |
| |
The
Company manages its business in two reportable segments, which consist of software
solutions and supply chain solutions. |
| |
The
Company’s management makes financial decisions and allocates resources, based on the
information it receives from its internal management system. The Company allocates
resources and assesses performance for each operating segment using information about
revenues, gross profit and operating income (loss) before interest and taxes. |
| |
a. |
Revenues,
gross profit and operating income (loss) for operating segments for the
six months ended June 30, 2007 and 2006 and for the year ended December 31,
2006 were as follows: |
| |
|
Six months ended June 30, 2007
|
| |
|
Software Solutions
|
Supply Chain
Solutions
|
Not allocated
|
Consolidated
|
| |
|
(Unaudited)
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Revenues |
|
|
$ | 824 |
|
$ | 10,248 |
|
$ | - |
|
$ | 11,072 |
|
| |
| | |
| |
Gross profit | | |
$ | 647 |
|
$ | 1,759 |
|
$ | - |
|
$ | 2,406 |
|
| |
| | |
| |
Operating income (loss) | | |
$ | 147 |
|
$ | 290 |
|
$ | (696 |
) |
$ | (259 |
) |
| |
| | |
| |
Assets related to segment | | |
$ | 252 |
|
$ | 14,431 |
|
$ | 13,718 |
|
$ | 28,401 |
|
- 19 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 10: |
– |
SEGMENTS AND GEOGRAPHICAL INFORMATION (Cont.) |
| |
|
Six months ended June 30, 2006
|
| |
|
Software Solutions
|
Supply Chain
Solutions
|
Not allocated
|
Consolidated
|
| |
|
(Unaudited)
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Revenues |
|
|
$ | 1,018 |
|
$ | 8,541 |
|
$ | - |
|
$ | 9,559 |
|
| |
| | |
| |
Gross profit | | |
$ | 665 |
|
$ | 1,654 |
|
$ | - |
|
$ | 2,319 |
|
| |
| | |
| |
Operating income (loss) | | |
$ | (71 |
) |
$ | 102 |
|
$ | (531 |
) |
$ | (500 |
) |
| |
| | |
| |
Assets related to segment | | |
$ | 1,786 |
|
$ | 11,780 |
|
$ | 7,938 |
|
$ | 21,504 |
|
| |
|
Year ended December 31, 2006
|
| |
|
Software Solutions
|
Supply Chain
Solutions
|
Not allocated
|
Consolidated
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
|
|
|
|
|
| |
Revenues |
|
|
$ | 2,058 |
|
$ | 18,859 |
|
$ | - |
|
$ | 20,917 |
|
| |
| | |
| |
Gross profit | | |
$ | 1,341 |
|
$ | 3,376 |
|
$ | - |
|
$ | 4,717 |
|
| |
| | |
| |
Operating income (loss) | | |
$ | (35 |
) |
$ | (64 |
) |
$ | (957 |
) |
$ | (1,056 |
) |
| |
| | |
| |
Assets related to segment | | |
$ | 243 |
|
$ | 13,700 |
|
$ | 10,586 |
|
$ | 24,529 |
|
| |
b. |
The
following presents total revenues and long-lived assets for the six months
ended June 30, 2007 and 2006 and for the year ended December 31, 2006 in
accordance with Statement of Financial Accounting No. 131, “Disclosures
about Segments of an Enterprise and Related Information” (“SFAS
131”): |
| |
|
Six months ended
June 30,
|
Year ended
December 31,
2006
|
| |
|
2007
|
2006
|
| |
|
(Unaudited)
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Revenues: |
|
|
| |
|
| |
|
| |
|
| |
United States | | |
$ | 1,928 |
|
$ | 1,087 |
|
$ | 2,848 |
|
| |
Far-East | | |
| 554 |
|
| 1,253 |
|
| 2,019 |
|
| |
Europe | | |
| 966 |
|
| 447 |
|
| 1,173 |
|
| |
Israel and other | | |
| 7,624 |
|
| 6,772 |
|
| 14,877 |
|
| |
|
| |
| |
| |
| |
| | |
| |
| | |
$ | 11,072 |
|
$ | 9,559 |
|
$ | 20,917 |
|
| |
|
| |
| |
| |
| |
All
the long-lived assets are attributed to Israel’s geographic area, and are comprised
of goodwill, intangible assets, property, plant and equipment. |
- 20 -
|
| B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES |
| |
| NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS |
|
| U.S. dollars in thousands, except share and per share data |
| NOTE 10: |
– |
SEGMENTS AND GEOGRAPHICAL INFORMATION (Cont.) |
| |
c. |
Major
customer data as a percentage of total revenues: |
| |
|
Six months ended
June 30,
|
Year ended
December
31,
2006
|
| |
|
2007
|
2006
|
| |
|
Unaudited
|
|
| |
|
|
|
|
| |
|
|
|
|
| |
Customer A |
|
|
| 27 |
% |
| 20 |
% |
| 24 |
% |
| |
|
| |
| |
| |
| |
Major
customers debt balances as of June 30, 2007 and December 31, 2006 are $ 1,869 and $ 1,971,
respectively. |
| NOTE 11: |
– |
SUBSEQUENT EVENTS |
| |
a. |
The
general meeting of shareholders that held on August 9, 2007, adopted, as the following
resolutions: |
| |
1. |
reelect
Messrs. Edouard Cukierman, Joel Adler and Ronen Zavlik and to elect Messrs.
Amir Ohad, Joshua Zoller and Dan Hoz to the Company’s Board of Directors,
to serve until the next annual general meeting of shareholders and until their
successors have been duly elected and qualified. |
| |
2. |
reappoint
Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young
International, Ltd. as the Company’s Independent Auditors. |
| |
3. |
approve
an increase of options available for issuance under the Company’s 2003
Israeli Share Option Plan to 2.6 million from 1.5 million. |
| |
Following
this approval, 103,600 options were granted to officers at an exercise price of
$2.52 per share. The options shall vest and become exercisable in 4 equal
annual installments with the first installment vesting upon the lapse of a year
from March 25, 2007. |
| |
b. |
On
September 18, 2007, the French Trade Tribunal rejected the Company’s assertion that
jurisdiction is with the Israeli courts. The Company appealed
this decision. |
- 21 -