Nexus Telocation Systems Ltd. Announces its Financial Results for the First Six Months of 2004
GIVATAYIM, Israel, September 2 -- Nexus Telocation Systems Ltd. (OTC Bulletin Board: NXUS), a leading provider of Stolen Vehicle Retrieval services, announced today its consolidated financial results for the first six months of 2004.
Total shareholder's equity increased during the first six months of 2004 to $10.9 million, mainly as a result of the closing at the end of June of an agreement, pursuant to which Nexus increased its holding in Pointer (Eden Telecom Group) Ltd., its operator in Israel, to 100% and issued shares and warrants of Nexus.
The completion of the transaction to acquire Pointer is part of Nexus' strategy to strengthen its presence as an operator of location based services and security applications. As a result of the purchase of Pointer by Nexus both companies will be able to expand the services to be provided to their customers. In addition, the continuous improvement in Pointer's results signals the new stage of Pointer in its life cycle whereby it starts to capitalize on its historical investments.
Pointer's revenues for the first six months of 2004 increased 26% to NIS26.7 million from NIS21.2 million in the comparable period in 2003. Pointer's EBITDA increased to NIS4.3 million in the first six months of 2004 as compared to NIS0.8 million in the first half of 2003. However, Pointer's results were not included in Nexus' consolidated statement of operations for the first six months of 2004 and such consolidation will start from the following period.
Nexus' loss from continuing operations in the first six months of 2004 was reduced to $1.3 million or $0.01 per share as compared to $1.8 million or $0.02 per share for the same period in 2003. Nexus' results in the first six months of 2004 did not include any impact of the automated meter reading discontinued operation, as compared to an $8.5 million one-time non-cash capital gain, which was recorded in the same period in 2003.
The Company's balance sheet as of June 30, 2004 included, for the first time, the consolidation of Pointer's balance sheet and $18.2 million of intangible assets, which were recorded pursuant to the purchase price allocation, of which approximately $4.0 million is expected to be amortized over a period of five years.
Arik Avni, CEO of Nexus commented: "I am pleased from the series of positive events we had including the closing of Pointer's transaction, the continuous improvement in Pointer's results and the resumption of our business with Venezuela. In Argentina, following the reduction in theft rates and intensed competition, we invest in leveraging our existing infrastructure and reputation to provide additional security based services".
Yossi Ben-Shalom, Chairman of the Board of Directors of Nexus, added: "As we progress in the process of raising funds to complete the purchase of Shagrir, we believe that our new platform of subsidiaries, Pointer in Israel and Tracsat in Argentina, which together serve today more than 75,000 subscribers is the basis to build a strong group in the field of vehicle services and security".
Nexus Telocation Systems Ltd. develops, manufactures and markets low energy and cost effective wireless communications and location based information systems through the application of digital spread spectrum technologies deployed in Stolen Vehicle Retrieval applications.
This press release contains forward-looking statements with respect to the business, financial condition and results of operations of Nexus and its affiliates. These forward-looking statements are based on the current expectations of the management of Nexus, only, and are subject to risk and uncertainties relating to changes in technology and market requirements, the company's concentration on one industry in limited territories, decline in demand for the company's products and those of its affiliates, inability to timely develop and introduce new technologies, products and applications, and loss of market share and pressure on pricing resulting from competition, which could cause the actual results or performance of the company to differ materially from those contemplated in such forward-looking statements. Nexus undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. For a more detailed description of the risks and uncertainties affecting the company, reference is made to the company's reports filed from time to time with the Securities and Exchange Commission.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
June 30, December 31,
2004 2003
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 662 $ 708
Short-term bank deposits 11 11
Trade receivables (net of allowance for doubtful
accounts) 3,083 1,417
Other accounts receivable and prepaid expenses 814 641
Inventories 2,160 957
Total current assets 6,730 3,734
LONG-TERM INVESTMENTS:
Other long-term accounts receivable 166 75
Severance pay fund 676 502
Investment in investee - 2,064
842 2,641
PROPERTY AND EQUIPMENT, NET 2,530 1,772
INTANGIBLE ASSETS, NET 18,286 143
Total assets $ 28,388 $ 8,290
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term bank credit $ 6,574 $ 1,204
Trade payables 2,030 871
Other accounts payable and accrued expenses 2,848 1,806
Total current liabilities 11,452 3,881
LONG-TERM LIABILITIES:
Long-term loan 4,890 3,000
Accrued severance pay 1,120 691
6,010 3,691
SHAREHOLDERS' EQUITY:
Share capital 1,142 773
Additional paid-in capital 94,131 83,239
Deferred stock compensation (354) (566)
Cumulative foreign currency translation adjustments (806) (840)
Accumulated deficit (83,187) (81,888)
Total shareholders' equity 10,926 718
$ 28,388 $ 8,290
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
Year
Six months ended ended
December
June 30, 31,
2004 2003 2003
Unaudited
Revenues:
Sales $ 1,475 $ 1,357 $ 2,774
Services 936 1,263 2,376
Total revenues 2,411 2,620 5,150
Cost of revenues:
Sales 1,071 880 2,099
Services 975 869 2,075
Total cost of revenues 2,046 1,749 4,174
Gross profit 365 871 976
Operating expenses:
Research and development, net 254 343 664
Selling and marketing 269 358 621
General and administrative 741 656 1,410
Amortization of deferred stock
compensation (*) 228 - 400
Total operating expenses 1,492 1,357 3,095
Operating loss 1,127 486 2,119
Financial expenses, net 172 1,316 1,105
Other expenses - - 32
Loss from continuing operations 1,299 1,802 3,256
Gain from disposal of discontinued
operations - 8,524 8,524
Net income (loss) $ (1,299) $ 6,722 $ 5,268
Basic and diluted loss per share from
continuing operations
(in U.S. $) $ 0.01 $ 0.02 $ 0.04
Basic and diluted income per share from
discontinued operations (in U.S. $) - 0.11 0.10
Total basic and diluted income (loss) per
share (in U.S. $) $ (0.01) $ 0.09 $ 0.06
Weighted average number of shares
outstanding (in thousands) 120,799 74,928 85,567
*) Stock-based compensation relates to
the following:
Research and development $ - $ 125
General and administrative 228 275
Total $ 228 $ 400