RNS Number:2335H
Elcom International Inc
04 August 2006
ELCOM INTERNATIONAL, INC. REPORTS
SECOND QUARTER 2006 OPERATING RESULTS
NORWOOD, MA, August 4, 2006 - Elcom International, Inc. (OTCBB: ELCO and AIM:
ELC and ELCS), today announced operating results for its second quarter ended
June 30, 2006.
Financial Summary Table (Unaudited)
(in thousands, except per share amounts)
Quarter Ended Six Months Ended
June 30 June 30
2006 2005 2006 2005
$ $ $ $
Net revenues 881 764 1,774 1,377
Gross profit 695 652 1,451 1,149
Operating loss (1,166) (885) (2,279) (1,960)
------- ------- ------- -------
Net loss (1,167) (958) (2,246) (2,094)
======= ======= ======= =======
Basic and diluted net loss per
share (-) (0.01) (0.01) (0.03)
======= ======= ======= =======
Basic and diluted weighted
average common shares
outstanding 402,080 61,282 401,049 61,282
======= ======= ======= =======
The above table, the following description and the appended condensed
consolidated financial information should be read in conjunction with the Risk
Factors and other information contained in the Company's Forms 10-QSB for the
periods ended March 31, and June 30, 2006 and 2005 Annual Report on Form 10-KSB,
as amended.
Quarter ended June 30, 2006 compared to the quarter ended June 30, 2005. Net
Revenues. Net revenues for the quarter ended June 30, 2006 increased to
$881,000, from $764,000 in the same period of 2005, an increase of $117,000, or
15%. License, hosting services and other fees increased from $484,000 in the
2005 quarter to $877,000 in the 2006 quarter, an increase of $393,000, or 81%.
This increase is primarily due to $245,000 in non-recurring eMarketplace agent
fees related to a terminated agreement, as well as an increase in the level of
customers in the eProcurement Scotland Program. License, hosting services and
other fees include license fees, hosting services fees, test system fees,
supplier fees, usage fees, and eMarketplace agent and affiliate fees.
Professional services fees decreased by $276,000, to $4,000 in the 2006 quarter,
from $280,000 in the 2005 quarter, reflecting a decrease in eProcurement
Scotland client implementations, from two in the second quarter of 2005 to none
in the second quarter of 2006. In addition, revenues recorded in the second
quarter of 2005 include certain non-recurring professional services revenues for
projects completed in 2005. During the second quarter of 2006, much of the
Company's technical staff was focused on research and development activities,
including completing a new version of the Company's PECOS software system (which
was released on June 30, 2006), and therefore the time available for other
professional services projects was limited. While the Company anticipates that
professional services revenues will increase in future quarters, the accounting
for professional implementation and development services revenues related to the
Zanzibar eMarketplace will be accreted to revenue over the remaining term of the
contract (which expires in July of 2010, subject to client renewal) which will
minimize the impact of these revenues on reported earnings. Deferred revenue
includes $65,000 related to the Zanzibar eMarketplace, the bulk of which relates
to implementation services that are ongoing as of June 30, 2006. The Company
anticipates that it will begin accreting professional services revenues related
to the Zanzibar eMarketplace implementation services in the third quarter of
2006.
Gross Profit. Gross profit for the quarter ended June 30, 2006 increased to
$695,000 from $652,000 in the comparable 2005 quarterly period, an increase of
$43,000, or 7%. This increase is primarily a result of the higher level of
non-recurring eMarketplace agent fees related to a terminated agreement recorded
in the second quarter of 2006 as described above, versus revenues recorded in
the second quarter of 2005. The level of gross profit recorded in the second
quarter of 2006 is reduced by the costs of professional services incurred in
support of the Zanzibar eMarketplace as well as the costs associated with
certain other client technical software system modification projects. The
Company currently expenses these costs because it can not be assured its efforts
will meet the specific client requirements, and only records the professional
services revenues when the client requirements and all revenue recognition
requirements are met.
Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses for the quarter ended June 30, 2006 were
$1,595,000 compared to $1,316,000 in the second quarter of 2005, an increase of
$279,000, or 21%. Because of the cash constraints experienced by the Company
over the last several years, Elcom has operated with as few personnel as
possible, and certain of its personnel have been compensated at below market
rates. In order to address staffing requirements related to its increasing level
of business activity, the Company engaged third party contractors during late
2005 and through the beginning of the second quarter of 2006, and began to hire
additional personnel in April 2006. The Company's headcount (full and part-time)
has increased by eight, from 36 at June 30, 2005 to 44 at June 30, 2006, and the
Company expects headcount to increase in the next several quarters. In addition,
the Company also has provided and plans to provide raises to certain personnel
whose compensation has been or is below the market rate. Therefore, Elcom
anticipates that its SG&A expenses will also increase in future quarters.
Accordingly, in addition to the increases in cost of revenues and research and
development expense (which are generally comprised of personnel and third party
contractor costs), the Company's personnel costs increased $155,000 in the
second quarter of 2006 as compared to the second quarter of 2005, and increased
$76,000 over the amounts recorded in the first quarter of 2006. Personnel
expenses recorded in the second quarter of 2006 include $62,000 of stock option
expense related to the initial implementation of Statement of Financial
Accounting Standards No. 123 (Revised 2004), Share-Based Payments ("SFAS 123R"),
which requires the expensing of stock based compensation (stock options), which
was not required in the second quarter of 2005. In addition to the increase in
personnel expenses, the primary reasons for the increase in SG&A expenses in the
second quarter of 2006 as compared to the second quarter of 2005 relate to
additional software licensing, computer supplies and other computer
infrastructure expenses related to the Company's growing business, as well as
increases in insurance and legal expenses related to the change in control of
the Company. Increases in travel and marketing expenses in the second quarter of
2006 as compared to the second quarter of 2005, were generally offset by a
reduction in facilities expenses in the second quarter of 2006 as compared to
the second quarter of 2005, as the Company renegotiated its headquarters lease
in the first quarter of 2006.
Research and Development Expense. Research and development expense for the
quarters ended June 30, 2006 and 2005 were $266,000 and $221,000, respectively,
reflecting an increase in the 2006 quarter of $45,000 over the expense recorded
in the second quarter of 2005. The expense in the 2006 quarter primarily relates
to ongoing work associated with improving the data interchange and inbound
interface capabilities of the Company's PECOS technology, as well as an
increased level of work in the second quarter of 2006 as compared to the second
quarter of 2005, on a variety of other internal enhancements incorporated in a
new version of the Company's software system released on June 30, 2006. The
increase in research and development expense in the second quarter of 2006, as
compared to the second quarter of 2005, is due to the increased level of
development activity as noted above, as well as approximately $14,000 of third
party consulting expense and $18,000 of stock-based compensation expense
reflected in the second quarter of 2006, while in the second quarter of 2005 all
expenses were internal and stock-based compensation expense was not recorded.
Research and development expense for the quarter ended March 31, 2006 was
$330,000, which declined to $266,000 in the second quarter of 2006, reflecting
accomplishment of various development activities related to the Zanzibar
eMarketplace in the first quarter of 2006. Accordingly, the Company anticipates
that research and development expense will moderate further in 2006.
Operating Loss. The Company reported an operating loss of $1,166,000 for the
quarter ended June 30, 2006 compared to a loss of $885,000 reported in the
comparable quarter of 2005, an increase of $281,000 in the loss reported. This
increased operating loss in the second quarter of 2006 compared to the same
quarter in 2005 was primarily due to the increase in SG&A expenses and research
and development expenses in 2006, net of the increase in recorded gross profit.
Interest and Other Income (Expense), Net. Interest income and other income
(expense), net for the quarter ended June 30, 2006 was income of $5,000 versus
income of $1,000 in the second quarter of 2005. The increase in income, net in
2006 is primarily related to interest income earned on the funds raised in
December of 2005.
Interest Expense. Interest expense for the quarter ended June 30, 2006 was
$6,000, compared to $74,000 in the same period of 2005. The second quarter 2006
interest expense reflects interest primarily related to capitalized leases,
while the second quarter 2005 second quarter expense primarily reflects interest
on the Company's Convertible Debentures, and amortization of the related
conversion discount. The Debentures converted into Company common stock in
December of 2005.
Net Loss. The Company's net loss for the quarter ended June 30, 2006 was
$1,167,000, an increase in the loss of $209,000 from the loss recorded in the
second quarter 2005 of $958,000, as a result of the factors discussed above.
Six months ended June 30, 2006 compared to the six months ended June 30, 2005.
Net Revenues. Net revenues for the six months ended June 30, 2006 increased to
$1,774,000, from $1,377,000 in the same period of 2005, an increase of $397,000,
or 29%. License, hosting services and other fees increased from $979,000 in the
first half of 2005, to $1,436,000 in the first half of 2006, an increase of
$457,000, or 47%. This increase is primarily due to $245,000 in non-recurring
eMarketplace agent fees related to a terminated agreement, as well as an
increase in the level of customers using the eProcurement Scotland software
system. License, hosting services and other fees include license fees, hosting
services fees, test system fees, supplier fees, usage fees, and eMarketplace
agent and affiliate fees. Professional services fees decreased by $60,000, to
$338,000 in the first half of 2006, from $398,000 in the first half of 2005,
reflecting a decrease in professional services revenues related to projects
completed in 2005. During the second quarter of 2006, much of the Company's
technical staff was focused on completing a new version of the Company's PECOS
software system (which was released on June 30, 2006), and therefore the time
available for other professional services projects was limited. Professional
services revenues reflect implementation fees for six eProcurement Scotland
clients that went live in the first half of 2005, and professional services
revenues in the first six months of 2006 reflect implementation fees for six
additional eProcurement Scotland clients that went live in the first half of
2006.
Gross Profit. Gross profit for the six months ended June 30, 2006 increased to
$1,451,000 from $1,149,000 in the comparable 2005 six month period, an increase
of $302,000, or 26%. This increase is primarily a result of the higher level of
non-recurring eMarketplace agent fees related to a terminated agreement recorded
in the second quarter of 2006 as described above, versus revenues recorded in
the first half of 2005. The level of gross profit recorded in the first half of
2006 is reduced by the costs of professional services incurred in support of the
Zanzibar eMarketplace as well as the costs associated with certain client
technical software system modification projects. The Company currently expenses
these costs because it can not be assured its efforts will meet the specific
client requirements, and only records the professional services revenues when
the client requirements and all revenue recognition requirements are met.
Selling, General and Administrative Expenses. SG&A expenses for the six months
ended June 30, 2006 were $3,134,000 compared to $2,768,000 in the first six
months of 2005, an increase of $366,000, or 13%. Because of the cash constraints
experienced by the Company over the last several years, Elcom has operated with
as few personnel as possible, and certain of its personnel have been compensated
at below market rates. In order to address staffing requirements related to its
increasing level of business activity, the Company engaged third party
contractors during late 2005 and through the beginning of the second quarter of
2006, and began to hire additional personnel in April 2006. The Company's
headcount (full and part-time) has increased by eight, from 36 at June 30, 2005
to 44 at June 30, 2006, and the Company expects headcount to increase in the
next several quarters. In addition, the Company also has provided and plans to
provide raises to certain personnel whose compensation has been or is below the
market rate. Therefore, Elcom anticipates that its SG&A expenses will also
increase in future quarters. Accordingly, in addition to the increases in cost
of revenues and research and development expense (which are generally comprised
of personnel and third party contractor costs), the Company's personnel costs
increased $125,000 in the first six months of 2006 as compared to the first half
of 2005, primarily due to $114,000 of stock option expense recorded in the first
half of 2006, related to the initial implementation of SFAS 123R which requires
the expensing of stock based compensation (stock options), which was not
required in the first half of 2005. In addition to the increase in personnel
expenses, the primary reasons for the increase in SG&A expenses in the first six
months of 2006, as compared to the first half of 2005, relate to additional
software licensing, computer supplies and other computer infrastructure expenses
related to the Company's growing business, as well as increases in insurance and
legal expenses related to the change in control of the Company. Increases in
travel and marketing expenses in the first half of 2006 as compared to the first
six months of 2005, were generally offset by both a reduction in facilities
expense the first half of 2006 as compared to the first six months of 2005, as
the Company renegotiated its headquarters lease in the first quarter of 2006, as
well as a reduction in depreciation and amortization expense the first half of
2006 as compared to the first six months of 2005, as many Company assets are
fully depreciated. Due to the acquisition of various equipment and software in
the first half of 2006, the Company anticipates that depreciation and
amortization expense will increase in future periods.
Research and Development Expense. Research and development expense for the six
months ended June 30, 2006 and 2005 were $596,000 and $341,000, respectively,
reflecting an increase in the first half of 2006 of $255,000 over the expense
recorded in the first half of 2005. The increase in expense in the first half of
2006, compared to the same six month period in 2005, was due primarily to an
increased level of work commenced in late 2005, related to new software for
supplier directories, marketplace portals, client sign on, request for quotation
module, interfaces to other software, as well as enhancements to improve the
data interchange, and inbound interface capabilities, and a variety of other
internal enhancements incorporated in a new version of the Company's PECOS
software system released on June 30, 2006. Certain of these items were completed
in the first quarter of 2006, and are primarily related to the Zanzibar
eMarketplace, but will also be included in Elcom's offerings to other customers
and potential customers. In the first half of 2006, research and development
expense included approximately $114,000 of third party consulting expense and
$35,000 of stock-based compensation expense, while in the first six months of
2005 all expenses were internal and stock-based compensation expense was not
recorded.
Operating Loss. The Company reported an operating loss of $2,279,000 for the six
months ended June 30, 2006, compared to a loss of $1,960,000 reported in the
first half of 2005, an increase of $319,000 in the loss reported. This increased
operating loss in the first half of 2006 compared to the same period of 2005 was
primarily due to the increase in SG&A expenses and research and development
expenses in 2006, net of the increase in recorded gross profit.
Interest and Other Income (Expense), Net. Interest income and other income
(expense), net for the first six months of 2006 was income, net of $46,000
versus a net nil balance in the first half of 2005. The increase in income, net
in 2006 is primarily related to interest income earned on the funds raised in
December of 2005.
Interest Expense. Interest expense for the six months ended June 30, 2006 was
$13,000, compared to $134,000 in the same period of 2005. The expense for the
first half of 2006 reflects interest primarily related to capitalized leases,
while the expense for the first half 2005 primarily reflects interest on the
Company's Convertible Debentures, and amortization of the related conversion
discount. The Debentures converted into Company common stock in December of
2005.
Net Loss. The Company's net loss for the six months ended June 30, 2006 was
$2,246,000, an increase in the loss of $152,000 from the loss recorded in the
six months of 2005 of $2,094,000, as a result of the factors discussed above.
Liquidity and Capital Resources
Net cash used in operating activities for the six months ended June 30, 2006 was
$2,313,000, which is attributable primarily to the Company's net loss of
$2,246,000, together with an increase of $105,000 in prepaid expenses and
decreases in accounts payable and accrued expenses totaling $832,000, which uses
were partly offset by a decrease in accounts receivable and an increase in
deferred revenues totaling $535,000 and non-cash depreciation, amortization and
stock based compensation expenses aggregating $352,000.
Net cash used in operating activities for the six months ended June 30, 2005 was
$264,000, which is attributable primarily to the Company's net loss of
$2,094,000, together with an increase in prepaid expenses of $106,000, which
uses were largely offset by a reduction in accounts receivable and an increase
in accounts payable, deferred revenue and accrued liabilities totaling
$1,477,000 and depreciation, amortization and non-cash rent expenses of
$450,000. In general, the increase in accounts payable and accrued liabilities
in the first half of 2005 is a reflection of the Company's weak balance sheet
and liquidity as of June 30, 2005, while the increase in deferred revenue at
June 30, 2005 resulted primarily from certain customer advance payments made to
augment the Company's liquidity.
In the U.K., the Company has a small overdraft facility with its bank, which
allows for short-term overdrafts. The largest overdraft in the first half of
2005 was approximately $18,000. The facility is an informal arrangement, secured
by a pledge of U.K. assets. There was no overdraft position during the first
half of 2006.
The Company's principal commitments consist of a lease on its headquarters
office facility, capital lease obligations and a long-term software license
payable. The Company will also require ongoing investments in research and
development, and equipment and software in order to further increase operating
revenues and meet the requirements of its customers.
On December 20, 2005 the Company agreed to issue a total of 298,582,044 shares
of common stock to investors in the U.K. and listed the shares on the AIM
Exchange. Elcom raised a total of $7.9 million, with net proceeds to the Company
of $7.7 million. Of the total raised, approximately $547,000 represented the
conversion of non-U.S. investor loans and related accrued interest. The funds
derived from the 2005 issuance of common stock on the AIM Exchange are being
used to support the Company's working capital requirements until the Company
achieves positive cash flow, which management anticipates achieving in 2007.
Risk Factors Relating to Liquidity
The Company's consolidated financial statements as of June 30, 2006 have been
prepared under the assumption that the Company will continue as a going concern
for the year ending December 31, 2006. The Company's independent registered
public accounting firm, Vitale, Caturano & Company, Ltd., has issued a report
dated March 6, 2006 that included an explanatory paragraph referring to the
Company's significant operating losses and expressing substantial doubt in
Elcom's ability to continue as a going concern, without generating incremental,
ongoing operating revenues or, if required, additional capital becoming
available. The Company's ability to continue as a going concern is currently
primarily dependent upon its ability to grow revenue, and attain further
operating efficiencies. If the Company is unable to generate incremental,
ongoing operating revenues before the end of 2006, it will require additional
capital investment or debt financing in order to continue operations. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
As of June 30, 2006, the Company had approximately $2.6 million of cash and cash
equivalents, and has used $2.3 million of cash in operating activities in the
first six months of 2006. The Company has incurred $8.1 million of cumulative
net losses for the eighteen-month period ended June 30, 2006. As a result of
funds raised via common stock issuances at the end of fiscal 2005, the Company
has substantially improved its financial position from June 30, 2005. The
Company believes it has sufficient liquidity to fund operations through the end
of 2006, however, it anticipates that it will incur a loss in fiscal 2006, and
will require additional operating revenues in order to achieve profitable
operations. The Company is currently seeking to arrange a credit facility to
enable the Company to borrow additional working capital, if required. There can
be no assurance the Company will be successful in arranging such a facility, or
if successful, what the terms of such a facility might be.
Factors Affecting Future Performance
A significant portion of the Company's revenues are from hosting services and
associated fees received from Capgemini under a back-to-back contract between
Elcom and Capgemini which essentially mirrors the primary agreement between
Capgemini and the Scottish Executive, executed in November 2001. Future revenue
under this arrangement is contingent on the following significant factors: the
rate of adoption of the Company's ePurchasing software system by Public Entities
associated with the Scottish Executive; renewal by existing Public Entity
clients associated with the Scottish Executive of their rights to use the
ePurchasing software system; the procurement of additional services from the
Company by Public Entities associated with the Scottish Executive; Capgemini's
relationship with the Scottish Executive; their compliance with the terms and
conditions of their agreement with the Scottish Executive; and the ability of
the Company to perform under its agreement with Capgemini.
In addition, the Company intends to continue to commit resources to provide the
eProcurement and eMarketplace components of the Zanzibar eMarketplace for public
sector organizations in the U.K. under its agreements with PASSL and PA. Future
revenue under this arrangement is contingent primarily on the timing and rate of
adoption by U.K. Public Entities of the Zanzibar eMarketplace, as well as the
timing and level of costs incurred to develop the required infrastructure to
support the architecture of the Zanzibar eMarketplace, stage one (of three
stages) of which was accepted in February 2006, and the ability of the
consortium, as a whole, to operate on a profitable basis.
If further business fails to develop under the Capgemini agreement or if the
Zanzibar eMarketplace does not attract a profitable level of clients, or if the
U.S. eMarketplaces do not expand as expected, or if the Company is unable to
perform under any of these agreements, it would have a material adverse affect
on the Company's future financial results.
Outlook
As evidenced by the level of SG&A expenses, research and development expenses,
and cost of revenues, the Company's expenditures in 2006 have begun to increase
as compared to 2005 in order to more properly staff the Company to address the
increased level of its business. The Company's expects that its expenses will
continue to increase, although at a moderating rate, as described above.
Accordingly, the Company expects that its operating loss will continue through
2006. Improvements in revenues and operating results from operations in future
periods will not occur without the Company being able to generate incremental,
ongoing operating revenues from existing and new clients. The Company believes
it has sufficient liquidity to fund operations through the end of 2006; however,
it anticipates that it will incur a loss in fiscal 2006, and will require
additional, ongoing operating revenues in order to achieve profitable
operations. If the Company is unable to generate incremental, ongoing operating
revenues before the end of 2006, it will require additional capital investment
or debt financing in order to continue operations. The Company can make no
assurance that it will be able to raise additional capital or arrange a credit
facility in the event its capital resources are exhausted.
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
Except for the historical information contained herein, the matters discussed in
press release could include forward-looking statements or information. All
statements, other than statements of historical fact, including, without
limitation, those with respect to the Company's objectives, plans and strategies
set forth herein and those preceded by or that include the words "believes,"
"expects," "targets," "intends," "anticipates," "plans," or similar expressions,
are forward-looking statements. Although the Company believes that such
forward-looking statements are reasonable, it can give no assurance that the
Company's expectations are, or will be, correct. These forward-looking
statements involve a number of risks and uncertainties which could cause the
Company's future results to differ materially from those anticipated, including:
(i) the necessity for the Company to control its expenses as well as to generate
incremental, ongoing operating revenues and whether this objective can be met
given the overall marketplace and clients' acceptance and usage of eCommerce
software systems, eProcurement and eMarketplace solutions including corporate
demand therefor, the impact of competitive technologies, products and pricing,
particularly given the substantially larger size and scale of certain
competitors and potential competitors;; (ii) the consequent results of
operations given the aforementioned factors; and (iii) the necessity of the
Company to achieve profitable operations within the constraints of its existing
resources, and if it can not, the availability of incremental capital funding to
the Company, particularly in light of the audit opinion from the Company's
independent registered public accounting firm in the Company's 2005 Annual
Report on Form 10-KSB, as amended, and other risks detailed from time to time in
its March 31 and June 30, 2006 Quarterly Reports on Form 10-QSB and in its other
SEC reports and statements, including particularly the Company's "Risk Factors"
contained in the prospectus included as part of the Company's Registration
Statement on Form S-3 filed on June 21, 2002. The Company assumes no obligation
to update any of the information contained or referenced in this press release.
The financial data set forth below should be read in conjunction with the
Consolidated Financial Statements and other disclosures contained in the
Company's 2005 Annual Report on Form 10-K, as amended and Forms 10-QSB for the
periods ended March 31, and June 30, 2006.
ELCOM INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30 December 31
2006 2005
(unaudited)
$ $
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 2,607 6,399
-------- --------
Accounts receivable:
Trade 428 548
Less-allowance for doubtful accounts 47 45
-------- --------
Accounts receivable, net 381 503
-------- --------
Prepaid expenses and other current assets 224 119
-------- --------
Total current assets 3,212 7,021
-------- --------
PROPERTY, EQUIPMENT AND SOFTWARE, AT COST:
Computer hardware and software 21,177 20,675
Furniture, equipment and leasehold improvements 3,088 3,088
-------- --------
24,265 23,763
Less - accumulated depreciation and amortization 23,215 23,020
-------- --------
1,050 743
-------- --------
OTHER ASSETS 14 10
-------- --------
Total assets 4,276 7,774
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of capital lease obligations 94 27
Related party convertible loan payable - 120
Convertible loans payable - 1,179
Accounts payable 450 547
Deferred revenue 958 545
Related party accrued salary, bonuses and interest 1,031 1,121
Accrued expenses and other current liabilities 1,629 2,525
Current liabilities of discontinued operations 45 62
-------- --------
Total current liabilities 4,207 6,126
-------- --------
CAPITAL LEASE OBLIGATIONS, NET OF CURRENT PORTION 162 -
OTHER LONG TERM LIABILITY 357 423
-------- --------
Total liabilities 4,726 6,549
======== ========
COMMITMENTS AND CONTINGENCIES
STOCKOLDERS' EQUITY (DEFICIT)
Preferred stock $.01 par value; Authorised - - -
10,000,000 shares - issued and outstanding - none
Common stock, $0.01 par value; Authorised -
500,000,000 4,026 3,992
shares - issued 402,611,152 and 399,152,859 shares
Additional paid-in capital 125,647 125,263
Accumulated deficit (124,729) (122,483)
Treasury stock, at cost - 530,709 shares (4,712) (4,712)
Accumulated other comprehensive loss (682) (835)
-------- --------
Total stockholders' equity (deficit) (450) 1,225
-------- --------
4,276 7,774
======== ========
ELCOM INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME
(in thousands, except per share data)
(unaudited)
Three months ended Six months ended
June 30 June 30
2006 2005 2006 2005
$ $ $ $
Net Revenues:
License, hosting services and
other fees 877 484 1,436 979
Professional services 4 280 338 398
-------- -------- -------- --------
Total net revenues 881 764 1,774 1,377
Cost of revenues 186 112 323 228
-------- -------- -------- --------
Gross profit 695 652 1,451 1,149
-------- -------- -------- --------
Operating Expenses:
Selling, general and
administrative 1,595 1,316 3,134 2,768
Research and development 266 221 596 341
-------- -------- -------- --------
Total operating expenses 1,861 1,537 3,730 3,109
-------- -------- -------- --------
Operating loss (1,166) (885) (2,279) (1,960)
Interest and other income
(expense), net 5 1 46 -
Interest expense (6) (74) (13) (134)
-------- -------- -------- --------
Net loss before income taxes (1,167) (958) (2,246) (2,094)
Income taxes - - - -
-------- -------- -------- --------
Net loss (1,167) (958) (2,246) (2,094)
Other comprehensive income, net of
tax 129 17 153 25
-------- -------- -------- --------
Comprehensive loss (1,038) (941) (2,093) (2,069)
======== ======== ======== ========
Basic and diluted net loss per
share (-) (0.01) (0.01) (0.03)
======== ======== ======== ========
Weighted average number of basic
and diluted shares outstanding 402,080 61,282 401,049 61,282
======== ======= ======== ========
ELCOM INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six months ended
June 30
2006 2005
$ $
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss (2,246) (2,094)
Adjustments to reconcile net loss to net cash unused
in operating activities
Depreciation and amortization 184 253
Stock based compensation 168 -
Deferred rent expense - 197
Provisions for doubtful accounts receivable - 1
Changes in current assets and liabilities:
Accounts receivable, net 122 182
Prepaid expenses and other current assets (105) (106)
Accounts payable (97) 151
Deferred revenue 413 193
Accrued expenses and other current liabilities (735) 951
-------- --------
Net cash used in continuing operating activities (2,296) (272)
Net cash (used in) provided by discontinued (17) 8
operations
-------- --------
Net cash used in operating activities (2,313) (264)
-------- --------
CASHFLOWS FROM INVESTING ACTIVITIES
Additions to property, equipment and software (225) -
Change in other assets (4) (21)
-------- --------
Net cash used in investing activities (229) (21)
-------- --------
CASHFLOWS FROM FINANCING ACTIVITIES
Proceeds from loans payable - 200
Repayments of loans payable (1,299) -
Repayments of capital lease obligations (38) (15)
Decrease in other long term liability (66) (60)
-------- --------
Net cash provided by (used in) financing activities (1,403) 125
-------- --------
FOREIGN EXCHANGE EFFECT ON CASH 153 25
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (3,792) (135)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,399 390
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD 2,607 255
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid 28 3
======== ========
Income taxes paid - -
======== ========
Issuance of common stock in satisfaction of deferred
rent 250 -
======== ========
Acquisition of equipment under capital lease 267 -
======== ========
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ILFERTFIVIIR
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