ZONE-IP LTD.
("ZONE-IP" OR THE COMPANY")
Preliminary UNAUDITED results for the year ENDED 31 December 2007
Ra'anana, Israel, 27 March 2008: ZONE-IP Ltd. (LSE: ZIP), announces its
preliminary unaudited financial results for the year ended 31 December 2007.
Highlights
- Revenues increased by 26% to $US8.26m (2006: $US6.57m)
- Operating loss decreased by 51% to $US2.6m (2006: $US5.3m)
- Net loss decreased by 53% to $US2.75m (2006: $US5.88m)
- Net cash, cash equivalents and available-for-sale marketable
securities amounted to $US5.2m as at 31 December 2007 (2006: $US7.3m)
- Fully diluted loss per share was 0.06 cents (2006: 0.15 cents)
- Exclusive distribution agreements signed in Germany, Italy, South
Africa, Russia, Hungary, Vietnam and Indonesia
Chairman's Statement
In the year ended 31 December 2007 the Company incurred a loss on continuing
operations of $2.75 million (2006: $5.88 million) on turnover of $8.26 million
(2006: $6.57 million). At that date, the Company had a cash portfolio of $5.2 million.
The year ended 31 December 2007 was a turnaround year for the
Company. Following the completion of the strategic review in the last quarter
of 2006, I indicated in my Chairman's statement accompanying the 2006 results
that the Company intended to launch new products in the first half of 2007. I
am pleased to advise you that the first six months of the year saw the
introduction of the next generation of endpoints and infrastructure servers:
xPoint - a new top of the line room system featuring ISDN and 4CIF
technologies, VCBpro - a new state-of-the-art HD Multipoint appliance with
full audio and video transcoding and vPoint V8 - an HD desktop client.
In Q4 2007, Wainhouse Research, an independent market research firm
that focuses on critical issues in rich media communications and conferencing,
conducted an evaluation, sponsored by the Company, of Emblaze-VCON's xPoint
appliance-based videoconferencing system. The evaluation included ease of use,
video performance, audio performance, data collaboration support,
interoperability and security/ encryption. Based on the rating determined by
Wainhouse Research in the report, xPoint earned a good overall rating of 3.8
out of 5. Specific areas of strength include exceptional ease of use, strong
video performance, especially at relatively low call speeds, and solid
interoperability with the other systems in the test lab. Wainhouse Research
found that the xPoint performed at least as well, if not better, than its
peers and in many ways exceeded their expectations. The full report can be
found on the Company's website.
The second half of the year saw an overall change both on the
business and the operational side. The release of a brand new up-to-standard
product line has enabled us to sign distribution agreements with leading audio
and video resellers across the world and win new business. It has also enabled
us to embark on new OEM discussions with leading video vendors. Business focus
was shifted to better reflect the Company's core technology and vision - Video
over PC-based systems for competitive pricing.
On the operational side, the Company has dramatically improved its
execution capabilities as well as reducing the rate of returned units.
The Directors expect that demand for video over the desktop will
increase as enterprises worldwide move to replace and converge their legacy
analog systems into more advanced IP based products.
The growing demand for visual communication solutions will allow
Emblaze VCON to enhance its market presence through the introduction of the
xPoint and VCBpro products. Having a complete offering will enable us to
create a strong lead with AV resellers and take part in lucrative bids.
The early months of the current year will see further new product
launches and upgrades in our existing product line. Emblaze VCON intends to
extend its range of products and service offering to customers and enhance the
technology of existing products to Full HD.
Emblaze VCON will also endeavor to strengthen its leading position
in the desktop Video*over*IP with special focus on web-based collaborative
solutions. We will also strive to enhance our relationships and partnerships
with industry technology and service providers.
Dr Hans Wagner
Chairman
27 March 2008
Enquiries:
ZONE-IP
Hagit Gal, David Amir +972 9 7699339/ +972 9 7627800
John East & Partners Limited
David Worlidge +44 (0)20 7628 2200
Note to Editors:
About Emblaze-VCON
Emblaze-VCON, a subsidiary of ZONE-IP Ltd., is a world leader in
the development and deployment of Video over-IP Conferencing Solutions,
enabling enterprises of all sizes to optimize their productivity and
efficiency through enhanced interaction and communication. The Company
designs, develops, manufactures and markets high-performance, feature-rich
desktop and group videoconferencing systems designed for a variety of
networks, including those based on the Internet Protocol as well as
infrastructure servers to manage the video network and services.
More information is available at www.vcon.com.
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
31 December
2007 2006
ASSETS
CURRENT ASSETS:
Cash and cash equivalents 2,674 1,613
Restricted cash 551 237
Short-term available-for-sale marketable
securities 150 3,974
Trade receivables (net of allowance for doubtful
accounts - $131 and $ 179 at 31 December 2007
and 2006, respectively) 2,433 1,660
Other accounts receivable and prepaid expenses 535 387
Inventories 2,730 1,407
Total current assets 9,073 9,278
NON-CURRENT ASSETS:
Long-term available-for-sale marketable
securities 1,869 1,505
Property and equipment, net 397 501
Intangible assets, net 650 894
Total non-current assets 2,916 2,900
Total assets 11,989 12,178
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
31 December
2007 2006
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Short-term bank credit 2,330 515
Trade payables 3,103 1,549
Related party 29 513
Government grants 695 577
Employees and payroll accruals 516 628*
Deferred revenues 210 471
Accrued expenses and other liabilities 458 389
Total current liabilities 7,341 4,642
NON-CURRENT LIABILITIES:
Government grants 730 847
Accrued severance pay 177 149*
Total non-current liabilities 907 996
Total liabilities attributed to discontinued
operations 100 250
Total liabilities 8,348 5,888
EQUITY:
Ordinary shares 109 109
Share premium 13,221 12,989
Net unrealized loss reserve (139) (10)
Foreign currency translation reserve 4 (2)
Accumulated deficit (9,554) (6,796)
Total equity 3,641 6,290
Total liabilities and equity 11,989 12,178
* Reclassified
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands (except share and per share data)
For the year ended
31 December
2007 2006
Continuing Operations:
Revenues 8,265 6,577
Cost of revenues (3,374) (3,344)
Gross profit 4,891 3,233
Operating expenses:
Research and development 2,973 3,018
Selling and marketing 2,676 3,816
General and administrative 1,857 1,714
Total operating expenses 7,506 8,548
Operating loss (2,615) (5,315)
Finance income 145 175
Finance expenses (373) (212)
Loss for the period from continuing operations (2,843) (5,352)
Discontinued Operations:
Income/(loss) for the period from discontinued
operations 85 (531)
Loss (2,758) (5,883)
Loss per share:
Basic and diluted loss per share from continuing
operations (0.06) (0.13)
Basic and diluted loss per share from
discontinued operations (0.00) (0.02)
Basic and diluted loss per share (0.06) (0.15)
Weighted average number of shares used in
computing basic and diluted loss per share 51,120,253 40,083,881
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
Foreign
currency
Net translation Total
Share Share unrealized adjustments Accumulated Total recognized
loss
capital premium reserve reserve deficit equity expenses
Balance as of 1
January 2006 66 3,539 - (2) (913) 2,690
Reverse
acquisition of net
assets of Zone-IP,
net of issuance
expenses 43 9,450 - - - 9,493 -
Net loss on
available-for-sale
financial assets - - (10) - - (10) (10)
Loss - - - - (5,883) (5,883) (5,883)
Balance as of 31
December 2006 109 12,989 (10) (2) (6,796) 6,290 -
Foreign currency
translation - - - 6 - 6 6
Net loss on
available-for-sale
financial assets - - (129) - - (129) (129)
Loss - - - - (2,758) (2,758) (2,758)
Share-based
payment - 232 - - - 232 -
Balance as of 31
December 2007 109 13,221 (139) 4 (9,554) 3,641 2,881
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended
31 December
2007 2006
Cash flows from operating activities:
Loss (2,758) (5,883)
Adjustments to reconcile the loss to net cash used in
operating activities:
Loss/(income) from discontinued operations (85) 531
Depreciation and amortization 510 547
Share-based payments 232 -
Increase in severance pay 28 149
Amortization of premium and discount of marketable
securities 42 -
Increase in short and long-term Government grants
payables 1 63
Working capital adjustments:
Decrease/(increase) in trade receivables (772) 453
Decrease/(increase) in other accounts receivable and
prepaid expenses (147) 153
Increase in inventories (1,437) (221)
Increase in trade payables 1,520 155
Increase/(decrease) in employees and payroll accruals (111) (402)
Increase/ (decrease) in deferred revenues (261) 330
Increase in accrued expenses and other liabilities 70 241
Net cash flows used in continuing operating activities (3,168) (3,884)
Net cash flows used in discontinued operating
activities (65) (772)
Net cash used in operating activities (3,233) (4,656)
Cash flows from investing activities:
Purchase of property and equipment (14) (232)
Restricted cash (314) (237)
Investment in marketable securities (2,397) (3,083)
Proceeds from sale of marketable securities 5,686 6,650
Net cash provided by investing activities 2,961 3,098
Cash flows from financing activities:
Increase in short-term bank credit 1,815 148
Increase in cash upon reverse acquisition - 585
Increase in related party (484) 182
Net cash provided by financing activities 1,331 915
Increase/(decrease) in cash and cash equivalents 1,059 (643)
Net foreign exchange difference 2 -
Cash and cash equivalents at beginning of period 1,613 2,256
Cash and cash equivalents at end of period 2,674 1,613
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended
31 December
2007 2006
(1) Supplemental disclosure of cash flow activities:
Interest received 302 479
Interest paid 72 49
Tax paid 15 13
Transfer from inventories to property and equipment 114 81
Property acquired through suppliers' credit 34 -
(2) Net cash flows used in discontinued operating
activities:
Profit/(Loss) from discontinued operations 85 (531)
Less decrease in accrued expenses associated with
discontinued operations (150) (241)
(62) (772)
Notes to the financial statements
1. The financial information for the year ended 31 December 2006 is
extracted from the Group's financial statements to that date which received an
unqualified auditor's report. The financial information for the year ended 31
December 2007 is extracted from the Group's unaudited financial statements to
that date.
2. Loss per share
The figures for loss per share are calculated on a loss of
$2,758,000 (2006 - $5,883,000). The basic earnings per share calculation is
based on a weighted average number of ordinary shares of NIS 0.01 each of
51,120,253 (2006: 40,083,881).
3. Dividends
No dividends have been declared for the year ended 31 December 2007.
4. Copies of the Report and Accounts will be sent to shareholders
in due course and will be available from the offices of the Company's
nominated adviser, John East & Partners Limited, 10 Finsbury Square, London
EC2A 1AD and from the Company's website at www.zone-ip.com.
END
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