SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of May 2004
ROBOGROUP T.E.K. LTD.
(Name of Registrant)
Rechov Hamelacha 13, Afeq Industrial Estate, Rosh HaAyin 48091 Israel
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of 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 by furnishing the information contained in this Form, the registrant 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): 82-______
SIGNATURES
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.
| ROBOGROUP T.E.K. LTD. (Registrant) By: /s/ Haim Schleifer ——————————— Haim Schleifer General Manager |
Date: May 19, 2005
For Immediate Release
RoboGroup Announces First-Quarter 2005 Financial Results
ROSH HA’AYIN, Israel, May 19, 2005 – RoboGroup T.E.K. Ltd. (Nasdaq: ROBO) today reported first-quarter 2005 financial results.
Revenues for the first quarter totaled NIS 10.8 million (US$2.5 million) compared with NIS 14.4 million (US$3.3 million) for the comparable quarter in 2004. Gross profit for the first quarter reached NIS 4.2 million (US$1.0 million) compared with NIS 6.1 million (US$1.4 million) in the first quarter of 2004. Operating expenses for the first quarter decreased to NIS 6.6 million (US$1.5 million) from NIS 8.6 million (US$2.0 million) in the first quarter of 2004.
RoboGroups’ first quarter net loss was reduced to NIS 2.6 million (US$0.6 million) from a net loss of NIS 2.9 million (US$0.7 million) in the first quarter of 2004.
Rafael Aravot, Chief Executive Officer of RoboGroup, commented: “Although our sales figures in the first quarter were somewhat disappointing we did our best to minimize our loss mainly by controlling our expenses. As is evident, our operating expenses this quarter are substantially lower than the comparable quarter due to the cost-cutting plan we implemented in the educational sector in mid-2004. Looking forward, we plan to continue with our efforts to increase sales, while focusing our attention on operating efficiency to ensure that we maximize output while controlling our costs “.
A complete Directors’ Report for the first quarter of 2005 is available on the Company’s Website at http://www.robo-group.com. Please contact Ayelet Shiloni at Integrated IR, toll-free +1-866-447-8633.
RoboGroup and its subsidiaries are engaged in two major fields of activity. The first is the field of education devoted to RoboGroup’s training products and e-learning systems. RoboGroup is a world leader in engineering and manufacturing technology training systems. The Company is market driven, deriving its growth from technological leadership, strong partnerships and management expertise. The other field of activity is the development, manufacturing and marketing of motion control products for the industrial market, which is performed through the Company’s subsidiary, Yaskawa Eshed Technologies (YET). For more information, visit http://www.robo-group.com.
To the extent that this press release discusses expectations about market conditions or about market acceptance and future sales of the Company’s products, or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause results to differ materially from the statements made. These factors include the rapidly changing technology and evolving standards in the industries in which the Company and its subsidiaries operate, risks associated with the acceptance of new products by individual customers and by the market place and other factors discussed in the business description and management discussion and analysis sections of the Company’s Annual Report on Form 20-F.
Company Contact:
Michal Afuta
RoboGroup
michala@robotec.co.il
+972-3-900-4112
Agency Contact:
Ayelet Shiloni
Integrated IR
ayelet@integratedir.com
+1-866-447-8633
RoboGroup T.E.K. Limited
Directors' Report for Three-Month Period Ended March 31, 2005
We are pleased to present the Directors' Report on the financial condition of the Company for the three month period ended March 31, 2005.
| 1. | Main data out of the Company's business description |
The Company engages, by itself and through its subsidiaries (the Company and its subsidiaries, hereinafter: "The Group"), in two major fields of activity:
| 1.1 | The first field of activity is the Company's traditional field of activity - the field of education, performed mainly abroad but also in Israel. The field of education includes research and development, operation, marketing and sales of the Company's products, and the sale and marketing of third party products to the training and education markets in Israel and in the world[, in a scope that is not substantial.] |
| Overseas, this activity is performed mainly through the Company and U.S. subsidiary, Intelitek Inc. In Israel, the activity is performed through the Company and its subsidiary, Robotec Technologies Ltd. |
| 1.2 | The second field of activity is industrial motion control. The Group engages, through its subsidiary, Yaskawa Eshed Technology Ltd ("YET"), in the development, manufacturing and marketing of industrial motion controllers for motorized systems, marketed to the international and domestic industrial markets. The motion controllers are electronic systems with embedded software whose function is to supervise the process of regular, normal operation of machines and motors of various kinds and sizes. |
| 1.3 | Data and developments that have occurred in the three month period ended March 31, 2005 |
| For the three months ended March 31, 2005 the Company incurred a net loss of approximately NIS 2.6 million and negative cash flow from operating activities in the amount of approximately NIS 1 million, compared to approximately a net loss of NIS 2.9 million and negative cash flow of approximately NIS 2.4 million at March 31, 2004. |
| In the years ended December 31, 2004 and 2003, the Company incurred net losses of approximately NIS 8 million and NIS 18 million, respectively. In addition, during those two years the Company's negative cash flows from operating activities were approximately NIS 6 million and NIS 9 million, respectively. The Company's management took steps to strengthen and improve the Company's financial state and its profitability, as follows: |
| 1. | Consolidating activities, reducing manpower, reducing salary costs of senior executives and cutting general expenses. |
| 2. | The Company entered into an Equity Line agreement with Cornell Capital Partners LP. |
RoboGroup T.E.K. Limited
Directors' Report for Three-Month Period Ended March 31, 2005
| As a result of the cost cutting measures described above, the Company's losses in 2004 and in the first quarter of 2005 were reduced, compared with the previous year and the first quarter of 2004. |
| In addition, on March 2005, the proportionally consolidated company, YET, distributed a dividend of approximately NIS 1.7 million. The net dividend received by the Company amounted to approximately NIS 700 thousand. Another possible dividend distribution in the same amount was approved for August 2005. |
| Backlog of Orders |
| The Company's backlog of orders at March 31, 2005 was approximately NIS 10.9 million, compared to approximately NIS 14.2 million at March 31, 2004. |
RoboGroup T.E.K. Limited
Directors' Report for Three-Month Period Ended March 31, 2005
| 2. | Financial Results |
Sales
The Company's revenues for the
first quarter of 2005 totaled approximately NIS 10.8 million, compared with NIS 14.4
million in the corresponding period last year. The decrease in revenues stemmed from a
decrease in sales of the Company's products in the educational activity field, in the
sum of approximately NIS 4.5 million which was offset in part by an increase of
approximately NIS 0.9 million in the Company's revenues in the industrial motion
control field.
Gross profit
The Company's gross profit for the
first quarter of 2005 totaled approximately NIS 4.2 million (approximately 39% of
sales), compared with approximately NIS 6.1 million (approximately 43% of sales) in
the corresponding period last year. The decrease in gross profit and in the gross margin
stemmed mainly from the decrease in sales.
Research and development expenses, net
Research and development
expenses, net for the first quarter of 2005 totaled approximately NIS 1.7 million,
compared with approximately NIS 2.3 million in the corresponding period last year.
The decrease in research and development expenses stemmed mainly from a reducton in the
development expenses of the education activity field.
Sales and marketing expenses
Sales and marketing expenses for
the first quarter of 2005 totaled approximately NIS 2.9 million, compared with
approximately NIS 3.5 million in the corresponding period last year. The decrease in
sales and marketing expenses is attributed mainly to the reduction in marketing expenses
in the industrial motion control field.
General and administrative expenses
General and administrative expenses
for the first quarter of 2005 totaled approximately NIS 1.9 million, compared with
approximately NIS 2.8 million in the corresponding period last year. The
reduction in administrative expenses stemmed mainly from a reduction in administrative
expenses in the education activity field.
Operating income (loss)
The operating loss for the
first quarter of 2005 totaled approximately NIS 2.4 million, compared with
approximately NIS 2.4 million in the corresponding period last year.
Financing revenues (expenses), net
Financing expenses, net, for the
first quarter of 2005 totaled approximately NIS 0.1 million, compared with
approximately NIS 0.8 million in the corresponding period last year. The decrease in
financing expenses is mainly due to a reduction in exchange rate differences.
RoboGroup T.E.K. Limited
Directors' Report for Three-Month Period Ended March 31, 2005
Other income (expenses), net
Other expenses, net, for the
first quarter of 2005 totaled approximately NIS 30 thousand, compared with
approximately NIS 280 thousand in the corresponding period last year. The decrease
is attributed mainly to a reduction in income net of expenses from renting space in the
Company's building in Rosh Ha'Ayin.
Loss before tax
The loss before tax for the
first quarter of 2005 totaled approximately NIS 2.5 million, compared with
approximately NIS 2.9 million in the corresponding period last year.
Taxes on income
The tax expenses for the first
quarter of 2005 totaled approximately NIS 0.1 million. In the corresponding period last
year the Company had no tax expenses. Tax expenses for the first quarter of 2005
stemmed mainly from the industrial motion control field
Net income (loss)
The Company's net loss for the
first quarter of 2005 totaled approximately NIS 2.6 million, compared with
approximately NIS 2.9 million in the corresponding period last year.
| 3. | The Financial Position of the Company |
| a) | The Company's assets as of March 31, 2005 totaled approximately NIS 68.4 million, compared to approximately NIS 72 million at December 31, 2004. The principal reason for the decrease was a decline of approximately NIS 0.9 million in cash and cash equivalents and a decrease in trade receivables of approximately NIS 3.8 million. |
| b) | The Company's equity was approximately NIS 20.6 million as at March 31, 2005, compared with approximately NIS 23.1 million as at December 31, 2004. The decrease in equity was mainly due to the Company's net loss of approximately NIS 2.6 million for the quarter. |
| 4. | Liquidity |
| a) | The Company's cash and cash equivalents at March 31, 2005 was approximately NIS 6 million as compared to approximately NIS 7 million at December 31, 2004. |
| b) | Cash flows from operating activities: |
| In the first quarter of 2005, the Company had a deficit from operating activities of approximately NIS 1 million as compared to a deficit from operating activities of approximately NIS 2.4 million in the corresponding period last year. |
RoboGroup T.E.K. Limited
Directors' Report for Three-Month Period Ended March 31, 2005
| c) | Cash flows used in investing activities: |
| In the first quarter of 2005, the Company invested approximately NIS 0.1 million in fixed assets as compared to approximately NIS 0.4 million in the corresponding period last year. |
| d) | Cash flows from financing activities: |
| In the first quarter of 2005, the Company had a surplus from financing activities of approximately NIS 0.1 million as compared to a deficit of approximately NIS 0.1 million in the corresponding period last year. |
| 5. | Sources of Financing |
| a) | The Company's current ratio was 0.98 at March 31, 2005, compared with 1.08 at the end of 2004. The Company's quick ratio was 0.63 at March 31, 2005 compared with 0.78 at December 31, 2004. |
| b) | The Company's shareholders' equity of approximately NIS 20.1 million at March 31, 2005, accounted for approximately 30% of its total balance sheet (in comparison to shareholders' equity of approximately NIS 23.1 million that accounted for approximately 32% of the company's balance sheet at December 31, 2004). |
| c) | The average amount of credit provided to the Company's customers was approximately NIS 13.4 million and the average credit the Company obtained from its suppliers and service providers was approximately NIS 5.6 million, in the first quarter of 2005 as compared with approximately NIS 14.2 million and approximately NIS 5.6 million, respectively, in 2004. |
| d) | The average amount of short-term credit from banks was approximately NIS 15.6 million in the first quarter of 2005 as compared with approximately NIS 15.6 million in 2004. |
| e) | The average amount of long-term bank credit was approximately NIS 16.7 million in the first quarter of 2005 as compared with approximately NIS 17.3 million in 2004. |
RoboGroup T.E.K. Limited
Directors' Report for Three-Month Period Ended March 31, 2005
| 6. | Exposure to and Management of Market Risks |
| No significant changes occurred during the period covered by this report in the Company's exposure to market risks and their management relative to the Company's report on this issue in the Director's report as at December 31, 2004. |
Linked Balances:
| March 31, 2005 |
||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Linked to US dollar |
Linked to Euro |
Linked to Japanese Yen |
Linked to Swiss Franks |
Linked to the CPI |
Unlinked |
Autonomous Unit & Non-monetary items |
Total | |||||||||||||||||||
| NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Cash and cash equivalents | 4,907 | 479 | 13 | - | - | 432 | 213 | 6,044 | ||||||||||||||||||
| Short-term investments | 28 | - | - | - | - | - | - | 28 | ||||||||||||||||||
| Trade receivables | 4,624 | 473 | - | - | - | 3,400 | 3,002 | 11,499 | ||||||||||||||||||
| Other receivables and debit | ||||||||||||||||||||||||||
| balances | 20 | 11 | - | - | - | 1,842 | 200 | 2,073 | ||||||||||||||||||
| Inventories | - | - | - | - | - | - | 10,946 | 10,946 | ||||||||||||||||||
| Funds in respect of employee | ||||||||||||||||||||||||||
| rights upon retirement, net | - | - | - | - | - | 706 | - | 706 | ||||||||||||||||||
| Fixed assets, net | - | - | - | - | - | - | 36,094 | 36,094 | ||||||||||||||||||
| Other assets and deferred | ||||||||||||||||||||||||||
| expenses | - | - | - | - | - | 564 | 445 | 1,009 | ||||||||||||||||||
| 9,579 | 963 | 13 | - | - | 6,944 | 50,900 | 68,399 | |||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Short-term bank credits | 703 | - | 636 | 2,553 | 1,132 | 8,060 | 2,852 | 15,936 | ||||||||||||||||||
| Trade payables | 410 | 56 | 508 | - | - | 2,918 | 1,384 | 5,276 | ||||||||||||||||||
| Other payables and credit | ||||||||||||||||||||||||||
| balances | 3,379 | - | - | - | - | 6,105 | 524 | 10,008 | ||||||||||||||||||
| Long-term loans | 5,618 | - | 5,091 | - | 5,626 | - | - | 16,335 | ||||||||||||||||||
| Deferred taxes | - | - | - | - | - | 106 | - | 106 | ||||||||||||||||||
| Liability for termination of | ||||||||||||||||||||||||||
| employee/employer relationship, | ||||||||||||||||||||||||||
| net | - | - | - | - | - | 163 | - | 163 | ||||||||||||||||||
| 10,110 | 56 | 6,235 | 2,553 | 6,758 | 17,352 | 4,760 | 47,824 | |||||||||||||||||||
| Excess of assets (liabilities) | (531 | ) | 907 | (6,222 | ) | (2,553 | ) | (6,758 | ) | (10,408 | ) | 46,140 | 20,575 | |||||||||||||
RoboGroup T.E.K. Limited
Directors' Report for Three-Month Period Ended March 31, 2005
Linked Balances (cont.’)
| December 31, 2004 |
||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Linked to US dollar |
Linked to Euro |
Linked to Japanese Yen |
Linked to Swiss Franks |
Linked to the CPI |
Unlinked |
Autonomous Unit & Non-monetary items |
Total | |||||||||||||||||||
| NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) | |||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Cash and cash equivalents | 4,842 | 990 | - | - | - | 870 | 255 | 6,957 | ||||||||||||||||||
| Short-term investments | 99 | - | - | - | - | - | - | 99 | ||||||||||||||||||
| Trade receivables | 5,893 | 1,493 | - | - | - | 2,205 | 5,691 | 15,282 | ||||||||||||||||||
| Other receivables and debit | ||||||||||||||||||||||||||
| balances | 40 | - | - | - | - | 1,811 | 242 | 2,053 | ||||||||||||||||||
| Inventories | - | - | - | - | - | - | 9,372 | 9,372 | ||||||||||||||||||
| Funds in respect of employee | ||||||||||||||||||||||||||
| rights upon retirement, net | - | - | - | - | - | 563 | - | 563 | ||||||||||||||||||
| Fixed assets, net | - | - | - | - | - | - | 36,548 | 36,548 | ||||||||||||||||||
| Other assets and deferred | ||||||||||||||||||||||||||
| expenses | - | - | - | - | - | 564 | 472 | 1,036 | ||||||||||||||||||
| 10,874 | 2,483 | - | - | - | 6,013 | 52,580 | 71,950 | |||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Short-term bank credits | 694 | - | 656 | 2,664 | 1,087 | 7,854 | 2,273 | 15,228 | ||||||||||||||||||
| Trade payables | 173 | 105 | 599 | - | - | 3,176 | 1,800 | 5,853 | ||||||||||||||||||
| Other payables and credit | ||||||||||||||||||||||||||
| balances | 3,408 | - | - | - | - | 6,279 | 646 | 10,333 | ||||||||||||||||||
| Long-term loans | 5,722 | - | 5,409 | - | 5,969 | - | 17,100 | |||||||||||||||||||
| Deferred taxes | - | - | - | - | - | 163 | - | 163 | ||||||||||||||||||
| Liability for termination of | ||||||||||||||||||||||||||
| employee/employer relationship, | ||||||||||||||||||||||||||
| net | - | - | - | - | - | 139 | - | 139 | ||||||||||||||||||
| 9,997 | 105 | 6,664 | 2,664 | 7,056 | 17,611 | 4,719 | 48,816 | |||||||||||||||||||
| Excess of assets (liabilities) | 877 | 2,378 | (6,664 | ) | (2,664 | ) | (7,056 | ) | (11,598 | ) | 47,861 | 23,134 | ||||||||||||||
| Rafael Aravot | Haim Schleifer |
| Chairman of the Board and CEO | Director and Joint General Manager |
Date: May 17, 2005
RoboGroup T.E.K. Limited
Directors' Report for Three-Month Period Ended March 31, 2005
| Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This report contains forward-looking statements, which express the beliefs and expectations of management. Such statements are based oncurrent plans, estimates and expectations and involve a number of known and unknown risks and uncertainties that could cause the Company’s future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to fluctuations in currency, exchange and interest rates, operating results, and other factors that are discussed in the Company’s Annual Report on Form 20-F and the Company’s other filings with the U.S. Securities and Exchange Commission. Forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future developments or otherwise. |
RoboGroup T.E.K. Ltd.
Interim Consolidated
Financial Statements
At March 31, 2005
Financial statements:
| Balance Sheets | F - 2 - F - 3 |
| Statement of Operations | F - 4 |
| Statement of Changes in Shareholders' Equity | F - 5 |
| Statement of Cash Flows | F - 6 - F - 7 |
| Notes to the Financial Statements | F - 8 - F - 10 |
F - 1
| RoboGroup T.E.K. Ltd. |
| Balance Sheets |
| NIS in Thousands |
| March, 31 |
December, 31 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2005 |
2005 |
2004 |
2004 | |||||||||||
| US$ (K) |
NIS (K) |
NIS (K) |
NIS (K) | |||||||||||
| Unaudited |
Unaudited |
Unaudited |
Audited | |||||||||||
| Convenience translation to US dollars |
Reported amounts |
Reported amounts | ||||||||||||
| ASSETS | ||||||||||||||
| Current assets | ||||||||||||||
| Cash and cash equivalents | 1,386 | 6,044 | 12,091 | 6,957 | ||||||||||
| Short-term investments | 6 | 28 | - | 99 | ||||||||||
| Trade receivables | 2,637 | 11,499 | 10,480 | 15,282 | ||||||||||
| Other receivables and debit balances | 475 | 2,073 | 3,622 | 2,093 | ||||||||||
| Inventories | 2,510 | 10,946 | 13,301 | 9,372 | ||||||||||
| 7,014 | 30,590 | 39,494 | 33,803 | |||||||||||
| Long-term investments | ||||||||||||||
| Investments in investee and other | ||||||||||||||
| companies | - | - | 15 | - | ||||||||||
| Funds in respect of employee rights upon | ||||||||||||||
| retirement, net | 162 | 706 | 236 | 563 | ||||||||||
| 162 | 706 | 251 | 563 | |||||||||||
| Fixed assets | 8,277 | 36,094 | 38,115 | 36,548 | ||||||||||
| Other assets and deferred expenses | 231 | 1,009 | 1,451 | 1,036 | ||||||||||
| 15,684 | 68,399 | 79,311 | 71,950 | |||||||||||
The accompanying notes are an integral part of the financial statements.
F - 2
| RoboGroup T.E.K. Ltd. |
| Balance Sheets |
| NIS in Thousands |
| March, 31 |
December, 31 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2005 |
2005 |
2004 |
2004 | |||||||||||
| US$ (K) |
NIS (K) |
NIS (K) |
NIS (K) | |||||||||||
| Unaudited |
Unaudited |
Unaudited |
Audited | |||||||||||
| Convenience translation to US dollars |
Reported amounts |
Reported amounts | ||||||||||||
| LIABILITIES | ||||||||||||||
| Current liabilities | ||||||||||||||
| Credit from banks | 3,654 | 15,936 | 15,302 | 15,228 | ||||||||||
| Trade payables | 1,210 | 5,276 | 6,298 | 5,853 | ||||||||||
| Other payables and credit balances | 2,295 | 10,008 | 11,074 | 10,333 | ||||||||||
| 7,159 | 31,220 | 32,674 | 31,414 | |||||||||||
| Long-term liabilities | ||||||||||||||
| Loans from banks | 3,746 | 16,335 | 18,727 | 17,100 | ||||||||||
| Provision for deferred taxes | 24 | 106 | - | 163 | ||||||||||
| Liability for termination of employee/employer | ||||||||||||||
| relationship, net | 37 | 163 | 204 | 139 | ||||||||||
| 3,807 | 16,604 | 18,931 | 17,402 | |||||||||||
| Shareholders' equity | ||||||||||||||
| Share capital | 2,614 | 11,400 | 11,399 | 11,400 | ||||||||||
| Capital reserves and premium on shares | 10,140 | 44,219 | 44,207 | 44,179 | ||||||||||
| Accumulated deficit | (7,855 | ) | (34,255 | ) | (26,897 | ) | (31,656 | ) | ||||||
| Treasury stock | (181 | ) | (789 | ) | (1,003 | ) | (789 | ) | ||||||
| 4,718 | 20,575 | 27,706 | 23,134 | |||||||||||
| 15,684 | 68,399 | 79,311 | 71,950 | |||||||||||
| —————————————— Rafael Aravot Chairman of the Board and CEO |
—————————————— Haim Schleifer Director and Joint General Manager |
—————————————— Hanan Eibushitz Chief Financial Officer |
Date of approval of the financial statements: May 17, 2005
The accompanying notes are an integral part of the financial statements.
F - 3
| RoboGroup T.E.K. Ltd. |
| Statement of Operations |
| NIS in Thousands |
| For the three months ended March 31 |
Year ended December, 31 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2005 |
2005 |
2004 |
2004 | |||||||||||
| US$ (K) |
NIS (K) |
NIS (K) |
NIS (K) | |||||||||||
| Unaudited |
Unaudited |
Unaudited |
Audited | |||||||||||
| Convenience translation to US dollars |
Reported amounts |
Reported amounts | ||||||||||||
| Revenues | 2,480 | 10,815 | 14,365 | 61,734 | ||||||||||
| Cost of revenues | 1,524 | 6,648 | 8,231 | 35,843 | ||||||||||
| Gross profit | 956 | 4,167 | 6,134 | 25,891 | ||||||||||
| Operating expenses | ||||||||||||||
| Research and development expenses, net | 388 | 1,690 | 2,302 | 7,619 | ||||||||||
| Marketing and selling expenses | 674 | 2,941 | 3,485 | 13,204 | ||||||||||
| Administrative and general expenses | 444 | 1,938 | 2,792 | 10,042 | ||||||||||
| 1,506 | 6,569 | 8,579 | 30,865 | |||||||||||
| Operating loss | (550 | ) | (2,402 | ) | (2,445 | ) | (4,974 | ) | ||||||
| Financial expenses, net | (27 | ) | (116 | ) | (765 | ) | (2,111 | ) | ||||||
| Other income, net | 7 | 31 | 282 | 809 | ||||||||||
| Loss before taxes on income | (570 | ) | (2,487 | ) | (2,928 | ) | (6,276 | ) | ||||||
| Income tax expenses | 26 | 112 | - | 1,411 | ||||||||||
| Net loss | (596 | ) | (2,599 | ) | (2,928 | ) | (7,687 | ) | ||||||
| Loss per share ("EPS") | (0.05 | ) | (0.24 | ) | (0.27 | ) | (0.71 | ) | ||||||
| Weighted average number of shares used in computation | ||||||||||||||
| of EPS (in thousands) | 10,851 | 10,851 | 10,744 | 10,757 | ||||||||||
The accompanying notes are an integral part of the financial statements.
F - 4
| RoboGroup T.E.K. Ltd. |
| Statement of Changes in Shareholders' Equity |
| NIS in Thousands |
| Number of shares |
Share capital |
Premium on shares |
Capital reserves |
Adjustments on translation of financial statement of an autonomous consolidated company |
Shares purchase cost & assigned loans guaranteed by company's shares |
Accumulated earnings (deficit) |
Total | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| NIS |
NIS |
NIS |
NIS |
NIS |
NIS |
NIS | ||||||||||||||||||||
| Reported amounts | ||||||||||||||||||||||||||
| For the three months ended | ||||||||||||||||||||||||||
| March 31, 2005 (Unaudited) | ||||||||||||||||||||||||||
| Balance as of January 1, 2005 | 10,851,027 | 11,400 | 42,452 | 2,260 | (533 | ) | (789 | ) | (31,656 | ) | 23,134 | |||||||||||||||
| Adjustments on translation of | ||||||||||||||||||||||||||
| financial statement of an | ||||||||||||||||||||||||||
| autonomous consolidated | ||||||||||||||||||||||||||
| company | - | - | - | - | 40 | - | - | 40 | ||||||||||||||||||
| Net loss | - | - | - | - | - | - | (2,599 | ) | (2,599 | ) | ||||||||||||||||
| Balance at March 31, 2005 | 10,851,027 | 11,400 | 42,452 | 2,260 | (493 | ) | (789 | ) | (34,255 | ) | 20,575 | |||||||||||||||
| For the three months ended | ||||||||||||||||||||||||||
| March 31, 2004 (Unaudited) | ||||||||||||||||||||||||||
| Balance as of January 1, 2004 | 10,744,031 | 11,399 | 42,214 | 2,260 | (453 | ) | (1,003 | ) | (23,969 | ) | 30,448 | |||||||||||||||
| Adjustments on translation of | ||||||||||||||||||||||||||
| financial statement of an | ||||||||||||||||||||||||||
| autonomous consolidated | ||||||||||||||||||||||||||
| company | - | - | - | - | 186 | - | - | 186 | ||||||||||||||||||
| Net loss | - | - | - | - | - | - | (2,928 | ) | (2,928 | ) | ||||||||||||||||
| Balance at March 31, 2004 | 10,744,031 | 11,399 | 42,214 | 2,260 | (267 | ) | (1,003 | ) | (26,897 | ) | 27,706 | |||||||||||||||
| For the year ended December | ||||||||||||||||||||||||||
| 31, 2004 (audited) | ||||||||||||||||||||||||||
| Balance at January 1, 2004 | 10,744,031 | 11,399 | 42,214 | 2,260 | (453 | ) | (1,003 | ) | (23,969 | ) | 30,448 | |||||||||||||||
| Exercise of options | 1,600 | 1 | 3 | - | - | - | - | 4 | ||||||||||||||||||
| Granting of treasury stock | 105,396 | - | 235 | - | - | 214 | - | 449 | ||||||||||||||||||
| Adjustments on translation of | ||||||||||||||||||||||||||
| financial statement of an | ||||||||||||||||||||||||||
| autonomous consolidated | ||||||||||||||||||||||||||
| company | - | - | - | - | (80 | ) | - | - | (80 | ) | ||||||||||||||||
| Net loss | - | - | - | - | - | - | (7,687 | ) | (7,687 | ) | ||||||||||||||||
| Balance at December 31, 2004 | 10,851,027 | 11,400 | 42,452 | 2,260 | (533 | ) | (789 | ) | (31,656 | ) | 23,134 | |||||||||||||||
The accompanying notes are an integral part of the financial statements.
F - 5
| RoboGroup T.E.K. Ltd. |
| Statement of Cash Flows |
| NIS in Thousands |
| For the three months ended March 31 |
Year ended December, 31 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2005 |
2005 |
2004 |
2004 | |||||||||||
| US$ (K) |
NIS (K) |
NIS (K) |
NIS (K) | |||||||||||
| Unaudited |
Unaudited |
Unaudited |
Audited | |||||||||||
| Convenience translation to US dollars |
Reported amounts |
Reported amounts | ||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net loss | (596 | ) | (2,599 | ) | (2,928 | ) | (7,687 | ) | ||||||
| Adjustments to reconcile net loss to net cash | ||||||||||||||
| provided by operating activities (Appendix A): | 367 | 1,597 | 493 | 1,667 | ||||||||||
| Net cash used in operating activities | (229 | ) | (1,002 | ) | (2,435 | ) | (6,020 | ) | ||||||
| Cash flows from investing activities: | ||||||||||||||
| Acquisition of fixed assets | (15 | ) | (65 | ) | (409 | ) | (700 | ) | ||||||
| Proceeds from sales of fixed assets | 21 | 92 | 119 | 117 | ||||||||||
| Net cash provided by (used in) investing activities | 6 | 27 | (290 | ) | (583 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||
| Increase in short term credit from banks, net | 154 | 673 | 292 | 614 | ||||||||||
| Long-term loans received | - | - | 13,908 | 21,414 | ||||||||||
| Repayment of long -term loans | (141 | ) | (614 | ) | (14,273 | ) | (23,315 | ) | ||||||
| Exercise of options by employees | - | - | - | 4 | ||||||||||
| Net cash provided by (used in) financing activities | 13 | 59 | (73 | ) | (1,283 | ) | ||||||||
| Effect of exchange rate changes on cash and cash | ||||||||||||||
| equivalents | 1 | 3 | 11 | (35 | ) | |||||||||
| Decrease in cash and cash equivalents | (209 | ) | (913 | ) | (2,787 | ) | (7,921 | ) | ||||||
| Cash and cash equivalents at the beginning of the year | 1,595 | 6,957 | 14,878 | 14,878 | ||||||||||
| Cash and cash equivalents at the end of the year | 1,386 | 6,044 | 12,091 | 6,957 | ||||||||||
The accompanying notes are an integral part of the financial statements.
F - 6
| RoboGroup T.E.K. Ltd. |
| Statement of Cash Flows |
| NIS in Thousands |
| For the three months ended March 31 |
Year ended December, 31 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2005 |
2005 |
2004 |
2004 | |||||||||||
| US$ (K) |
NIS (K) |
NIS (K) |
NIS (K) | |||||||||||
| Unaudited |
Unaudited |
Unaudited |
Audited | |||||||||||
| Convenience translation to US dollars |
Reported amounts |
Reported amounts | ||||||||||||
| Appendix A: Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||||||
| Income and expenses not involving cash flows: | ||||||||||||||
| Depreciation and amortization | 109 | 477 | 543 | 2,589 | ||||||||||
| Decrease in liability for termination of | ||||||||||||||
| employee/employer relationship | (27 | ) | (119 | ) | (151 | ) | (543 | ) | ||||||
| Write-down of loans | (27 | ) | (116 | ) | 645 | 158 | ||||||||
| Decrease (increase) in value of marketable securities | 16 | 71 | - | (84 | ) | |||||||||
| Decrease (increase) in deferred taxes | (20 | ) | (88 | ) | 30 | 1,054 | ||||||||
| Other | - | - | - | (136 | ) | |||||||||
| 51 | 225 | 1,067 | 3,038 | |||||||||||
| Changes in assets and liabilities: | ||||||||||||||
| Decrease (increase) in trade receivables | 884 | 3,853 | 2,884 | (2,163 | ) | |||||||||
| Decrease (increase) in other receivables and debit | ||||||||||||||
| balances | 19 | 82 | (1,320 | ) | 201 | |||||||||
| Decrease (increase) in inventories | (360 | ) | (1,571 | ) | 576 | 4,111 | ||||||||
| Increase (decrease) in trade payables | (132 | ) | (577 | ) | 904 | 459 | ||||||||
| Decrease in other payables and credit balances | (95 | ) | (415 | ) | (3,618 | ) | (3,979 | ) | ||||||
| 316 | 1,372 | (574 | ) | (1,371 | ) | |||||||||
| 367 | 1,597 | 493 | 1,667 | |||||||||||
| Appendix B: Non-monetary events: | ||||||||||||||
| Granting of treasury stocks | - | - | - | 449 | ||||||||||
The accompanying notes are an integral part of the financial statements.
F - 7
| RoboGroup T.E.K. Ltd. |
| Notes to the Financial Statements |
| NIS in Thousands |
| NOTE 1 | – | GENERAL |
| (a) | These financial statements have been prepared in a condensed format as of March 31, 2005, and for the three months then ended (“interim financial statements”). These financial statements should be read in conjunction with the Company’s audited annual financial statements and accompanying notes as of December 31, 2004 and for the year then ended. |
| (b) | These financial statements have been reviewed by the Company’s certified public accountants. The review was conducted in accordance with the procedures established by the Institute of Certified Public Accountants in Israel regarding interim periods. The review was limited in scope and did not constitute an audit in accordance with generally accepted auditing standards and therefore no opinion was expressed by the Company’s certified public accountants. |
| (c) | In management’s opinion all necessary adjustments were made in order to present correctly these interim financial statements. |
| (d) | For the three months ended March 31, 2005 and 2004 the Company incurred net losses of approximately NIS 2.6 million and NIS 2.9 million, respectively. In addition, the Company had negative cash flows from operating activities in the amount of approximately NIS 1 million and NIS 2.4 million, respectively. |
| In the years ended December 31, 2004 and 2003, the Company incurred net losses of approximately NIS 8 million and NIS 18 million, respectively. In addition, the Company’s negative cash flows from operating activities were approximately NIS 6 million and NIS 9 million, respectively. The Company’s management took steps to improve the Company’s financial state and its profitability, as follows: |
| 1. | Consolidating activities, reducing manpower, reducing salary costs of senior executives and cutting general expenses. |
| 2. | The Company had entered into an Equity Line agreement with Cornell Capital Partners LP Company. |
| In addition, on March 2005, a proportionally consolidated company distributed a dividend of approximately NIS 1.7 million. The net dividend received by the Company amounted to approximately NIS 700 thousand. Another possible distribution of dividend in the same amount was approved for August 2005. |
| NOTE 2 | – | SIGNIFICANT ACCOUNTING POLICIES |
| A. | General |
| The interim financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in Accounting Standard No. 14 of the Israel Accounting Standards Board. |
| B. | Impact of recently issued Accounting Standards |
| On July 2004, the Israeli Accounting Standards Board published Accounting Standard No. 19, “Taxes on Income”. The Standard provides that a liability for deferred taxes is to be recorded for all temporary differences subject to tax, except for a limited number of exceptions. In addition, a deferred tax asset is to be recorded for all temporary differences that may be deducted, losses for tax purposes and tax benefits not yet utilized, if it is anticipated that there will be taxable income against which they can be offset, except for a limited number of exceptions. The new Standard applies to financial statements for periods beginning on January 1, 2005. The Standard provides that it is to be implemented by means of a cumulative effect of a change in accounting method. |
| The Company estimates the impact of the Standard on its financial statements will not be material. |
F - 8
| RoboGroup T.E.K. Ltd. |
| Notes to the Financial Statements |
| NIS in Thousands |
| NOTE 2 | – | SIGNIFICANT ACCOUNTING POLICIES (cont.) |
| C. | Following are data regarding the Israeli CPI and the exchange rate of the U.S. dollar: |
| As of |
Israeli CPI |
Exchange rate of one U.S. dollar | ||||||
|---|---|---|---|---|---|---|---|---|
| Points (*) |
NIS | |||||||
| March 31, 2005 | 113.6 | 4.631 | ||||||
| March 31, 2004 | 112.8 | 4.528 | ||||||
| December 31, 2004 | 114.3 | 4.308 | ||||||
| Change during the period |
% |
% | ||||||
| March 2005 (three months) | (0.6) | 1.2 | ||||||
| March 2004 (three months) | (0.1) | 3.4 | ||||||
| December 2004 (12 months) | 1.2 | (1.6) | ||||||
| (*) The index on an average basis of 1998 = 100. |
| D. | The financial statements at March 31, 2005 and for the three months then ended have been translated into US dollars solely for the convenience of the American reader. This translation was made at the US Dollar/New Israeli Shekel exchange rate in effect on the said date, i.e. US$ 1 = NIS 4.361. |
| NOTE 3 | – | TRANSACTION WITH INTERESTED RELATED PARTIES |
| 1. | The Board of Directors of a proportionally consolidated company approved on March 2005, a distribution of dividend to its shareholders in the amount of NIS 1,725 thousand. The net dividend received by the Company amounted to NIS 733 thousand. |
| 2. | In
July 2004 the Company entered into a contract with Yaskawa Electric
Corporation (“YEC”) for the supply of an E-learning system
in consideration of approximately NIS 3.3 million. The system will be
supplied gradually during several quarters. The Company and YEC own 50% each of the share capital of a proportionally consolidated company Yaskawa Eshed Technology Ltd. (“YET”). |
| In the first quarter of 2005, the revenues from this contract were included in the amount of approximately NIS 650 thousand. |
F - 9
| RoboGroup T.E.K. Ltd. |
| Notes to the Financial Statements |
| NIS in Thousands |
| NOTE 4 | – | FINANCIAL INFORMATION IN REGARD TO BUSINESS SEGMENTS |
| For the three months ended March 31, 2005 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Education segment |
Motion control for industry |
Adjustment |
Total | |||||||||||
| NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) | |||||||||||
| Reported amounts | ||||||||||||||
| Revenues from customers | 7,728 | 3,087 | - | 10,815 | ||||||||||
| Segment operations | (2,324 | ) | 222 | 328 | (1,774 | ) | ||||||||
| Non allocated expenses | (628 | ) | ||||||||||||
| Operating loss | (2,402 | ) | ||||||||||||
| For the three months ended March 31, 2005 | ||||||||||||||
| Education segment |
Motion control for industry |
Adjustment |
Total | |||||||||||
| $ (K) |
$ (K) |
$ (K) |
$ (K) | |||||||||||
| Revenues from customers | 1,772 | 708 | - | 2,480 | ||||||||||
| Segment operations | (533 | ) | 51 | 75 | (407 | ) | ||||||||
| Non allocated expenses | (143 | ) | ||||||||||||
| Operating loss | (550 | ) | ||||||||||||
| For the three months ended March 31, 2004 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Education segment |
Motion control for industry |
Memcall |
Adjustments |
Total | |||||||||||||
| NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) |
NIS (K) | |||||||||||||
| Reported amounts | |||||||||||||||||
| Revenues from customers | 12,263 | 2,102 | - | - | 14,365 | ||||||||||||
| Inter segment revenues | - | 66 | - | (66 | ) | - | |||||||||||
| 12,263 | 2,168 | - | (66 | ) | 14,365 | ||||||||||||
| Segment loss | (2,393 | ) | (204 | ) | (331 | ) | - | (2,928 | ) | ||||||||
F - 10