Published:
IXI Mobile Reports Second Quarter 2008 Financial Results
BELMONT, California, August 21 /PRNewswire-FirstCall/ -- IXI Mobile, Inc.
(OTC: IXMO, IXMOW, IXMOU), the maker of the Ogo(TM) family of mobile devices
and services, announced today financial results for the quarter ended June
30, 2008.
Revenue for the second quarter was $2.2 million as compared to $3.2
million in the second quarter of 2007 and $3.4 million in the first quarter
of 2008. Gross margin (deficit) in the second quarter was (151.7%) compared
to (28.1%) in the second quarter of 2007 and 8.2% in the first quarter of
2008.
Operating expenses (excluding costs of revenues) were $7.4 million in the
second quarter of 2008, compared to $9.3 million in the second quarter of
2007 and $7.9 million in the first quarter of 2008. Operating loss for the
quarter was $10.8 million, compared to $10.2 million for the second quarter
of 2007 and $7.6 million for the first quarter of 2008.
Net loss for the second quarter of 2008 was $11.4 million or $0.45 per
diluted share, compared to a net loss of $21.5 million or $4.65 per diluted
share for the second quarter of 2007 and $8.7 million or $0.34 per diluted
share for the first quarter of 2008.
The Company's net loss for the second quarter of 2008 included non-cash
accounting expenses required to be recorded pursuant to GAAP of approximately
$113,000 of financial income related to amortization of premium that was
recorded in connection with the amendment to the terms of its convertible
bridge loan; $3.7 million of inventory write-downs, vendor advance payments
and royalties write-offs; and $567,000 for stock-based compensation expenses
for employees and consultants and expenses recorded in connection with the
issuance of stock and incentive plans to management.
Cash and cash equivalents totaled $8.1 million at June 30, 2008, compared
to $12.6 million at March 31, 2008.
In addition to the Company's financial results, we achieved certain
operational highlights during the second quarter. Service ASP in the second
quarter of 2008 increased to $2.70 per billed user per month compared to
$2.40 per billed user per month in the first quarter of 2008
Discussing the outcome of the quarter, Israel Frieder, Chairman of the
Board of Directors and Chief Executive Officer, said, "We have taken measures
to address what can only be characterized as a challenging year thus far. As
announced recently, we have initiated several strategic measures intended to
refocus the Company's activities and to reduce operating costs. This involves
a workforce reduction of approximately twenty-five percent, closing our U. S.
facilities and the installation of a new senior management team.
"The plan that we have put into place is also designed to strategically
refocus our efforts on those markets that we believe hold the most promise
for Ogo. This means we will focus on our existing and potential customers in
the European and Asian Pacific markets. In parallel the Company will seek
additional investments to meet its critical working capital needs.
Additionally, the Company continues to pursue strategic partnerships.
"After all is said and done, the result of this plan is a leaner and more
nimble IXI with a management team dedicated to building the Ogo brand. Our
resolve to turn the company around and our commitment to our customers and
shareholders has never been greater. We hope that in the near future we will
be able to report better operating results and an improved market position,"
concluded Mr. Frieder.
Six-Month Results
Revenues for the six months ended June 30, 2008 were $5.6 million
compared to $6.3 million for the six months ended June 30, 2007. Gross margin
(deficit) during the six months ended June 30, 2008 was (54.9%) compared to
(14.0%) for the same period last year.
Operating loss during the six months ended June 30, 2008 was $18.4
million compared to $16.0 during the six months ended June 30, 2007. IXI had
a net loss for the six months ended June 30, 2008 of $20.0 million, compared
to a net loss of $28.2 million, for the six months ended June 30, 2007.
IXI's operating loss for the six months ended June 30, 2008 included
non-cash accounting expenses required to be recorded pursuant to GAAP of
approximately $1.2 million of stock-based compensation expenses for employees
and consultants and expenses recorded in connection with the issuance of
stock and incentive plans to management.; $3.7 million of inventory write
down, vendor advance payments and royalties write-offs charged to cost of
revenues; and, financial expenses of $752,000 relating to the Merger,
conversion and amendment of loans and the credit line.
Non-GAAP Financial Information
Gross margin in the second quarter of 2008 was 15.4% compared to 2.8% in
the second quarter of 2007
Excluding the aforementioned charges, non-GAAP operating loss for the
second quarter of 2008 was $6.5 million, compared to a non-GAAP operating
loss of $6.5 million for the second quarter of 2007 and $7.0 million for the
first quarter of 2008.
The Non-GAAP net loss for the second quarter of 2008 was $7.2 million
compared to $7.5 million in the second quarter of 2007 and $7.2 million in
the first quarter of 2008.
Gross margin during the six months ended June 30, 2008 was 11.4% compared
to 3.6% for the same period last year.
Excluding the aforementioned charges, the Non-GAAP operating loss for the
six months ended June 30, 2008 was $13.5 million, compared to a Non-GAAP
operating loss of $12.1 million for the six months ended June 30, 2007.
Non-GAAP net loss for the six months ended June 30, 2008 was $14.4
million, compared to a Non-GAAP net loss of $14.1 million, for the same
period last year.
A reconciliation of GAAP to non-GAAP is set forth below in the tables to
this release.
Additionally, due to the corporate restructuring initiatives, IXI will
not be holding an earnings call this quarter.
About IXI Mobile
IXI Mobile, Inc. offers solutions that bring innovative, data-centric
mobile devices and services to the mass market. IXI Mobile's Ogo devices are
designed to improve the mobile user experience and increase mobile voice and
data usage. The Company provides an end to end solution to mobile operators
and Internet service providers around the world to support Ogo products. For
more information on IXI Mobile, please visit http://www.ixi.com. IXI Mobile,
Inc. is headquartered inBelmont, CA.
About Ogo
The Ogo family of devices delivers popular applications, including email,
instant messaging, SMS, RSS, voice and Web browsing on optimized, easy-to-use
handheld devices for a true on-the-go mobile messaging experience. Ogo is
available from mobile operators and Internet service providers around the
world. More information on Ogo is available at: http://www.ogo.com .
Forward Looking Statements
This press release contains forward looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities
Act"), Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Private Securities Litigation Reform Act. All
statements in this press release, other than statements that are purely
historical in nature, are forward looking statements. Words such as
"believe," "anticipate," "expect," "intend," "plan," "estimate," "project,"
"will," "may" "trend," "potential," "opportunity," "comfortable," "current,"
"position," "assume," "outlook," "continue," "remain," "maintain," "sustain,"
" seek, " "achieve," and other similar expressions are intended to identify
forward looking statements, although not all forward looking statements
contain these words. In addition, any statements that refer to expectations,
projections or other characterizations of future events or circumstances are
forward looking statements. We have based these forward looking statements on
our current expectations and beliefs about future events. Actual results
could differ materially from those discussed or projected in, or implied by,
the forward looking statements as a result of various risks and
uncertainties, including: whether the Company's recent strategic initiatives
will sufficiently reduce operating costs and increase revenues to enable the
Company to continue as a going concern; the Company's ability to raise, and
the availability of, additional financing in the near term; the Company's
continuing history of losses and its ability to continue as a going concern;
the Company's ability to provide an affordably priced alternative for mobile
email access as well as other value added services; competing products that
may, now or in the future, be available to consumers; the Company's ability
to develop and market new products or services, the Company's ability to
maintain relationships with existing customers and develop arrangements with
new customers in the European and Asian Pacific markets; the number or nature
of potential customers for the Company's products; the Company's expectations
regarding trends in the cell phone, mobile messaging and consumer electronics
industries; and the Company's ability to improve its financial performance.
This press release should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended December 31, 2007 and its other
reports on file with the Securities and Exchange Commission, which contain
more detailed discussion of risks and uncertainties that may affect future
results. Except as required by law, the Company does not undertake to update
any forward looking statements.
IXI MOBILE INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
Six months ended Three months ended
June 30, June 30,
2008 2007 2008 2007
Revenues:
Product sales $ 3,691 $ 5,144 $ 1,203 $ 2,512
Services 1,939 1,150 1,018 659
Total Revenues 5,630 6,294 2,221 3,171
Cost of
Revenues:
Product sales 7,020 5,990 4,536 3,434
Services 1,702 1,183 1,055 628
Cost of
revenues 8,722 7,173 5,591 4,062
Gross loss (3,092 ) (879 ) (3,370 ) (891)
Operating
expenses:
Research and
development 8,446 7,137 4,166 4,133
Selling and
marketing 3,015 3,346 1,229 1,388
General and
administrative 3,804 4,603 1,996 3,756
Total
operating
expenses 15,265 15,086 7,391 9,277
Operating loss (18,357 ) (15,965 ) (10,761 ) (10,168)
Financial
expenses, net (1,656 ) (12,210 ) (610 ) (11,313)
Loss from
continuing
operations (20,013 ) (28,175 ) (11,371 ) (21,481)
Loss from
discontinued
operations (32 ) (55 ) (16 ) (27)
Net loss $(20,045 ) $ (28,230 ) $ (11,387 ) $ (21,508)
Basic and
diluted net
loss per share
of Common
stock:
From
continuing
operations $ (0.80 ) $ (10.77 ) $ (0.45 ) $ (4.64)
From
discontinued
operations (0.00 ) (0.02 ) (0.00 ) (0.01)
Basic and
diluted net
loss per share $ (0.80 ) $ (10.79 ) $ (0.45 ) $ (4.65)
Weighted
average number
of shares of
Common stock
used in
computing
basic and
diluted net
loss per share
of Common
stock 25,201,624 2,694,311 25,211,573 4,705,970
IXI MOBILE INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
June December
30, 31,
2008 2007
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 8,118 $ $17,278
Restricted cash 198 183
Trade receivables, net 2,932 3,019
Other receivables and prepaid expenses 1,691 1,364
Vendor advance payments, net 1,694 4,081
Inventories, net (of which $ 7,582 and $7,806
delivered to customers but not yet recognized
as revenues as of June 30, 2008 and December
31, 2007, respectively) 12,927 14,239
Total current assets 27,560 40,164
LONG-TERM ASSETS:
Severance pay fund 1,292 917
Long-term prepaid expenses 48 39
Property and equipment, net 479 487
Deferred debt costs 125 348
Total long-term assets 1,944 1,791
Total assets $ 29,504 $ 41,955
IXI MOBILE INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
June 30, December 31,
2008 2007
Unaudited
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
CURRENT LIABILITIES:
Current maturities of long-term
convertible loan from stockholders $ - $ 4,492
Current maturities of long-term loans
from stockholders - 2,000
Short-term bank credit 2,446 1,942
Trade payables 7,129 2,095
Employees and payroll accruals 1,750 1,488
Deferred revenues 10,306 10,149
Other payables and accrued expenses 2,236 6,401
Liabilities of discontinued operations 2,555 2,523
Total current liabilities 26,422 31,090
LONG-TERM LIABILITIES:
Long-term loans from stockholders, net
of current maturities 4,609 2,000
Long-term convertible loan from
stockholders 8,278 -
Other long term liabilities 7 286
Accrued severance pay 1,540 1,138
Total long-term liabilities 14,434 3,424
STOCKHOLDERS' EQUITY (DEFICIENCY) *** :
Stock capital -
Common stock of $ 0.0001 par value:
Authorized: 60,000,000 shares at June
30, 2008 and December 31, 2007; Issued
and outstanding: 25,221,691 and
20,787,955 shares at June 30, 2008 and
December 31, 2007, respectively 2 2
Receipts on account of stock ** ) - 15,840
Additional paid-in capital *) 168,842 151,750
Accumulated deficit (180,196 ) (160,151 )
Total stockholders' equity (deficiency) (11,352 ) 7,441
Total liabilities and stockholders'
equity (deficiency) $ 29,504 $ 41,955
*) Net of deferred stock based compensation.
**) As of December 31, 2007 included 4,400,000 shares of Common stock
that the Company was contractually obligated to issue on account of long-term
convertible loan from stockholders converted on October 25, 2007, that were
issued on February 22, 2008
***) Upon the Merger, the shares of IXI stock were canceled and exchanged
into the Company's shares at a ratio of 1:0.15. All share information
included in this report has been retroactively adjusted to reflect this
exchange.
Non-GAAP Financial Measures (Unaudited)
We present the following non-GAAP financial measures: non-GAAP Cost of
Revenues, non-GAAP operating loss and non-GAAP net loss. Our non-GAAP
presentation and information should not be considered as a substitute for, or
as superior to, our financial information prepared in accordance with GAAP.
The non-GAAP presentation does not reflect a comprehensive system of
accounting, and it differs from similar financial information prepared in
accordance with GAAP and from financial information not prepared in
accordance with GAAP with the same or similar names that may be used by other
companies. We strongly urge investors and potential investors in our
securities to review the reconciliation of our non-GAAP financial information
to the comparable GAAP financial information, and our consolidated financial
statements, including the notes thereto, that is included in this Annual
Report and not to rely on any single financial measure to evaluate our
business. The principal limitation of our non-GAAP presentation is that it
excludes significant expenses that are required by GAAP to be recorded. In
addition, the non-GAAP presentation is subject to inherent limitations
because it reflects the exercise of judgments by management about which
charges are excluded for purposes of the non-GAAP presentation. To mitigate
this limitation, we present our non-GAAP presentation in addition to our GAAP
results, and recommend that investors do not give undue weight to the
non-GAAP presentation.
Non-GAAP Cost of Revenues Reconciliation
Three months ended
June 30,
2008 2007
(in thousands)
Total revenues $ 2,221 $ 3,171
GAAP cost of revenues: 5,591 4,062
Stock-based option expense in GAAP cost of
revenues 20 145
Inventory write-down (including vendor advance
payments and royalties) 3,693 837
Non-GAAP cost of revenues (excluding the
above) $ 1,878 $ 3,080
Non-GAAP gross margin 15.44% 2.82%
Non-GAAP Operating Loss Reconciliation
Three months ended
June 30,
2008 2007
(in thousands)
GAAP operating loss $ (10,761 ) $ (10,168)
Stock-based option and share expense in GAAP
operating expenses, including Merger related
expenses 567 2,881
Inventory write-down (including vendor advance
payments and royalties) 3,693 837
Non-GAAP operating loss (excluding the above) $ (6,501 ) $ (6,450)
Non-GAAP Net Loss Reconciliation
Three months ended
June 30,
2008 2007
(in thousands)
GAAP net loss $ (11,387 ) $ (21,508)
Stock based option and share expense in GAAP
operating expenses, including merger related
expenses 567 2,881
Inventory write-down (including vendor advance
payments and royalties) 3,693 837
Financial expenses (income) relating to
Merger, conversion and amendments of loans and
credit line (113 ) 10,258
Non-GAAP net loss (excluding the above) $ (7,240 ) $ (7,532)
Non-GAAP Cost of Revenues Reconciliation
Six months ended
June 30,
2008 2007
(in thousands)
Total revenues $ 5,630 $ 6,294
GAAP cost of revenues: 8,722 7,173
Stock-based option expense in GAAP cost of
revenues 41 146
Inventory write-down (including vendor advance
payments and royalties) 3,693 958
Non-GAAP cost of revenues (excluding the above) $ 4,988 $ 6,069
Non-GAAP gross margin 11.40% 3.57%
Non-GAAP Operating Loss Reconciliation
Six months ended
June 30,
2008 2007
(in thousands)
GAAP operating loss $ (18,357 ) $ (15,965)
Stock-based option and share expense in GAAP
operating expenses, including Merger related
expenses 1,165 2,953
Inventory write-down (including vendor advance
payments and royalties) 3,693 958
Non-GAAP operating loss (excluding the above) $ (13,499 ) $ (12,054)
Non-GAAP Net Loss Reconciliation
Six months ended
June 30,
2008 2007
(in thousands)
GAAP net loss $ (20,045 ) $ (28,230)
Stock based option and share expense in GAAP
operating expenses, including merger related
expenses 1,165 2,953
Inventory write-down (including vendor advance
payments and royalties) 3,693 958
Financial expenses (income) relating to
Merger, conversion and amendment of loans and
credit line 752 10,258
Non-GAAP net loss (excluding the above) $ (14,435 ) $ (14,061)
We excluded the following items in the development of the non-GAAP
financial measures presented:
- Share-based compensation expenses. We have excluded share-based
compensation expenses, which consist of expenses for share-based
compensation that we began recording under SFAS No. 123(R) in the
first quarter of fiscal 2006. We excluded these expenses primarily
because they are non-cash expenses that we do not consider part of
ongoing operating results when assessing the performance of our
business.
- Inventory (vendor advance payments and royalty write down). We have
excluded the inventory (including vendor advance payments and
royalties, and open commitments of slow-moving inventory) write down.
Although this may be considered a recurring item, management excludes
this write down when evaluating its cost of revenues since it affects
the ability to compare periods.
- General and administrative expenses recorded in connection with the
issuance of stock, stock options and cash bonuses to our senior
management. We have excluded expenses recorded in connection with the
issuance of stock, stock options and cash bonuses to Mr. Barak and Mr.
Haller in connection with the consummation of the Merger and their
specific compensation terms following the consummation of the Merger
primarily because we believe that excluding these items allows
investors to better assess our operating loss and to compare it to
previous periods that did not include these expenses.
- Finance expenses recorded in connection with the consummation of the
Merger. In addition to the above mentioned exclusions, we have also
excluded financial expenses recorded in connection with the
consummation of the Merger primarily because we believe that excluding
these non-recurring items allows investors to better assess our net
loss and to compare it to previous periods that did not include these
expenses.
- Finance expenses recorded in connection with the amendments of the
loans and credit line. In addition to the above mentioned exclusions,
we have also excluded financial expenses recorded in connection with
the amendments of the loans and credit line primarily because we
believe that excluding these items allows investors to better assess
our net loss and to compare it to previous periods that did not
include these expenses.
IXI Mobile: KCSA Strategic Communications:
Ariella Shoham Marybeth Csaby / Meghan Garrity
Marketing Manager +1-212-896-1236 / 1224
Press@ixi.com mcsaby@kcsa.com / mgarrity@kcsa.com
SOURCE IXI Mobile, Inc.
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