26 Mar 2009 07:00
Preliminary Results for the year ended 31 December 2008
SimiGon Ltd (together with its subsidiaries "SimiGon" or the "Company"), a global leader in providing simulation solutions, announces its preliminary results for the year ended 31 December 2008.
Financial Highlights
Operational Highlights
SimiGon won a $3.1 million contract with Lockheed Martin ("LM") for the Advanced Jet Training phase of the UK Military Flying Training System ("UKMFTS"). The program includes 25 years of support with additional phases and could provide other growth opportunities for SimiGon.
SimiGon continues its support for Lockheed Martin's F-35 Lightning II Joint Strike Fighter ("JSF") training program. The SIMbox Learning Management System was selected by LM for JSF pilot training systems in 2007. This strategically important project strengthens SimiGon's position when competing for new contracts.
SimiGon continues to leverage its core product, SIMbox, to compete for more programs in its existing markets, as well as compete in newer markets.
SimiGon was selected by BAE Systems Australia to provide the Company's AirBook software for a desktop simulation training programme, designed for Royal Australian Air Force pilots.
Individual Dental Education Assistant (IDEA) selected SimiGon to provide simulation training applications for dentists. This reflects the flexibility of SimiGon's SIMbox technology.
Israeli Air Force (IAF) has selected SimiGon to provide additional advanced pilot training systems, reflecting the success of the training systems that SimiGon already provides to the IAF operational squadrons and to the Air Force Academy for initial pilot training.
SimiGon has been selected by an additional European country to provide its Air Force with SimiGon's simulation software for the F-16.
SimiGon has been selected by the Cessna Aircraft Company ("Cessna") to provide cold weather simulation and training courses for CE-208 Caravan. This further reflects the flexibility of SimiGon's SIMbox technology.
SimiGon's subsidiary, National Simulation Services ("NSS") Inc. and its partner, NCI, won a USAF task order to provide information technology services to upgrade, support, and maintain the Air Battle Manager Training System (UABMTS). The mission of the UABMTS is to conduct initial skills training of United States Air Force Air Battle Managers.
The SIMbox technology infrastructure continues its forward movement, now offering complete web-based simulation through Full Mission Simulator capabilities, increasing the Company's growth potential. SIMbox's advanced 3D graphic engine can be utilised for air, land, sea and industrial environments. The SIMbox LMS remains an industry leading application and the Company is also examining additional ways to leverage this in the commercial markets.
Ami Vizer, President & Chief Executive Officer of SimiGon stated: "While we are disappointed with the delay in our expected revenue growth and earnings during 2008 and the uncertain outlook for 2009 due to the global economic crisis, we are encouraged as SimiGon won numerous strategic contracts this year that will positively impact the Company's longer term prospects. The UK MFTS contracts and Lockheed Martin's F-35 Lightning II Joint Strike Fighter training demonstrate the market's need and recognition of SIMbox as an integral part of training activities. We will continue to work closely with LM to ensure the training program's success. We successfully engaged in new partnerships with BAE Systems Australia and Cessna due to our advanced technology platform. These achievements are several among many that will provide the Company with significant long term revenue potential. SimiGon is well placed for further growth and is recognised globally for supplying advanced PC-based simulation training technology for the training industry's largest programmes."
| SimiGon Ltd | |
| Ami Vizer, Chief Executive Officer Haim Yatim, Chief Financial Officer | +972 9 956 1777 |
| Evolution Securities Ltd | |
| Jeremy Ellis / Chris Clarke | +44 (0) 20 7071 4300 |
Overview
As a provider of advanced PC-based training and simulation technologies for the world's largest military flight training programmes, SimiGon has transformed into a formidable player in the market of PC-based training and simulation solutions. The Company's reconfigurable SIMbox technology platform can be used for all initial, recurrent and operational requirements, across all domains such as air, land and sea, and industrial. The Company will continue to leverage its core product, SIMbox, to compete for more programs in its existing markets, as well as compete in newer markets such as medical, maritime and industrial operations training.
SimiGon is extremely pleased to have been chosen as a partner in the UKMFTS program. This is a significant milestone for the company and it represents a success of its strategic business model as it transitions from primarily six figure contracts to long term multimillion dollar contracts. We are very excited to be part of the team for this program as this further extends the mutually beneficial relationship with Lockheed. The UKMFTS will be using our technology the way it was designed to be - network centric, personal and dynamic hi-fidelity training systems for each trainee. We are confident this program will demonstrate the viability of the SIMbox technology platform and our business model. This and other recent contract wins give us confidence in the growth prospects of SimiGon.
The selection of the SIMbox Learning Management System for the F-35 Lightning II Joint Strike Fighter training program by Lockheed Martin and winning the Contract with Lockheed Martin for the Advanced Jet Training phase of the UKMFTS will continue to impact SimiGon more significantly in the longer term. This success has led to the addition of several significant partners including BAE Systems Australia and Cessna along with several training companies. These new partnerships serve to strengthen SimiGon's foundations, providing further affirmation of the viability of SimiGon's training solutions and will further fuel the Company's expansion.
Financial Performance
Revenues for the year ended 31 December 2008 were $5.14 million, compared to $5.01 million in 2007, an increase of 2.59%. In terms of regional breakdown, 58.55% of SimiGon's revenues came from North America (2007: 29.2%), 31.73% from Europe and the Middle East (2007: 70.7%) and 9.72% from the Far East (2007: 0.1%).
Gross profit for the fiscal year was $4.14 million (2007: $3.96 million).
Research and development expenses for the year decreased by 8.30% to $2.54 million (2007: $2.77 million), primarily due to lower salary expenses. Sales and marketing expenses for the year 2008 decreased by 29.18% to $1.82 million (2007:$2.57 million) mainly due to a decrease in sales commission. General and administration expenses increased by 3.93% to $1.85 million (2007: $1.78 million) mainly due to provision for doubtful debt.
As a result, the total operating expenses for the year decreased by 12.78% to $6.21 million (2007: $7.12 million).
The operating loss therefore is $2.06 million (2007: operating loss $3.16 million) and the net loss is $1.98 million in 2008 compared to a net loss of $2.89 million in 2007. This resulted in a net basic and diluted loss per share of $0.05 (2007: loss per share of $0.08). As at 31 December 2008, SimiGon had cash, cash equivalents and deposits in the amount of $3.64 million.
As at 31 December 2008, the Company had 47 employees, compared to 60 employees on 31 December 2007.
Product Development
During 2008, SimiGon incurred a high level of annual expenditure on research and development as the group sought to further extend its technology lead over its competitors.
SimiGon is committed to technology innovation and developing new capabilities and products to ensure market relevance and build market share. In 2008, SimiGon R&D efforts focused on the following areas:
SIMbox Learning Management System has been improved to provide a distributed site management platform supporting multiple professional communities across different locations. This enables far flung organizations to collaborate, monitor and track group and individual performance, leading to faster effective training.
A new generation of the SIMbox Graphic Engine has been developed to support urban and ground simulation with high resolution, getting better performance for the end user.
A new SIMbox Simulation platform has been developed; SIMbox Web Simulation provides an interactive mode to support access to the simulation from a web browser. The Web Simulation platform significantly increases the number of end users training with SIMbox.
SIMbox Toolkit has been improved to support Subject Matter Experts (SME) without programmer knowledge, enabling them to rapidly develop simulation entities using SIMbox Toolkit.
SimiGon R&D continues to be an early adapter of cutting edge software technologies for infrastructure development.
Outlook
Despite the global economic crisis and the delays in the expected revenue growth, the Company remains positive in its outlook due to the strategic partnerships and large contracts that have already begun to impact revenues and others that are expected to be closed in the future. The Company is well positioned to compete for upcoming military aviation training contracts as well as for other training contracts in other domains.
The Board believes the Company is well positioned for near term and longer term growth, continuing its success in providing PC-based training and simulation systems for the industry's largest training programmes.
SIMIGON LTD. AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
| December 31, | ||||||||
| 2008 | 2007 | 2006 | ||||||
| U.S. dollars in thousands | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | 3,137 | 5,024 | 8,226 | |||||
| Short-term bank deposits | 500 | - | 655 | |||||
| Trade receivables | 1,880 | 1,147 | 1,299 | |||||
| Other accounts receivable and prepaid expenses | 26 | 226 | 215 | |||||
| Total current assets | 5,543 | 6,397 | 10,395 | |||||
| NON-CURRENT ASSETS | ||||||||
| Long-term prepaid expenses | 46 | - | - | |||||
| Property and equipment, net | 155 | 187 | 179 | |||||
| Intangible assets, net | 1,476 | 1,528 | - | |||||
| Total non-current assets | 1,677 | 1,715 | 179 | |||||
| Total assets | 7,220 | 8,112 | 10,574 | |||||
| EQUITY AND LIABILITIES | ||||||||
| CURRENT LIABILITIES: | ||||||||
| Current maturities and short-term bank loans | 81 | - | 200 | |||||
| Trade payables | 147 | 125 | 139 | |||||
| Deferred revenues | 336 | 21 | 104 | |||||
| Other accounts payable and accrued expenses | 601 | 1,139 | 785 | |||||
| Total current liabilities | 1,165 | 1,285 | 1,228 | |||||
| LONG-TERM LIABILITIES: | ||||||||
| Severance pay liability | 306 | 351 | 252 | |||||
| Long-term loan | 869 | - | - | |||||
| Total long-term liabilities | 1,175 | 351 | 252 | |||||
| Total liabilities | 2,340 | 1,636 | 1,480 | |||||
| EQUITY: | ||||||||
| Share capital | 90 | 89 | 89 | |||||
| Additional paid-in capital | 14,904 | 14,521 | 14,251 | |||||
| Accumulated deficit | (10,114) | (8,134) | (5,246) | |||||
| Total equity | 4,880 | 6,476 | 9,094 | |||||
| Total equity and liabilities | 7,220 | 8,112 | 10,574 | |||||
SIMIGON LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
| Year ended December 31, | ||||||||
| 2008 | 2007 | 2006 | ||||||
| U.S. dollars in thousands | ||||||||
| Revenues | 5,143 | 5,008 | 7,517 | |||||
| Cost of revenues | 999 | 1,056 | 1,196 | |||||
| Gross profit | 4,144 | 3,952 | 6,321 | |||||
| Operating expenses: | ||||||||
| Research and development | 2,537 | 2,773 | 1,985 | |||||
| Selling and marketing | 1,822 | 2,567 | 939 | |||||
| General and administrative | 1,849 | 1,776 | 887 | |||||
| Total operating expenses | 6,208 | 7,116 | 3,811 | |||||
| Operating profit (loss) | (2,064) | (3,164) | 2,510 | |||||
| Financial income, net | 84 | 276 | 10 | |||||
| Profit (loss) for the year | (1,980) | (2,888) | 2,520 | |||||
| Basic earnings (loss) per share in U.S. dollars | (0.05) | (0.08) | 0.08 | |||||
| Diluted earnings (loss) per share in U.S. dollars | (0.05) | (0.08) | 0.07 | |||||
| Weighted average number of shares used in computing basic earnings (loss) per share in thousands | 37,453 | 37,251 | 31,608 | |||||
| Weighted average number of shares used in computing diluted earnings (loss) per share in thousands | 37,453 | 37,251 | 33,821 | |||||
SIMIGON LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Number of shares | Share capital | Additional paid-in capital | Accumulated deficit | Total equity | ||||||
| U.S. dollars in thousands (except share amounts) | ||||||||||
| Balance as of January 1, 2006 | 30,520,331 | 73 | 5,746 | (7,766) | (1,947) | |||||
| Shareholders waiver of interest on loan | - | - | 85 | - | 85 | |||||
| Issuance of shares, net **) | 6,076,811 | 14 | 8,397 | - | 8,411 | |||||
| Exercise of warrant issued to a bank | 653,524 | 2 | (2) | - | - | |||||
| Share-based compensation | - | - | 25 | - | 25 | |||||
| Profit for the year | - | - | - | 2,520 | 2,520 | |||||
| Balance as of December 31, 2006 | 37,250,666 | 89 | 14,251 | (5,246) | 9,094 | |||||
| Exercise of employee stock options | 8,660 | *) - | 5 | - | 5 | |||||
| Share-based compensation | - | - | 265 | - | 265 | |||||
| Loss for the year | - | - | - | (2,888) | (2,888) | |||||
| Balance as of December 31, 2007 | 37,259,326 | 89 | 14,521 | (8,134) | 6,476 | |||||
| Issuance of shares | 538,868 | 1 | 210 | - | 211 | |||||
| Share-based compensation | - | - | 173 | - | 173 | |||||
| Loss for the year | - | - | - | (1,980) | (1,980) | |||||
| Balance as of December 31, 2008 | 37,798,194 | 90 | 14,904 | (10,114) | 4,880 | |||||
*) Represents an amount lower than $ 1,000.
**) Net of issuance expenses of $ 1,619 thousand.
SIMIGON LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year ended December 31, | ||||||
| 2008 | 2007 | 2006 | ||||
| U.S. dollars in thousands | ||||||
| Cash flows from operating activities: | ||||||
| Profit (loss) for the year | (1,980) | (2,888) | 2,520 | |||
| Adjustments to reconcile profit (loss) to net cash provided by (used in) operating activities (a) | (347) | 563 | (2,236) | |||
| Net cash provided by (used in) operating activities | (2,327) | (2,325) | 284 | |||
| Cash flows from investing activities: | ||||||
| Proceeds from (investment in) short-term deposits, net | (500) | 655 | (182) | |||
| Purchase of property and equipment | (50) | (87) | (82) | |||
| Purchase of VTSG business | - | (1,250) | - | |||
| Net cash used in investing activities | (550) | (682) | (264) | |||
| Cash flows from financing activities: | ||||||
| Issuance of shares, net | 44 | - | 8,411 | |||
| Exercise of employee stock options | - | 5 | - | |||
| Proceeds from long-term bank loans, net | 946 | - | - | |||
| Repayment of loans from shareholders | - | - | (1,502) | |||
| Repayment of short-term bank loans | - | (200) | - | |||
| Net cash provided by (used in) financing activities | 990 | (195) | 6,909 | |||
| Increase (decrease) in cash and cash equivalents | (1,887) | (3,202) | 6,929 | |||
| Cash and cash equivalents at beginning of year | 5,024 | 8,226 | 1,297 | |||
| Cash and cash equivalents at end of year | 3,137 | 5,024 | 8,226 | |||
SIMIGON LTD. AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Year ended December 31, | ||||||||||||||
| 2008 | 2007 | 2006 | ||||||||||||
| U.S. dollars in thousands | ||||||||||||||
| (a) | Adjustments to reconcile profit (loss) to net cash provided by (used in) operating activities: | |||||||||||||
| Income and expenses not involving operating cash flows: | ||||||||||||||
| Depreciation and amortization | 134 | 134 | 65 | |||||||||||
| Share-based compensation | 173 | 265 | 25 | |||||||||||
| Accrued interest on long-term loan | 4 | - | 66 | |||||||||||
| Accrued severance pay, net | (45) | 99 | 185 | |||||||||||
| Changes in operating assets and liabilities: | ||||||||||||||
| Decrease (increase) in trade receivables | (733) | 152 | (695) | |||||||||||
| Decrease (increase) in other accounts receivable and prepaid expenses | 154 | (11) | 231 | |||||||||||
| Increase (decrease) in trade payables | 22 | (14) | (37) | |||||||||||
| Increase (decrease) in deferred revenues | 315 | (83) | (2,389) | |||||||||||
| Increase (decrease) in other accounts payable and accrued expenses | (371) | 21 | 313 | |||||||||||
| (347) | 563 | (2,236) | ||||||||||||
| (b) | Supplemental disclosure of cash flows: | |||||||||||||
| Cash paid during the year for: | ||||||||||||||
| Interest | 5 | - | 80 | |||||||||||
| Cash received during the year for: | ||||||||||||||
| Interest | 75 | 272 | 105 | |||||||||||
| (c) | Supplemental disclosure of non-cash financing activities: | |||||||||||||
| Shareholder's waiver of interest on loans | - | - | 85 | |||||||||||
| Additional amount for purchase of VTSG business | - | 333 | - | |||||||||||
| Issuance of shares in consideration of liability due to VTSG | 167 | - | - | |||||||||||