Southborough, Mass. - June 7, 2006 -ViryaNet (Nasdaq: VRYA), a leading provider of solutions that automate business processes for mobile workforce management and field service delivery, today announced financial results for its first quarter of 2006.
Total revenues for the first quarter, ended March 31, 2006, were $4.0M, an increase of 27% from $3.1M of revenue recorded for the fourth quarter of 2005, and a 6% increase from $3.7M of revenue recorded for the first quarter of 2005. The Company reported a net loss of $0.7M, or $0.09 per basic and diluted share for the first quarter, ended March 31, 2006, compared to a net loss of $1.6M, or $0.22 per basic and diluted share for the fourth quarter of 2005, and compared to a net loss of
$1.1M, or $0.19 per basic and diluted share for the first quarter of 2005.
"In Q1, we saw growth in the sale of software licenses, improved gross margin performance, and a reduction in operating losses," stated Memy Ish-Shalom, president and CEO, ViryaNet. "The organizational realignment that we undertook earlier has provided to us focus and highlighted to the marketplace ViryaNet's superior product, domain expertise, and value proposition. This focus has resulted in new license revenue and success in cross selling our product into existing
customers. We signed two new end-user deals during the quarter, and gained another end-user customer through our channel network. We've also seen a strengthening of our sales pipeline, which is being supported by marketing campaigns. Our results for Q1 indicate that we are on the track to profitability."
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Software license revenues were $0.5M for the first quarter of 2006, compared to $0.2M for the fourth quarter of 2005, and compared to $1.4M in the first quarter of 2005. Professional services revenues grew by 22% to $3.5M for the first quarter of 2006, compared to $2.9M for the fourth quarter of 2005, and grew by 51% from $2.3M for the first quarter of 2005.
The Company reported a gross profit of $2.0M for the first quarter of 2006, or a gross margin of 49%, compared to a gross profit of $1.2M, or a gross margin of 37% in the fourth quarter of 2005, and compared to a gross profit of $1.9M, or a gross margin of 50% in the first quarter of 2005.
Operating expenses for the first quarter of 2006 were $2.4M, compared to $2.5M for the fourth quarter of 2005, and compared to $2.8M for the first quarter of 2005. During the first quarter, the Company completed its organization realignment and cost reduction actions, which have both contributed to the improved financial results. The Company expects to achieve the full benefit of these cost reduction actions in the second quarter of 2006.
The Company's cash position on March 31, 2006 was $0.7M, compared to $2.0M on December 31, 2005. The Company's short-term and long-term bank debt position on March 31, 2006 was $3.4M, compared to $2.2M on December 31, 2005. The Days of Sales Outstanding (DSO) for the Company in the first quarter of 2006 was 52 days, compared to 39 days in the fourth quarter of 2005.
The Company also announced that it had closed $1.1 million of equity financing, which was previously announced in its press release dated May 5, 2006. In addition, the Company announced that the shareholders of the Company voted in favor of all the items in the proxy statement for the special meeting of shareholders held on June 2, 2006. As a result, the Company has increased its authorized share capital to 25,000,000 Ordinary Shares, completed the conversion of $2.0 million of its 7.5%
convertible note with LibertyView to Preferred A Shares of the Company at a conversion price of $1.53 per Preferred A Share, and closed $250,000 of the $650,000 of additional equity financing approved by the shareholders on the same terms as the $1.1 million of equity financing closed previously.
These recent financing activities, in combination with the financial results for the first quarter of 2006, resulted in an increase in the Company's shareholders' equity to more than $2.5 million. As a result, the Company believes it now satisfies all requirements for continued listing on The Nasdaq Capital Market, including the $2.5 million shareholders' equity requirement. However, unless and until NASDAQ renders a final determination that the Company complies with all
requirements for continued listing, there can be no assurances that the Company's securities will continue to be listed on NASDAQ.
About ViryaNet
ViryaNet is a provider of software applications that improve the quality and efficiency of an organization's service operations. ViryaNet's products enable companies in the utilities, telecommunications, retail, insurance, and general service sectors to manage and optimize mission critical business processes, resulting in increased service revenues, decreased service costs, and maximized customer satisfaction. The robust set of applications help companies improve workforce
scheduling, dispatching, and activity reporting; customer contract and entitlement automation; and asset, logistics, and depot repair management. Visit ViryaNet at
www.viryanet.com.
Safe Harbor Statement
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding ViryaNet's expectations, beliefs, intentions, or strategies regarding the capabilities of its products, its relationships with its customers, its customer purchases, its future
operational plans and objectives including integration of other businesses, its future business prospects, its future financial performance, its future cash position, and its future prospects for profitability. All forward-looking statements included in this document are based upon information available to ViryaNet Ltd. as of the date hereof, and ViryaNet Ltd. assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties,
which could cause actual results to differ materially from those projected. These and other risks relating to ViryaNet's business include market acceptance of and demand for the Company's products, risks associated with a slow-down in the economy, risks associated with the financial condition of the company's customers, risks associated with competition and competitive pricing pressures, risks associated with increases in costs and operating expenses, risks in technology
development and commercialization, the risk of operating losses, risks in product development, risks associated with international sales, and other risks that are set forth in ViryaNet's reports filed from time to time with the Securities and Exchange Commission. Reported results should not be considered an indication of future performance. You should not place undue reliance on these forward-looking statements, which speak only as the date hereof. ViryaNet disclaims any obligation to
publicly update or revise any such forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.