Business Context and Reporting Period
Company: B.O.S. Better Online Solutions Ltd.
Filing Type: Form 6-K (Report of Foreign Private Issuer)
Reporting Period: March 2019 (Filed March 20, 2019)
Principal Office: Rishon LeZion, Israel
The filing announces a definitive agreement signed on March 19, 2019, to acquire the assets of Imdecol Ltd., a global integrator and manufacturer of automatic and robotic systems for production lines. The transaction is expected to close by June 1, 2019.
Key Financial Metrics and Transaction Details
The filing focuses on the acquisition structure rather than historical financial performance. Key financial terms include:
- Valuation Method: Purchase price based on a multiple of four times the average annual operating profit of Imdecol for 2017, 2018, 2019, and the 12 months ended June 30, 2020.
- Initial Payment: NIS 1 million (approx. $280,000) paid upon signing as a bridge loan (10% interest, secured by shareholder shares).
- Closing Payment: NIS 4.5 million (approx. $1.25 million) in cash.
- Deferred Equity Payment: NIS 1.5 million (approx. $417,000) in BOS ordinary shares by August 2020 (subject to lock-up until June 2022).
- Inventory Acquisition: Estimated at NIS 2.6 million (approx. $720,000) at book value; NIS 1.5 million advance at closing, balance paid as consumed.
- Contingent Consideration: Additional cash payment possible by August 2020 based on Imdecol's performance through June 2020.
- Financing: Cash portion to be funded via commercial bank loans and internal resources.
Note: The filing text does not provide clear values for BOS's current revenue, profit, cash flow, margins, or total debt.
Material Changes
The primary material change is the commitment to acquire Imdecol Ltd. This represents a strategic expansion into robotic systems integration. The agreement introduces new contingent liabilities and potential dilution through the issuance of ordinary shares.
Outlook, Risks, and Contingencies
- Closing Conditions: The transaction is expected to close by June 1, 2019. If closing does not occur by August 31, 2019, the initial NIS 1 million bridge loan becomes due and payable.
- Performance Risk: A portion of the purchase price is contingent on Imdecol's business performance through June 2020.
- Financing Risk: The company relies on a combination of bank loans and internal cash to fund the cash portion of the deal.
Investor Verification Checklist
- Verify the exact average annual operating profit of Imdecol for the specified periods to calculate the final purchase price.
- Confirm the status of commercial bank loan approvals required to finance the cash portion.
- Monitor the closing date to ensure it occurs before August 31, 2019, to avoid immediate repayment of the bridge loan.
- Assess the impact of the share issuance (NIS 1.5 million value) on existing shareholder dilution.
- Review Imdecol's inventory book value and consumption rates to understand the ongoing cash outflow schedule.