BOS Better Online Solutions Ltd. — FY2021 Form 20-F
Reporting period: Fiscal year ended December 31, 2021; filed March 31, 2022. This is an annual report, not a standalone Q4 filing. Financial statements are audited and prepared under U.S. GAAP; amounts below are U.S. dollars unless stated otherwise.
Business context and reporting period
BOS is an Israel-based provider of supply-chain services and technology solutions, operating through Supply Chain Solutions, RFID, and Intelligent Robotics divisions. It generated 77% of 2021 revenue in Israel; exports were $8.0 million, or 24% of revenue. The company reported 5,250,518 ordinary shares outstanding at year-end.
Key financial metrics
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $33.634 million | $33.551 million |
| Gross profit / margin | $6.586 million / 19.6% | $6.118 million / 18.2% |
| Operating income (loss) | $517,000 | $(651,000) |
| Net income (loss) | $451,000 | $(960,000) |
| Basic / diluted earnings (loss) per share | $0.09 / $0.08 | $(0.22) / $(0.22) |
| Cash from operating activities | $9,000 | $1.058 million |
| Cash and cash equivalents | $1.875 million | $1.036 million |
| Working capital | $9.118 million | $7.621 million |
| Bank loans, total | $1.421 million | $2.031 million |
At year-end, current assets were $17.870 million and current liabilities $8.752 million. Restricted cash was $242,000. Total assets were $24.757 million and shareholders’ equity was $14.347 million. The company reported $1.169 million of undiscounted future operating lease payments.
Material changes versus the prior comparable period
- Revenue was broadly flat, increasing $83,000 year over year. Supply Chain revenue rose to $19.008 million from $18.594 million; RFID increased to $13.192 million from $12.523 million; Robotics fell to $1.576 million from $2.502 million.
- Gross margin improved, primarily because the Robotics division’s gross loss narrowed to $460,000 from $871,000. Robotics nevertheless reported an operating loss of $1.033 million.
- Net income improved by $1.411 million, reflecting the return to operating profitability and no repeat of 2020’s $988,000 impairment charge. Financial expenses declined to $105,000 from $348,000.
- Operating cash flow fell to $9,000 from $1.058 million, largely as inventory increased $515,000, versus a $575,000 decrease in 2020. Year-end inventory rose to $5.567 million from $4.871 million.
- Bank debt declined by $610,000. Current maturities were $740,000 and long-term loans, net of current maturities, were $681,000.
Q4 revenue was $9.079 million, compared with $10.426 million in Q4 2020. The filing does not provide a clear Q4 profit or cash-flow value.
Outlook, commentary, risks, contingencies and unusual items
- Management expected RFID revenue to benefit from the March 2022 Dagesh asset acquisition and anticipated Supply Chain growth in 2022, citing expected increases in defense budgets amid the Russia-Ukraine conflict. Robotics was redirected toward Israeli customers; the division received $1.06 million of orders from Israeli customers between December 2021 and February 2022. These are forward-looking statements, not guarantees.
- Dagesh was acquired after year-end for NIS 2.3 million (approximately $700,000), with possible additional earn-out and employee-retention payments.
- COVID-19-related supply-chain delays, product availability and customer collections remained risks. The company also cited foreign-exchange and inflation exposure, dependence on key suppliers and customers, competition, debt covenants, and reliance on one bank for credit facilities. Five key suppliers accounted for 17% of Supply Chain purchases in 2021 through Positronic, which had been acquired by Amphenol.
- Debt was secured by fixed and floating charges over company and Israeli subsidiary assets. BOS reported compliance with its bank covenants at year-end and an unused short-term credit line of $1.532 million.
- A customer dispute over an allegedly faulty manufacturing machine led to a $241,000 provision; the customer also sought approximately $160,000 in damages, which BOS referred to its insurer. A former sales agent sought approximately $361,000 in employee benefits; BOS rejected the claim and said it believed the claim had low prospects of success. BOS also had a debt claim in the Imdecol liquidation.
- In 2022, BOS disclosed learning of a limited 2020 cybersecurity breach involving data accessed and extracted through a software vulnerability. The software was replaced in 2020; the company said its investigation found no recurrence and no release of material company or customer information.
- Goodwill was $4.676 million, allocated to RFID; management’s impairment test found no impairment, but the auditor identified goodwill impairment analysis as a critical audit matter. Imdecol-related goodwill and intangible assets had been impaired in 2019 and 2020.
- Management reported disclosure controls and internal control over financial reporting effective at year-end. The auditor did not attest to internal controls. The independent auditor’s opinion on the financial statements was unqualified.
Most important facts for investors to verify
- Whether operating cash generation can recover from near break-even and fund debt service, working capital and growth; review receivable collection and inventory levels.
- Whether Robotics can stop project-related gross losses and deliver profitable orders, and whether the announced Israeli orders convert to revenue and cash.
- The realization and integration of the Dagesh acquisition, including its final payments, earn-out terms and employee retention.
- Compliance with bank covenants and refinancing capacity, given collateral over assets and scheduled loan payments.
- Outcomes and potential exposure from the faulty-machine customer dispute, former-agent claim and Imdecol liquidation.
- Revenue concentration, supplier continuity—particularly Positronic—and any renewed effects of COVID-19 or currency movements.
- Share dilution: BOS issued 800,000 shares in a 2021 offering and had outstanding warrants and options; confirm current fully diluted share count and exercise terms.
Filing-data note: The narrative discussion contains an apparent inconsistency describing 2021 per-share results as a loss, while the audited statements report net income and earnings per share of $0.09 basic and $0.08 diluted. The audited statements are used above.