Lanoptics LTD.

LNOP

 

Please see disclaimer at bottom of this document

 

 

 

November 7, 2005   Review of Form 6K earnings release for 9/30/05

1.    Statement of Cash flows not yet filed.  This makes analysis difficult, if not impossible.

2.    Dilution seems heavy.  Something always to watch

3.    Inventory is building, as revenues are falling.  Watch for potential write off.

4.    Looks like burn is around $2.5M quarterly.  If we use quarterly burn of $4.0M, there is still 5 quarters of cash.  It is very possible that I over estimated the burn, but I want to be more conservative.  Either way, cash could unarguably run out during fiscal 2007.

5.    Balance Sheet Data

	31-Dec-04	31-Mar-05	30-Jun-05	30-Sep-05
Assets
Current Assets
Cash and Marketable Securities	$25,619	$23,017	$20,712	$21,183
Trade Receivable Gross	$828	$1,667	$1,872	$471
Less: Allowance	($47)	($47)	($47)	$0
Other receivables and prepaid expense	$703	$459	$275	$448
Inventories	$1,279	$1,854	$2,356	$2,292
Total Current Assets	$28,382	$26,950	$25,168	$24,394
Long Term Investments
Prepaid Development and Production	$476	$455	$430	$397
Severance Pay Fund	$1,489	$1,543	$1,478	$1,543
Total Long Term Investments	$1,965	$1,998	$1,908	$1,940
Property and Equipment Net	$384	$341	$391	$378
Intangible Assets, Net	$634	$574	$5,865	$5,780
Total Assets	$31,365	$29,863	$33,332	$32,492
Liabilites and Shareholders' Equity
Current Liabilities
Trade Payables	$856	$1,178	$1,697	$303
Other Payables and Accrued Expenses	$2,478	$2,482	$2,197	$1,922
Total Current Liabilities	$3,334	$3,660	$3,894	$2,225
Long Term Liabilities
Accrued Severance Pay	$1,985	$2,034	$1,922	$1,983
Preferred Shares in Subsidiary	$35,937	$36,144	$35,185	$38,463
Shareholders' Deficiency
Share Capital	$70	$70	$75	$75
Additional Paid In Capital	$53,193	$53,231	$61,196	$61,185
Accumulated other Comprehensive Loss	($84)	($110)	($73)	($58)
Accumulated Deficit	($63,070)	($65,166)	($68,867)	($71,381)
Total Shareholders' Deficiency	($9,891)	($11,975)	($7,669)	($10,179)
Total Liabilites and Shareholders' Equity	$31,365	$29,863	$33,332	$32,492

 

 

 

 

September 29, 2005   Review of Form 6K earnings release for 6/30/05

 

1.               Balance Sheet Data

 

 

	30-Jun-05	31-Mar-05	31-Dec-04
Assets
Current Assets
Cash and Marketable Securities	20712	23017	25619
Trade Receivable Gross	1872	1667	828
Less: Allowance	-47	-47	-47
Other receivables and prepaid expense	275	459	703
Inventories	2356	1854	1279
Total Current Assets	25168	26950	28382
Long Term Investments
Prepaid Development and Production	430	455	476
Severance Pay Fund	1478	1543	1489
Total Long Term Investments	1908	1998	1965
Property and Equipment Net	391	341	384
Intangible Assets, Net	5865	574	634
Total Assets	33332	29863	31365
Liabilities and Shareholders' Equity
Current Liabilities
Trade Payables	1697	1178	856
Other Payables and Accrued Expenses	2197	2482	2478
Total Current Liabilities	3894	3660	3334
Long Term Liabilities
Accrued Severance Pay	1922	2034	1985
Preferred Shares in Subsidiary	35185	36144	35937
Shareholders' Deficiency
Share Capital	75	70	70
Additional Paid In Capital	61196	53231	53193
Accumulated other Comprehensive Loss	-73	-110	-84
Accumulated Deficit	-68867	-65166	-63070
Total Shareholders' Deficiency	-7669	-11975	-9891
Total Liabilities and Shareholders' Equity	33332	29863	31365

 

 

Profit and Loss Statement

 

	6 months ended	3 months ended	3 months ended
	30-Jun-05	31-Mar-05	30-Jun-05
Revenues	3876	1873	2003
Cost of Revenues	1488	739	749
Amortization of developed Technology	120	60	60
Gross Profit	2268	1074	1194
Operating Expenses:
Research and Development	4770	2086	2684
Write off of R&D	1475	0	1475
Selling and Marketing	1171	0	1171
General and Administrative	745	1001	-256
Total Operating Expenses	8161	3087	5074
Operating Income (Loss)	-5893	-2013	-3880
Financial and Other Expenses	110	88	22
Loss Before Minority Interest	-6003	-2101	-3902
Minority Interest in Sub	206	5	201
Net Loss	-5797	-2096	-3701
Net Loss per share	($0.54)	($0.20)	($0.35)
Weighted Avg. Shares O/S	10670815	10626285	44530

 

 

 

 

 

 

 

2.         Some Analysis

 

a.                Cash and marketable securities are $20,712 at June 30, 2005.  They were $25,619 at 12/31/04 and 24,637 at 3/31/05.

 

b.                Revenues increased QoQ by 6.94%

 

c.                Receivables are getting high.  I haven’t calculated DSO’s, but I imagine they are longer than typical. Lanoptics is in a lot of testing phases, hence I am concerned with the Receivables.  The allowance of $47 also looks a bit meager.

 

d.                Gross Profit % was 57.34% for 3 months ended 3/31/05 and 59.61% for 3 months ended 6/30/05.

 

e.                Operating expenses went up QoQ by 64.37%.

 

f.                 Weighted average shares outstanding went up .42% for the quarter.  That is an acceptable   1.6% run rate.  Watch this closely.

 

g.                Current Share Price is 6.50.  Hence market cap is 69.360M.  This is about 8X revenues. 

 

h.                Cash Flow adjustment.  One can argue that write off of R&D is not recurring.  I am keeping it here, unless I can be convinced otherwise.

 

 

 

i.                 EzChip ownership increased from 54.4% to 58.7% during the quarter.  This was done via a swap of shares.  I haven’t looked to closely.

 

j.                  If I ever get time, I will compare the 6 months ended from 2005 to 2004.  This is identified in SEC filing.  Revenues are up over $2,254 or 139%.  Yet, operating expenses alone are up over $3,045. 

 

k.                NP-2 samples were shipped in July 2005.

 

l.                  Believes that working capital can sufficiently get them through the end of 2006.  They could require more funds earlier, if they grow to rapidly or if sufficient revenue is not generated.  I would like them to identify how much that “sufficient revenue” is.