OREANDA-NEWS. RADA Electronic Industries Ltd. today announced its financial results for the year and quarter ended December 31, 2015.   

Full Year 2015 Results

Revenues totaled $14.8 million, a 34% decrease compared with revenues of $22.5 million in 2014.  

Gross profit totaled $2.6 million, a 61% decrease compared with gross profit of $6.5 million in 2014.  

Operating expenses totaled $5.4 million, an 8% increase compared with operating expenses of $5.0 million in 2014.

Operating loss totaled $2.9 million, compared with operating income of $1.4 million in 2014.  

Financial Expenses totaled approximately $3.6 million, a 185% increase compared to financial expenses of approximately $1.3 million in 2014. The financial expenses in 2015 includes a non-cash amortization expense of approximately $2.7 million associated with the debt discount resulting from the beneficial conversion feature applicable to the outstanding debt due to shareholders of the  Company that was approved by shareholders in April 2015.. The Company will continue to record such non-cash amortization expense until the earlier of the exercise of the conversion feature of the debt or the maturity of such debt in August 2016.

As a result, the Company reported a net loss of $6.4 million, or $0.54 per share for the year ended December 31, 2015, compared with net income of $0.21 million, or $0.02 per share, for the for the year ended December 31, 2014.

2015 Fourth Quarter Results

Revenues totaled $3.8 million, a 35% decrease compared with revenues of $5.9 million in the fourth quarter of 2014.

Gross profit totaled $0.7 million, a 55% decrease compared with gross profit of $1.6 million in the fourth quarter of 2014.

Operating expenses totaled $1.9 million, a 49% increase  compared with operating expenses of $1.3 million in the fourth quarter of 2014. 

Operating loss totaled $1.2 million compared to operating income $0.3 million in the fourth quarter of 2014.

Financial expenses totaled approximately $0.7 million, a 83% increase compared to financial expenses of approximately $0.4 million for the same period in 2014. Financial expenses in the fourth quarter of 2015 includes a non-cash amortization expense of approximately $0.6 million associated with a debt discount resulting from the beneficial conversion feature applicable to the outstanding debt due to shareholders of  the Company.

As a result, the Company reported a net loss of $1.9 million, or $0.12 per share, for the fourth quarter of 2015 compared to net loss of $0.13 million or $0.01 per share, for the fourth quarter of 2014.

Commenting on the results, Zvika Alon, RADA's Chief Executive Officer said, “Our revenues in 2015 were negatively impacted by delays in the contracting processes of our customers, which delayed until 2016 our securing several large avionic product orders that were expected during the first half of 2015. The low level of revenues during the year reduced our gross margin as well as our operating income as our engineering, operating and R&D expenses remained consistent with such expenses in 2014. We continued to deliver during the fourth quarter of 2015 as well as the beginning of 2016, a limited number of radar units to several potential new customers for evaluation of the units as components of systems being developed by them. We hope that that these evaluations will be successful and that these companies will decide to proceed with additional orders as soon as this year.

On July 30, 2015, we completed a public offering of our ordinary shares which resulted in $8,500,000 in gross proceeds to our company. As approved by our shareholders in an Extraordinary General Meeting of the Company held on April 16, 2015, the net proceeds of this offering were used to reduce debt owed to shareholders and enabled us to repay approximately 70% of the then outstanding debt owed to them. The reduction of our debt significantly improved our balance sheet. Our shareholders also approved the right for the lenders (who are affiliated with our controlling shareholder and another shareholder/director of the Company the right to convert the outstanding balance of loans they provided to the Company into ordinary shares at a discount to market. This caused the recognition of a debt discount derived from this beneficial conversion feature and resulted in a significant amount of non-cash financing expenses to the Company. Such non-cash amortization expenses will continue until the earlier of the exercise of the conversion feature of the debt or the maturity of such debt in August 2016.

On May 15, 2016 our shareholders approved the investment transaction with DBSI Investments Ltd. according to which DBSI will purchase ordinary shares for $4,000,000 and will receive warrants to purchase additional ordinary shares for $4,000,000, exercisable for a period of up to 48 months following the date of their initial investment which is scheduled to take place this week.

In addition, DBSI has granted us an option, to obtain a loan in the principal amount of up to $3,175 million, which will be used for the purpose of the repayment of our current outstanding debt that is due on August 31, 2016.

The approval of the transactions with DBSI gives our company sufficient working capital to support our current growth plans, R&D and marketing activities, that were constrained  because of our financial situation during the last few years. In addition, the new investment will reduce our out-of-pocket financial expenses in the future.