UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6 - K

 

Report of Foreign Private Issuer

 

Pursuant to Rule 13a - 16 or 15d -16

Under the Securities Exchange Act of 1934

 

For the Month of August, 2019

 

Commission file number 001-14184

 

B.O.S. Better Online Solutions Ltd.

(Translation of Registrant’s Name into English)

 

20 Freiman Street, Rishon LeZion, 7535825, Israel

(Address of principal executive office)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F ☒         Form 40-F ☐

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ___________

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ___________

 

 

 

 

 

  

B.O.S. Better Online Solutions Ltd.

 

This Form 6-K, including the exhibit, is hereby incorporated by reference into all effective registration statements, filed by us under the Securities Act of 1933, as amended, to the extent not superseded by documents or reports subsequently filed or furnished.

 

Attached hereto is the following exhibit:

 

99.1 B.O.S. Better Online Solutions Unaudited Pro forma Condensed Combined Consolidated Financial Statements for the year ended December 31, 2018.

 

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SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

  B.O.S. Better Online Solutions Ltd.
  (Registrant)
     
  By: /s/ Eyal Cohen
    Eyal Cohen
    Co-Chief Executive Officer and
Chief Financial Officer

 

Dated: August 7, 2019

 

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EXHIBIT INDEX

 

EXHIBIT NO.   DESCRIPTION
     
99.1   B.O.S. Better Online Solutions Unaudited Pro forma Condensed Combined Consolidated Financial Statements for the year ended December 31, 2018.

 

 

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Exhibit 99.1

 

B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES

 

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

  

The following unaudited pro forma condensed combined consolidated financial statements have been prepared to give effect to the acquisition by BOS Better Online Solutions Ltd. (“BOS”) of the assets and operations of Imdecol Ltd. (“Imdecol”), under the purchase method of accounting, reflecting pro forma adjustments described in the accompanying notes.

 

The following unaudited pro forma condensed combined consolidated balance sheet as of December 31, 2018 gives effect to the acquisition of all the assets and operations of Imdecol, as if it had occurred on such date, and reflects the allocation of the purchase price to the Imdecol assets acquired based on their estimated fair values at the date of acquisition. The acquisition is expected to be accounted for as a business combination under ASC-805. The portion of the consideration paid by BOS in the acquisition in excess of the fair value of Imdecol identifiable assets and liabilities has been recorded as goodwill.

 

The following unaudited pro forma condensed combined consolidated statements of operations combine the historical statements of operations of BOS and Imdecol, as if the Imdecol acquisition had occurred on January 1, 2018. This pro forma information should be read in conjunction with the respective consolidated historical audited financial statements (including notes thereto) of BOS for the year ended December 31, 2018, filed with the Securities and Exchange Commission under Form 20-F on April 1, 2019 and the consolidated historical audited financial statements (including notes thereto) of Imdecol for the year ended December 31, 2018, , filed with the Securities and Exchange Commission under Form 6-K on July 29, 2019.

 

Unaudited pro forma condensed combined consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the financial position or results of operations that would have actually been reported had the assets acquisition occurred at the beginning of the periods presented, nor is it necessarily indicative of future financial position or results of operations. These unaudited pro forma condensed combined consolidated financial statements are based upon the respective historical financial statements of BOS and Imdecol, and do not incorporate, nor do they assume, any benefits from cost savings or synergies of the combined company. The pro forma adjustments are based on available financial information and certain estimates and assumptions that BOS believes are reasonable and that are set forth in the notes to the unaudited pro forma condensed combined consolidated financial statements. In addition, the pro forma balance sheet includes allocations of the purchase price based upon preliminary estimates of the fair value of the assets acquired. These allocations may be adjusted in the future upon finalization of these preliminary estimates.

  

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B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES

 

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2018

U.S. dollars in thousands

 

    BOS Historical     Imdecol Historical     Pro Forma Adjustments     Pro Forma  
ASSETS                        
                         
CURRENT ASSETS:                        
                         
Cash and cash equivalents   $ 1,410     $ 77       (201
(77 		)
) 		2B
2A 		$ 1,209  
Restricted bank deposits     332       -       -       332  
Trade receivables (net of allowance for doubtful accounts of $31 and $75 at December 31, 2018 and 2017, respectively)     8,624       359       (359 ) 2A   8,624  
Other accounts receivable and prepaid expenses     829       174       (174 ) 2A   829  
Inventories     2,874       551       -   2C   3,425  
                                 
Total current assets     14,069       1,161       (811 )     14,419  
                                 
LONG-TERM ASSETS     177       130       (130 ) 2A   177  
                                 
PROPERTY AND EQUIPMENT, NET     1,108       100       -   2C   1,208  
                                 
OTHER INTANGIBLE ASSETS, NET     81       -       953   2C   1,034  
                                 
GOODWILL     4,676       -       471   2C   5,147  
                                 
Total assets   $ 20,111     $ 1,391     $ 483     $ 21,985  

  

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B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES

 

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 2018

U.S. dollars in thousands

  

    BOS
Historical 		    Imdecol
Historical 		    Pro Forma
Adjustments 		        Pro
Forma 		 
LIABILITIES AND SHAREHOLDERS’ EQUITY                            
                             
CURRENT LIABILITIES:                            
Short term bank loans   $ -     $ 54     $ (54)
350 		 

2A

2B3b

  $ 350  
Current maturities of long-term loans     467       279       (279)
142 		  2A
2B3a 		  $ 609  
Trade payables     4,106       941       (941 )   2A     4,106  
Employees and payroll accruals     778       151       (151 )   2A     778  
Deferred revenues     768       -       -           768  
Accrued expenses and other liabilities     313       289       (289 )   2A     313  
                                     
Total current liabilities     6,432       1,714       (1,222 )       6,924  
                                     
LONG-TERM LIABILITIES:                                    
Long-term loans, net of current maturities     1,867       170       (170)
 566 		   

2A

2B3a

    2,433  
Long term related party     -       33       (33 )   2A     -  
Accrued severance pay     301       151       (151 )   2A     301  
                                     
Total long-term liabilities     2,168       354       212           2,734  
                                     
SHAREHOLDERS’ EQUITY     11,511       (677 )     677
816 		   

2A

2B4

    12,327  
                                     
Total liabilities and shareholders’ equity   $ 20,111     $ 1,391     $ 483       $ 21,985  

  

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B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES

 

UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2018

U.S. dollars in thousands

  

    December 31, 2018  
    BOS
Historical 		    Imdecol
Historical 		    Pro Forma
Adjustments 		        Pro
Forma 		 
                             
Revenues   $ 32,650     $ 5,379       -       $ 38,029  
Amortization of intangible assets     -       -       90     2C     90  
Cost of revenues     25,907       3,724       -           29,631  
Gross profit     6,743       1,655       (90 )         8,308  
                                     
Sales and marketing     3,705       -       -           3,705  
General and Administrative     1,834       1,297       123     2D     3,254  
Amortization of intangible assets     -       -       112     2C     112  
                                     
Total operating costs and expenses     5,539       1,297       235           7,071  
                                     
Operating income     1,204       358       (325 )         1,237  
                                     
Financial expenses, net     (255 )     (95 )     95
(36) 		 

2A
2B3c

    (291 )
                                     
Income before taxes on income     949       263       (266 )         946  
Taxes on income (tax benefit)     (41 )     74       (74 )   2E     (41 )
                                     
Net Income   $ 990     $ 189     $ (192 )     $ 987  
                                     
Basic and diluted net Income per share   $ 0.28     $ -     $ -         $ 0.26  
                                     
Shares (in thousands) used in calculation of earnings per share:                                    
                                     
Basic and diluted     3,500       -       283     2B4     3,783  

   

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B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands

 

Note 1 - General

 

The unaudited pro forma condensed combined consolidated financial statements reflect the following:

 

A. On June 1, 2019, BOS completed its acquisition of the assets of Imdecol Ltd.

 

The purchase price of Imdecol’s business is based on a multiple of four times the average annual operating profit of Imdecol’s business for the years 2017, 2018, 2019 and for the 12 months ended June 30, 2020 (the “Formula of Consideration”).

 

The purchase price is for Imdecol’s Intangible assets and fixed assets and consists of a combination of cash and ordinary shares of BOS, payable as follows:

 

1. An advance of $276 was paid to Imdecol upon signing the definitive agreement in March 2019;

 

2. An additional approximately $1,239 was paid to Imdecol at closing, on June 1, 2019.

 

3. The final consideration will be paid by August 2020, according to the Formula of Consideration. Additional payment, if required, will be done in the following manner:

 

● Up to $417 shall be paid to Imdecol, by way of issuance of BOS’s ordinary shares. The value of the ordinary shares will be determined according to their market price prior to issuance and the shares will be subject to a lock-up period until June 2022.

 

● The residual amount, if any, will be paid in cash.

 

In addition, BOS acquired Imdecol’s inventory at its book value on the closing date.

 

   

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B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

U.S. dollars in thousands

 

Note 2 - Pro Forma:

 

The pro forma condensed combined consolidated balance sheet includes adjustments necessary to give effect to the acquisition as if it had occurred on December 31, 2018 and to reflect the allocation of the acquisition cost to the fair value of tangible and intangible assets acquired as noted above.

 

The pro forma condensed combined consolidated statement of operations includes adjustments necessary to give effect to the acquisition as if it had occurred on January 1, 2018.

 

Adjustments included in the pro forma condensed combined consolidated balance sheet and statement of operations are summarized as follows:

 

A. BOS bought Imdecol’s intangible assets, fixed assets and inventory. BOS didn’t assume any of Imdecol’s liabilities or acquire any other tangible assets of Imdecol.
   
B. Cash and cash equivalents:

 

Cash used for Imdecol’s acquisition:        
                     
1.   Payment for Imdecol’s intangible assets and the carrying amount of fixed assets as of December 31, 2018   $ (1,524 )
                     
2.    Payment for Imdecol’s carrying amount of inventory as of December 31, 2018     (551 )
                     
Cash Provided for Imdecol’s acquisition:        
                     
3.   Commercial bank loans that were received from the First International Bank of Israel:        
             
        a.   A long term bank loan that was received in May 2019 in the amount of $708, for a five year period and bearing annual interest at 3.5%. Principal and interest repayable monthly.        
            Long term loan, net of current maturities.     566  
            Current maturities of long term loans.
    142  
                     
        b.   A revolving credit line that was received in July 2019 in the amount of $350. The revolving credit line bears annual interest at 3.3%        
                     
        c.   Annual interest expenses attributed to the long term loan and revolving credit line estimated at $36     350  
                     
4.   Consideration from the issuance of 283,218 ordinary shares during February and March 2019 (see note 19 to BOS’ Consolidated Financial Statements for the year ended December 31, 2018).     816  
Change in cash and cash equivalents   $ (201 )

 

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B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

U.S. dollars in thousands

  

C. Purchase Price allocation:

 

This allocation is for pro forma purposes only. The final fair values will be included in BOS’ audited financial reports for year ended December 31, 2019. Based upon a preliminary valuation of tangible and intangible assets acquired, BOS has allocated the total cost of the acquisition of Imdecol’s assets as follows:

 

   

 

December 31,
2018

   

Average
amortization
period
(years)

   

 

Amortization
expenses in
year 2018

    Section
in the
statement
of
operation

Tangible assets:

                     
                       
Fixed assets (*)     100             3-10           *     *
                           
Inventory     551       -       -     -
                             
Intangible assets:                            
                             
Customer relationships     587       7       84     Sales and Marketing
                             
Brand name     276       10       28     Sales and Marketing
                             
Sales order Backlog     90       1       90     Cost of Goods
Goodwill     471       -       -     -
Total consideration   $ 2,075             $ 202      

 

(*) Depreciation expenses are already included in Imdecol’s financial statements for the year ended December 31, 2018. The carrying amount of the fixed assets is equal to their fair value

 

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B.O.S. BETTER ONLINE SOLUTIONS LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED FINANCIAL STATEMENTS (Cont.)

U.S. dollars in thousands

 

D. Acquisition expenses:

 

Legal   $ 50  
Agent Commission fee     45  
Consulting     26  
Others     2  
Total   $ 123  

  

E. BOS has accumulated losses for Israeli income tax purposes as of December 31, 2018, in the amount of approximately $15,620. These losses may be carried forward and offset against taxable income in the future for an indefinite period. Hence, if the acquisition had occurred in January 1, 2018, no tax expenses would have recorded.

 

 

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