LanOptics Ltd. (NASDAQ: LNOP), a provider of network processors,
today announced results for the third quarter ended September 30,
2006. For the three months ended September 30, 2006, LanOptics
reported revenues of US$ 2,074,000 versus US$ 687,000 in the third
quarter of 2005. All of the revenues were attributable to
LanOptics' subsidiary, EZchip Technologies. LanOptics incurred an
operating loss of US$ 1,991,000, versus an operating loss of US$
2,404,000 in the third quarter of 2005. The majority of the
expenses that resulted in the operating loss were attributable to
EZchip's research and development efforts on future products. The
balance of the expenses were related primarily to EZchip's sales
and marketing activities. Net loss for the third quarter was US$
2,136,000, including stock based compensation expenses in the
amount of US$ 171,000 which are being reported as of January 1st
2006 pursuant to SFAS 123R, a loss of US$ 0.18 per share, compared
to a net loss of US$ 2,514,000 or US$ 0.22 per share for the same
period last year. For the nine months ended September 30, 2006,
LanOptics reported revenues of US$ 5,087,000, compared with US$
4,563,000 for the same period last year. All of the revenues were
attributable to LanOptics' subsidiary, EZchip Technologies.
LanOptics incurred an operating loss for the nine months of US$
6,905,000, versus an operating loss of US$ 8,297,000, which
included a one-time in-process research and development write-off
in the amount of US$ 1,475,000, in the same period last year. Net
loss for the nine months was US$ 7,217,000, including stock based
compensation expenses in the amount of US$ 396,000 which are being
reported for the first time pursuant to SFAS 123R, or US$ 0.62 per
share, compared to a year-earlier loss for the comparable period of
US$ 8,311,000, or US$ 0.76 per share. "We are pleased with the
progress made during the third quarter and the agreement with
Marvell that was signed last week," said Eli Fruchter, President
and CEO of EZchip Technologies. "The Marvell agreement is further
validation for our network processors, whose adoption in the
Carrier Ethernet space is gaining momentum. We are jointly
developing an NPU chip with Marvell that utilizes both companies'
technologies and offers interoperable solutions that enable joint
Marvell-EZchip based system architectures. The partnership will
open new opportunities for EZchip that would not otherwise exist
and is expected to start generating meaningful revenues in 2008.
The new NPU does not alter EZchip's plans for NP-2, NP-3 and NP-4.
"We have seen a meaningful and very positive change in the way our
customers are adopting and implementing our NP-2 network
processors. Our customers selected the NP-1 for optional services
cards, mostly 1-2 per chassis, to deal with exception processing
that the hard wired ASICs on the line cards could not handle. In
contrast, the NP-2 replaces the ASICs on the line cards, with one
to four NP-2 devices per line card and 10-12 line cards per
chassis. "EZchip's NPUs have been adopted by leading tier-1 system
vendors that use them on the line cards of their carrier Ethernet
platforms. We now have close to 100 NP-1 and NP-2 design wins. One
tier-1 vendor began production of several NP-2 designs during the
third quarter and placed initial production orders during the
quarter. We expect several more tier-1 designs to enter production
in the coming quarters. NP-2 sales contributed significantly to the
third quarter revenues; we anticipate that NP-2 revenues will
continue growing during the fourth quarter, and will account for
the majority of our sales in the very near future. Our future
revenue ramp-up will continue to depend on the success of our
customers' new products that incorporate our network processors and
on market acceptance of these products." About LanOptics LanOptics
is focused on its subsidiary EZchip Technologies, a fabless
semiconductor company providing highly integrated 10-Gigabit and
5-Gigabit network processors. EZchip's network processors provide
the flexibility and integration that enable triple-play data, voice
and video services in systems that make up the new Carrier Ethernet
networks. Flexibility and integration make EZchip's solutions ideal
for building systems for a wide range of applications in telecom
networks, enterprise backbones and data centers. For more
information on EZchip, visit the web site at http://www.ezchip.com
For more information on LanOptics, visit the web site at
http://www.lanoptics.com "Safe Harbor" statement under the Private
Securities Litigation Reform Act of 1995: This release contains
forward looking statements that are subject to risks and
uncertainties, including, but not limited to, the impact of
competitive products, product demand and market acceptance risks,
customer order cancellations, reliance on key strategic alliances,
fluctuations in operating results, delays in development of
highly-complex products and other risks detailed from time to time
in the Company's filings with the Securities and Exchange
Commission. These risks could cause the Company's actual results
for 2006 and beyond to differ materially from those expressed in
any forward looking statements made by, or on behalf of LNOP.
LanOptics Ltd. Consolidated Statement of Operations (U.S. Dollars
in thousands, except per share amounts) � Three Months Ended
September 30 (UnAudited) Nine Months Ended September 30 (UnAudited)
2006� 2005� 2006� 2005� Revenues 2,074� 687� 5,087� 4,563� Cost of
Revenues 851� 293� 2,242� 1,782� Amortization of Developed
Technology 86� 86� 257� 205� Gross Profit 1,137� 308� 2,588� 2,576�
� Research & Development, Net 2,093� 1,815� 6,370� 6,584�
In-process Research and Development Write-off --� --� --� 1,475�
Selling, General & Administration 1,035� 897� 3,123� 2,814�
Operating Loss (1,991) (2,404) (6,905) (8,297) � Financial
Expenses, net (145) (110) (324) (220) Loss Before Minority Interest
(2,136) (2,514) (7,229) (8,517) Minority Interest in Loss of
Subsidiaries --� --� 12� 206� � � � � Net Loss (2,136) (2,514)
(7,217) (8,311) � Net Loss per Share (0.18) (0.22) (0.62) (0.76)
Weighted Average Number of Shares Used in Computing Net Losses per
Share 11,650,021� 11,633,771� 11,644,723� 10,995,327� LanOptics
Ltd. Consolidated Balance Sheet (U.S. Dollars in thousands) �
September 30, December 31, 2006� 2005� (UnAudited) (Audited) ASSETS
CURRENT ASSETS: Cash, Cash Equivalents & Marketable Securities
17,220� 19,552� Trade Receivables, Net 1,958� 931� Other
Receivables 817� 300� Inventories 2,767� 2,098� Total Current
Assets 22,762� 22,881� � LONG-TERM INVESTMENTS: Prepaid Development
and Production Costs, Net 305� 381� Severance Pay Fund 1,905�
1,564� Total Long-Term Investments 2,210� 1,945� � PROPERTY &
EQUIPMENT, NET 356� 351� � Developed Technology, Net 604� 861�
Goodwill 4,833� 4,833� TOTAL ASSETS 30,765� 30,871� � LIABILITIES
AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Trade Payables 1,149�
338� Other Payables and Accrued Expenses 2,539� 1,916� Total
Current Liabilities 3,688� 2,254� � LONG TERM LIABILITIES: Accrued
Severance Pay 2,417� 1,990� Long-Term Loan 3,275� --� Warrants to
Redeemable Preferred Shares 239� 253� Total Long-Term Liabilities
5,931� 2,243� � EMPLOYEES STOCK OPTIONS IN A SUBSIDIARY 396� --� �
PREFERRED SHARES IN A SUBSIDIARY 40,061� 38,567� � SHAREHOLDERS'
DEFICIENCY: Share Capital 75� 75� Additional Paid-in Capital
61,252� 61,185� Accumulated Other Comprehensive Loss (4) (36)
Accumulated Deficit (80,634) (73,417) Total Shareholders'
Deficiency (19,311) (12,193) � � TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIENCY 30,765� 30,871� LanOptics Ltd. (NASDAQ:
LNOP), a provider of network processors, today announced results
for the third quarter ended September 30, 2006. For the three
months ended September 30, 2006, LanOptics reported revenues of US$
2,074,000 versus US$ 687,000 in the third quarter of 2005. All of
the revenues were attributable to LanOptics' subsidiary, EZchip
Technologies. LanOptics incurred an operating loss of US$
1,991,000, versus an operating loss of US$ 2,404,000 in the third
quarter of 2005. The majority of the expenses that resulted in the
operating loss were attributable to EZchip's research and
development efforts on future products. The balance of the expenses
were related primarily to EZchip's sales and marketing activities.
Net loss for the third quarter was US$ 2,136,000, including stock
based compensation expenses in the amount of US$ 171,000 which are
being reported as of January 1st 2006 pursuant to SFAS 123R, a loss
of US$ 0.18 per share, compared to a net loss of US$ 2,514,000 or
US$ 0.22 per share for the same period last year. For the nine
months ended September 30, 2006, LanOptics reported revenues of US$
5,087,000, compared with US$ 4,563,000 for the same period last
year. All of the revenues were attributable to LanOptics'
subsidiary, EZchip Technologies. LanOptics incurred an operating
loss for the nine months of US$ 6,905,000, versus an operating loss
of US$ 8,297,000, which included a one-time in-process research and
development write-off in the amount of US$ 1,475,000, in the same
period last year. Net loss for the nine months was US$ 7,217,000,
including stock based compensation expenses in the amount of US$
396,000 which are being reported for the first time pursuant to
SFAS 123R, or US$ 0.62 per share, compared to a year-earlier loss
for the comparable period of US$ 8,311,000, or US$ 0.76 per share.
"We are pleased with the progress made during the third quarter and
the agreement with Marvell that was signed last week," said Eli
Fruchter, President and CEO of EZchip Technologies. "The Marvell
agreement is further validation for our network processors, whose
adoption in the Carrier Ethernet space is gaining momentum. We are
jointly developing an NPU chip with Marvell that utilizes both
companies' technologies and offers interoperable solutions that
enable joint Marvell-EZchip based system architectures. The
partnership will open new opportunities for EZchip that would not
otherwise exist and is expected to start generating meaningful
revenues in 2008. The new NPU does not alter EZchip's plans for
NP-2, NP-3 and NP-4. "We have seen a meaningful and very positive
change in the way our customers are adopting and implementing our
NP-2 network processors. Our customers selected the NP-1 for
optional services cards, mostly 1-2 per chassis, to deal with
exception processing that the hard wired ASICs on the line cards
could not handle. In contrast, the NP-2 replaces the ASICs on the
line cards, with one to four NP-2 devices per line card and 10-12
line cards per chassis. "EZchip's NPUs have been adopted by leading
tier-1 system vendors that use them on the line cards of their
carrier Ethernet platforms. We now have close to 100 NP-1 and NP-2
design wins. One tier-1 vendor began production of several NP-2
designs during the third quarter and placed initial production
orders during the quarter. We expect several more tier-1 designs to
enter production in the coming quarters. NP-2 sales contributed
significantly to the third quarter revenues; we anticipate that
NP-2 revenues will continue growing during the fourth quarter, and
will account for the majority of our sales in the very near future.
Our future revenue ramp-up will continue to depend on the success
of our customers' new products that incorporate our network
processors and on market acceptance of these products." About
LanOptics LanOptics is focused on its subsidiary EZchip
Technologies, a fabless semiconductor company providing highly
integrated 10-Gigabit and 5-Gigabit network processors. EZchip's
network processors provide the flexibility and integration that
enable triple-play data, voice and video services in systems that
make up the new Carrier Ethernet networks. Flexibility and
integration make EZchip's solutions ideal for building systems for
a wide range of applications in telecom networks, enterprise
backbones and data centers. For more information on EZchip, visit
the web site at http://www.ezchip.com For more information on
LanOptics, visit the web site at http://www.lanoptics.com "Safe
Harbor" statement under the Private Securities Litigation Reform
Act of 1995: This release contains forward looking statements that
are subject to risks and uncertainties, including, but not limited
to, the impact of competitive products, product demand and market
acceptance risks, customer order cancellations, reliance on key
strategic alliances, fluctuations in operating results, delays in
development of highly-complex products and other risks detailed
from time to time in the Company's filings with the Securities and
Exchange Commission. These risks could cause the Company's actual
results for 2006 and beyond to differ materially from those
expressed in any forward looking statements made by, or on behalf
of LNOP. -0- *T LanOptics Ltd. Consolidated Statement of Operations
(U.S. Dollars in thousands, except per share amounts) Three Months
Ended Nine Months Ended September 30 September 30 (UnAudited)
(UnAudited) 2006 2005 2006 2005 ----------- ----------- -----------
----------- Revenues 2,074 687 5,087 4,563 Cost of Revenues 851 293
2,242 1,782 Amortization of Developed Technology 86 86 257 205
----------- ----------- ----------- ----------- Gross Profit 1,137
308 2,588 2,576 Research & Development, Net 2,093 1,815 6,370
6,584 In-process Research and Development Write-off -- -- -- 1,475
Selling, General & Administration 1,035 897 3,123 2,814
----------- ----------- ----------- ----------- Operating Loss
(1,991) (2,404) (6,905) (8,297) Financial Expenses, net (145) (110)
(324) (220) ----------- ----------- ----------- ----------- Loss
Before Minority Interest (2,136) (2,514) (7,229) (8,517) Minority
Interest in Loss of Subsidiaries -- -- 12 206 -----------
----------- ----------- ----------- Net Loss (2,136) (2,514)
(7,217) (8,311) =========== =========== =========== =========== Net
Loss per Share (0.18) (0.22) (0.62) (0.76) Weighted Average Number
of Shares Used in Computing Net Losses per Share 11,650,021
11,633,771 11,644,723 10,995,327 ----------- -----------
----------- ----------- *T -0- *T LanOptics Ltd. Consolidated
Balance Sheet (U.S. Dollars in thousands) September 30, December
31, ------------- ------------ 2006 2005 ------------- ------------
(UnAudited) (Audited) ASSETS CURRENT ASSETS: Cash, Cash Equivalents
& Marketable Securities 17,220 19,552 Trade Receivables, Net
1,958 931 Other Receivables 817 300 Inventories 2,767 2,098
------------- ------------ Total Current Assets 22,762 22,881
LONG-TERM INVESTMENTS: Prepaid Development and Production Costs,
Net 305 381 Severance Pay Fund 1,905 1,564 -------------
------------ Total Long-Term Investments 2,210 1,945 PROPERTY &
EQUIPMENT, NET 356 351 Developed Technology, Net 604 861 Goodwill
4,833 4,833 ------------- ------------ TOTAL ASSETS 30,765 30,871
============= ============ LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES: Trade Payables 1,149 338 Other Payables and
Accrued Expenses 2,539 1,916 ------------- ------------ Total
Current Liabilities 3,688 2,254 LONG TERM LIABILITIES: Accrued
Severance Pay 2,417 1,990 Long-Term Loan 3,275 -- Warrants to
Redeemable Preferred Shares 239 253 ------------- ------------
Total Long-Term Liabilities 5,931 2,243 EMPLOYEES STOCK OPTIONS IN
A SUBSIDIARY 396 -- PREFERRED SHARES IN A SUBSIDIARY 40,061 38,567
SHAREHOLDERS' DEFICIENCY: Share Capital 75 75 Additional Paid-in
Capital 61,252 61,185 Accumulated Other Comprehensive Loss (4) (36)
Accumulated Deficit (80,634) (73,417) ------------- ------------
Total Shareholders' Deficiency (19,311) (12,193) -------------
------------ TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIENCY 30,765
30,871 ============= ============ *T
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