PR Newswire | May 6, 2021 05:14PM EDT

05/06 16:09 CDT

MTS Announces 2020 Half Year 2020 Financial Results RA'ANANA, Israel and POWDER SPRINGS, Ga., May 6, 2021

RA'ANANA, Israel and POWDER SPRINGS, Ga., May 6, 2021 /PRNewswire/ -- Mer Telemanagement Solutions Ltd. (MTS) (Nasdaq Capital Market: MTSL), a global provider of telecommunications expense management (TEM), call accounting and contact center software, today released its financial results for the six and twelve months ended December 31, 2020.

On April 15, 2021, we entered into a definitive agreement and Plan of Merger (the "Merger Agreement") with SharpLink, Inc., a leading online technology company that works with sports leagues, fantasy sports sites and media companies to connect fans to relevant and timely betting content sourced from its sportsbook partners.

Financial information

The Company recorded revenues of $1.9 million for the six months ended December 31, 2020, compared with $2.6 million for the six months ended December 31, 2019. The Company incurred losses of $(1.2) million for the six months ended December 31, 2020, or $(0.17) per diluted share compared with net income of $85,000, or $0.01 per diluted share, for the comparable period in 2019. On a non-GAAP basis (as described and reconciled below), The Company posted a net loss of

$(224,000) or $(0.03) per diluted share, for the six months ended December 31, 2020 compared with net income of $262,000, or $0.04 per diluted share, for the comparable period in 2019.

The Company recorded revenues of $4 million for the year ended December 31, 2020 compared with $5.2 million for the comparable period in 2019. The Company incurred a net loss of $(1.8) million or $(0.30) per diluted share, for the year ended December 31, 2020 compared with a net loss of $(135,000) or $(0.03) per diluted share for the comparable period 2019. On a non-GAAP basis (as described and reconciled below), the Company posted a net loss of $(376,000), or $(0.06) per diluted share for the year ended December 31, 2020compared with net income of $79,000, or $0.02 per diluted share for the comparable period in 2019.

During the period 2018-2020 an institutional investor invested, $3 million in a newly-created class of convertible preferred shares and $0.2 million in ordinary shares of the Company, at a price per preferred share and ordinary share of $1.14. The preferred shares are convertible into ordinary shares on a one to one basis. The stock purchase agreement with the institutional investor included a green shoe option for future investment of up to $1.5 million in the Company's preferred shares at a price per preferred share of $1.14. During, 2019 and 2020, the institutional investor fully exercised its green shoe option as part of its $3 million investment.

As previously reported on April 15, 2021, we entered into a definitive agreement and Plan of Merger (the "Merger Agreement") with SharpLink, Inc. ("SharpLink"), a leading online technology company that works with sports leagues, fantasy sports sites and media companies to connect fans to relevant and timely betting content sourced from its sportsbook partners, and New SL Acquisition Corp., a company incorporated under the laws of the State of Delaware and a wholly-owned subsidiary of the Company ("Merger Sub"). On the terms and subject to the satisfaction of the conditions described in the Merger Agreement, including approval of the transaction by the Company's shareholders, Merger Sub will be merged with and into SharpLink (the "Merger") with SharpLink surviving the Merger as a wholly-owned subsidiary of the Company.

Mr. Roy Hess, Chief Executive Officer of MTS, said, "We are excited to achieve this major milestone by signing the definitive merger agreement with SharpLink, a promising leading online technology company that works with sports leagues, fantasy sports sites and media companies. We are also excited about our future growth strategy as well as the current industry's rapid expansion both in the U.S. and globally. Our results in 2020 reflect the substantial reduction of our ongoing operations which were impacted by the COVID-19 pandemic. During 2020, the Company continued implementing its efficiency plan and reduced its operational expenses which contributed to improved operating margins. Excluding the impact of one-time non-cash impairment charges, our net loss for the second half of 2020 was $(224,000) on a non-GAAP basis. In June 2019, we introduced Omnis - Contact Center Software with "Out-Of-The-Box" capabilities and open channel architecture. During the end of 2019, we started to see initial revenues from this new product, which we consider to be our main growth engine in the coming years. While our marketing of this new product was delayed by the onset of the pandemic we intend to accelerate its introduction in 2021." Mr. Hess concluded, "we are looking forward to completing the SharpLink transaction in the near future and beginning a new chapter in the life of our company."

About MTS

Mer Telemanagement Solutions Ltd. (MTS) is focused on innovative products and services for enterprises in the area of telecom expense management (TEM), call accounting and contact center software. Headquartered in Israel, MTS markets its solutions through wholly-owned subsidiaries in Israel, the U.S and Hong Kong, as well as through distribution channels. For more information please visit the MTS web site: www.mtsint.com.

Certain matters discussed in this news release are forward-looking statements that involve a number of risks and uncertainties including, but not limited to, the Company's ability to achieve profitable operations, its ability to continue to operate as a going concern, its ability to continue to meet NASDAQ continued listing requirements, the impact of COVID-19 on the Company and its customers, customer acceptance of new products, the impact of competitive products and pricing, market acceptance, the lengthy sales cycle, proprietary rights of the Company and its competitors, risk of operations in Israel, general economic conditions and other risk factors detailed in the Company's annual report and other filings with the United States Securities and Exchange Commission.

Contacts:

Ofira Bar CFO Tel: +972-9-7777-540 Email: ofira.bar@mtsint.com

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

ASSETS December 31,

2020 2019

CURRENT ASSETS:

Cash and cash equivalents $ 1,504 $ 1,732

Restricted cash 1,003 1,464

Trade receivables (net of allowance for credit losses of $69 and $75, at 407 499 December 31, 2019 and 2020, respectively

Other accounts receivable and prepaid expenses (Note 3) 399 236

Assets of discontinued operations(Note 1b) 178 172

Total current assets 3,491 4,103

NON- CURRENT ASSETS:

Severance pay fund 252 653

Property and equipment, net (Note 4) 35 62

Deferred taxes (Note 7) 171 -

Goodwill 1,502 3,225

Total non-current assets 1,960 3,940

Total assets $ 5,451 $ 8,043

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

December 31,

2020 2019

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:

Trade payables $ 114 $ 149

Deferred revenues 745 962

Accrued expenses and other liabilities (Note 5) 1,769 2,317

Liabilities of discontinued operations (Note 1b) 496 516

Total current liabilities 3,124 3,944

LONG-TERM LIABILITIES:

Accrued severance pay 306 831

Deferred tax liability (Note 7) - 163

Total long-term liabilities 306 994

COMMITMENTS AND CONTINGENT LIABILITIES (Note 6)

SHAREHOLDERS' EQUITY (Note 9):

Share capital -

Ordinary shares of NIS 0.03 par value: Authorized: 17,000,000 shares atDecember 31, 2020 and 2019; Issued: 4,426,791 and 3,614,208 shares at 37 30December 31, 2020 and 2019, respectively; Outstanding 4,424,991 and3,612,408 shares at December 31, 2020 and 2019, respectively

Preferred Shares of NIS 0.03 par value: Authorized: 3,000,000 shares atDecember 31, 2020 and 2019; Issued and Outstanding: 1,831,579 and 15 162,008,772 shares at December 31, 2020 and 2019, respectively

Additional paid-in capital 31,360 30,635

Treasury shares at cost (1,800 Ordinary shares at December 31, 2020 and (29) (29) 2019)

Accumulated deficit (29,362) (27,547)

Total shareholders' equity 2,021 3,105

Total liabilities and shareholders' equity $ 5,451 $ 8,043

CONSOLIDATED STATEMENTS OF OPERATIONS

U.S. dollars in thousands (except share and per share data)

Twelve months ended Six months ended December 31, December 31,

2020 2019 2020 2019

Audited Audited Unaudited Unaudited

Revenues:

Services $ 3,383 $ 4,273 $ 1,568 $ 2,094

Product sales 635 920 347 499

Total revenues 4,018 5,193 1,915 2,593

Cost of revenues:

Services 1,511 1,486 818 701

Product sales 284 371 111 175

Total cost of revenues 1,795 1,857 929 876

Gross profit 2,223 3,336 986 1,717

Operating expenses:

Research and development - 545 - 277

Selling and marketing 752 817 293 264

General and administrative 1,867 1,890 930 912

Goodwill impairment 1,723 254 1,106 254

Total operating expenses 4,342 3,506 2,329 1,707

Operating income (loss) (2,119) (170) (1,343) 10

Financial income (expenses), net 16 (18) 8 7

Income (loss) before taxes on income (2,103) (188) (1,335) 17

Taxes on income (tax benefit), net (325) 4 (217) 3

Net Income (loss) from continuing operations (1,778) (192) (1,118) 14

Income (loss) from discontinued operations (37) 57 (36) 71

Net Income (loss) $ (1,815) $ (135) $ (1,154) $ 85

Net loss per share:

Basic and diluted net profit (loss) per share from continuing $ (0.29) $ (0.04) $ (0.16) $ 0.00 operations

Basic and diluted net profit (loss) per share from ( 0.01) 0.01 ( 0.01) 0.01 discontinued operations

Basic and dilutednet loss per share $ (0.30) $ (0.03) $ ( 0.17) $ 0.01

Weighted average number of shares used in computing 5,954,795 5,013,374 6,873,156 5,864,372 basic net profit (loss) per share

Weighted average number of shares used in computing 5,954,795 5,081,865 6,873,156 6,031,193 diluted net profit (loss) per share

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

U.S. dollars in thousands (except share and per share data)

Twelve months ended Six months ended December 31, December 31,

2020 2019 2020 2019

Unaudited Unaudited Unaudited Unaudited

GAAP net income (loss) from continuing operations (1,778) (192) (1,118) 14

Stock-based compensation expenses 21 47 7 34

Intangible assets amortization, net of tax effects - 21 - 11

Goodwill impairment, net of tax effect 1,381 203 887 203

Non-GAAP net Income (loss) $ (376) $ $ (224) $ 262 79

Net loss per share:

GAAP basic and diluted net profit (loss) per share $ (0.29) $ (0.04) $ (0.16) $ 0.00

Non-GAAP basic and diluted net profit (loss) per $ (0.06) $ 0.02 $ (0.03) $ 0.04share

Weighted average number of shares used in computing 5,954,795 5,013,374 6,873,156 5,864,372non-GAAP basic net profit (loss) per share

Weighted average number of shares used in computing 5,954,795 5,081,865 6,873,156 6,031,193non-GAAP diluted net profit (loss) per share

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SOURCE Mer Telemanagement Solutions Ltd. (MTS)