RiT Technologies Reports Third Quarter 2004 Results

Revenue Growth & Increasing Gross Margins Substantially Reduce Net Loss;

OEM Success and Large Carrier Deals Contribute to Larger Sales Pipeline

Nov 04, 2004, 00:00 ET from RiT Technologies

    TEL AVIV, Israel, November 4 /PRNewswire-FirstCall/ -- RiT Technologies
 (NASDAQ:   RITT), the pioneer and world-leading provider of intelligent
 physical layer solutions, today announced financial results for the third
 quarter and nine months ended September 30, 2004.
     Revenues for the third quarter of 2004 continued to increase: up 22% to
 $4,331,000, from $3,547,000 in the third quarter of 2003, and up 7% from
 $4,061,000 in the second quarter of 2004. Net loss for the quarter dropped to
 ($801,000), or ($0.06) per share, from ($3,707,000), or ($0.42) per share, in
 the third quarter of 2003, and ($1,100,000), or ($0.12) per share, for the
 second quarter of 2004. For comparison purposes, please note: the Company's
 weighted average number of ordinary shares increased to 12,875,583 in the
 third quarter of 2004 compared with 8,910,352 in the third quarter of 2003
 and 8,912,352 in the second quarter of 2004.
     Revenues for the first nine months of 2004 increased 16% to $12,776,000,
 from $11,003,000 for the first three quarters of 2003. Net loss for the
 period dropped to ($2,784,000), or ($0.27) per share, compared with
 ($5,470,000), or ($0.61) per share for the first nine months of 2003. For
 comparison purposes, please note: the Company's weighted average number of
 ordinary shares increased to 10,247,946 in the first nine months of 2004
 compared with 8,910,352 in the first three quarters of 2003.
     Commenting on the results, Liam Galin, President and CEO, said, "We are
 pleased to report our third quarter of year-over-year revenue growth, our
 highest gross margins in five quarters, and a significantly reduced net loss,
 all despite the normal third quarter seasonality which affected our European
 sales. These encouraging results reflect growth in Enterprise sales via our
 direct channels and OEM partners together with the reawakening of our Carrier
 business, developments that have also expanded our pipeline of PairView(TM)
 and PatchView(TM) opportunities.
     "We continue to enjoy increasing awareness of the benefits of Intelligent
 Physical Layer Management (IPLMS) and Outside Plant Qualification systems.
 With more and larger-scale IPLMS tenders coming to market throughout North
 America and Europe, our OEM and Strategic Alliance (OSA) partners have
 stepped up their activities and begun delivering impressive wins. The
 momentum of our Carrier business has also increased, with two new
 PairView(TM) deals delivered during the quarter and several large final-stage
 deals, some that we expect to begin shipping before the end of the year."
     Mr. Galin concluded, "As a result of these positives -- a fertile sales
 environment, increasing partner activities, and a growing backlog of large
 Carrier and Enterprise deals -- we feel that we are well-positioned. We
 therefore expect a stronger fourth quarter characterized by continued
 year-over-year revenue growth."
     The Company will host a conference call to discuss these results on
 Thursday, November 4th, at 10:00 A.M. Eastern Time/ 17:00 Israel time. To
 participate, please call 1-800-322-0079 from the US (toll free), or
 +1-973-935-2407 International, and use the ID code: RIT Q3. A replay of the
 call will be available beginning at 12 noon ET on the day of the call for 14
 days by calling 1-877-519-4471 from the US (toll free), or +1-973-341-3080
 from the rest of the world, and using the ID code: 5304198.
     About RiT Technologies
     RiT Technologies pioneered the development of intelligent physical layer
 solutions, designed to provide superior control, utilization and maintenance
 of networks. RiT's innovative solutions help customers capitalize on network
 investments and reduce cost of ownership.
     RiT's Enterprise Solutions include PatchView(TM) for full web-based
 management, planning and troubleshooting of network physical layer
 connectivity, and SMART Cabling(TM) System components for single-source,
 end-to-end structured cabling solutions.
     PairView(TM) and PairQ(TM) Carrier Solutions help telcos capitalize on
 outside plant investments by giving them reliable, mass-verified and
 qualified infrastructure and connectivity databases.
     With a global sales network spanning 60 countries, RiT's key customers
 include major financial institutions, corporations and global
 telecommunications companies such as: Deutsche Telekom, Alcatel, TELMEX,
 TELENOR, The New York Mercantile Exchange (NYMEX), ING Barings, INVESCO,
 DIAGEO, Daewoo, and Reuters.
     RiT is a member of the RAD group, a world leader in communications
     For more information, please visit our website: www.rittech.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 and pricing, product demand and market acceptance, new
 product development, reliance on key strategic alliances, availability of raw
 materials, the regulatory environment, fluctuations in operating results and
 other risk detailed from time to time in the Company's filings with the
 Securities Exchange Commission.
     This press release is available at http://www.rittech.com/ and
     RiT Technologies             PORTFOLIO PR
     Simona Green                 Paul Holm / Jerry Cahn
     VP Finance                   +1-212-736-9224
     +972-3-766-4249              pholm@portfoliopr.com
     simonag@rit.co.il            jcahn@portfoliopr.com
                               RiT TECHNOLOGIES LTD.
                        STATEMENTS OF OPERATIONS (U.S GAAP)
                 (U.S dollars in thousands, except per share data)
                              For the three                 For the nine
                              months ended                  months ended
                              September 30,                September 30,
                               (Unaudited)                  (Unaudited)
                         2004           2003          2004           2003
                        U.S. $         U.S. $        U.S. $         U.S. $
     Sales              4,331           3,547        12,776         11,003
     Cost of sales      2,401           4,143         7,389          8,155
     Gross profit       1,930           (596)         5,387          2,848
     Research and
     Research and         952           1,051         2,755          2,918
     Less -               109             -             286            116
     Research and         843           1,051         2,469          2,802
     Sales and          1,452           1,570         4,542          4,405
     General and          433             499         1,168          1,157
     Total operating    2,728           3,120         8,179          8,364
     Operating loss     (798)         (3,716)       (2,792)        (5,516)
     Financial            (3)               9            8              46
     income, net
     Loss for the       (801)         (3,707)       (2,784)        (5,470)
     Basic and
     diluted loss
     per share         (0.06)          (0.42)        (0.27)         (0.61)
     Basic and
     average number
     of shares     12,875,583       8,910,352    10,247,946      8,910,352
                               RiT TECHNOLOGIES LTD.
                       CONSOLIDATED BALANCE SHEET (U.S GAAP)
                             (U.S dollars in thousands)
                                         September 30,       December 31,
                                             2004                2003
                                           (Unaudited)         (Audited)
     Current Assets
     Cash and cash equivalents               6,147             2,714
     Marketable securities                     540               560
     Trade, net                              3,602             3,369
     Other                                     914               767
     Inventories                             4,713             4,760
     Total Current Assets                   15,916            12,170
     Property and Equipment
     Cost                                    3,391             3,209
     Less - accumulated depreciation         3,015             2,858
                                               376               351
     Assets held for severance benefits      1,456             1,435
     Total Assets                           17,748            13,956
     Liabilities and Shareholders'
     Current Liabilities
     Trade payables                          2,879             3,225
     Other payables and accrued expenses     2,406             2,153
     Total Current Liabilities               5,285             5,378
     Long-term Liabilities
     Liability for employees severance       1,926             1,970
     Total Long-term Liabilities             1,926             1,970
     Total Liabilities                       7,211             7,348
     Shareholders' Equity
     Share capital                             373               260
     Additional paid-in capital             30,320            23,699
     Capital reserves                          229               229
     Accumulated other comprehensive           (6)                15
     Notes receivable from employees          (27)              (27)
     Accumulated deficit                  (20,352)          (17,568)
     Total Shareholders' Equity             10,537             6,608
     Total Liabilities and Shareholders'    17,748            13,956

SOURCE RiT Technologies