ViryaNet Reports Second Quarter 2010 Results

Achieves Record Profits and Demonstrates Year-Over-Year Growth

SOUTHBOROUGH, Mass.--(BUSINESS WIRE)--ViryaNet Limited (VRYAF.OB), a leading provider of mobile workforce management solutions that optimize the full cycle of scheduling and dispatch processes for field service management announced financial results for the second quarter of 2010.

“Add to that strong relationships with our customer base as reflected in three new license deals and it translates into another strong quarter for us.”

For the second quarter ended June 30, 2010, ViryaNet reported revenues of $2.93 million, a 10% increase compared to the same period in 2009. Net income for the second quarter was $377,000 or $0.11 basic and $0.10 diluted earnings per share, compared to a net income of $36,000 or $0.01 per basic and diluted earnings share for the same period in 2009. Software license revenues for the second quarter of 2010 were $600,000, compared to $457,000 recorded in the second quarter of 2009. Maintenance and services revenues were $2.33 million in the second quarter of 2010, compared to $2.19 million in the second quarter of 2009.

“Continued success through our channel partners, including three wins by three different channel partners, continues to validate the strong market acceptance of our G4 mobile workforce management solution,” stated Memy Ish-Shalom, CEO of ViryaNet.“ Add to that strong relationships with our customer base as reflected in three new license deals and it translates into another strong quarter for us.”

Second Quarter Highlights:

• Announced that three different channel partners each signed new license agreements.
  • The European division of an International food and beverage giant will utilize the ViryaNet G4 mobile workforce management solution in an on-demand environment, and will provide both mobile workforce management and supply chain management functionality.
  • Vectren Corporation made the strategic decision to consolidate their field service scheduling and optimization processes onto a rebranded version of the ViryaNet G4 mobile workforce management solution.
  • A utility in the Western US outsourced their dispatch operations to a ViryaNet channel partner who, provides business processes outsourcing services by leveraging the ViryaNet platform.
• Announced that ViryaNet best in class G4 mobile workforce management platform successfully deployed at a number of large Utility and Telecommunication companies. ViryaNet expects tens-of-thousands of mobile field service personnel will be supported by the G4 platform by the end of 2010, driven by rapid adoption within the market as a result of a number of first-of-their kind capabilities. The ViryaNet G4 mobile workforce management system was built to enable efficient and effective decision-making for dynamic and complex scheduling and dispatch environments.
• Announced General Electric, a ViryaNet global partner, achieves prestigious Ecomagination™ status for its field force automation product. The GE announcement emphasizes the value of ViryaNet mobile workforce management solutions for GE's Smart Grid initiatives.
• Announced another successful ViryaNet field service customer conference. ViryaVision 2010 was held in Sanibel Harbour Resort & Spa in Ft. Myers, Florida. The event was sponsored by several ViryaNet partners including GE Energy, General Dynamics Itronix, and SageQuest and focused on achieving operational excellence with the ViryaNet G4 platform.

About ViryaNet

ViryaNet provides packaged industry solutions that intelligently guide, automate, and optimize both simple and complex field service work, resulting in operational excellence. ViryaNet's field service management software solutions specialize in the functions of scheduling and dispatching resources and enabling mobile field communication. Embedding industry best practices and utilizing a powerful workflow engine, web architecture, and visibility suite, the ViryaNet solutions allow companies to outperform their competition, better the customer experience, improve financial performance, and address regulatory compliance. ViryaNet possesses a 22-year history in the field service space, a vast number of customers across a variety of industries, and strong partnerships with leading platform and system integration companies. Headquartered in Southborough, MA, ViryaNet enjoys a worldwide presence with offices and customers located in North America, Europe, and the Pacific Rim. For more information, visit www.viryanet.com

Safe Harbor Statement

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, including statements regarding ViryaNet's expectations, beliefs, intentions, or strategies regarding the capabilities of its products, its relationships with its customers, its customer purchases, its future operational plans and objectives including integration of other businesses, its future business prospects, its future financial performance, its future cash position, and its future prospects for profitability. All forward-looking statements included in this document are based upon information available to ViryaNet Ltd. as of the date hereof, and ViryaNet Ltd. assumes no obligation to update any such forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks relating to ViryaNet's business include market acceptance of and demand for the Company's products, risks associated with a slow-down in the economy, risks associated with the financial condition of the company's customers, risks associated with competition and competitive pricing pressures, risks associated with increases in costs and operating expenses, risks in technology development and commercialization, the risk of operating losses, risks in product development, risks associated with international sales, and other risks that are set forth in ViryaNet's Form 20-F, dated July 15, 2010 and the other reports filed from time to time with the Securities and Exchange Commission. Reported results should not be considered an indication of future performance. You should not place undue reliance on these forward-looking statements, which speak only as the date hereof. ViryaNet disclaims any obligation to publicly update or revise any such forward-looking statements to reflect any change in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

VIRYANET AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
	December 31, 2009		June 30, 2010
	Audited		Unaudited
Assets
CURRENT ASSETS:
Cash and cash equivalents	$	156	$	77
Trade receivables		547		1,031
Other accounts receivable and prepaid expenses		97		132
Total current assets		800		1,240
NON-CURRENT ASSETS:
Severance pay fund		912		917
Other		60		59
Total non-current assets		972		976
PROPERTY AND EQUIPMENT, net		89		115
GOODWILL		7,169		7,134
OTHER INTANGIBLE ASSETS, net
Customer relationship		138		13
Other		73		-
Total intangible assets		7,380		7,147
Total assets	$	9,241	$	9,478

VIRYANET AND ITS SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
	December 31, 2009			June 30, 2010
	Audited			Unaudited
Liabilities and shareholders’ equity (deficiency)
CURRENT LIABILITIES:
Short-term bank credit	$	380		$	134
Current maturities of long-term bank loans		400			500
Trade payables		530			337
Deferred revenues		2,961			3,177
Other accounts payable and accrued expenses		2,061			1,907
Loan from related party		79			79
Total current liabilities		6,411			6,134
LONG-TERM LIABILITIES:
Long-term bank loan, net of current maturities		889			839
Long-term convertible debt		530			523
Long-term deferred revenues		641			624
Accrued severance pay		1,376			1,393
Total long-term liabilities		3,436			3,379
SHAREHOLDERS' EQUITY (DEFICIENCY):
Share capital		3,961			4,285
Additional paid-in capital		116,603			116,468
Accumulated other comprehensive income		3			(24	)
Accumulated deficit		(121,173	)		(120,764	)
Total shareholders' equity (deficiency)		(606	)		(35	)
Total liabilities and shareholders' equity (deficiency)	$	9,241		$	9,478

VIRYANET AND ITS SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except share and per share data
	Three months ended June 30						Six Months ended June 30
	2009			2010				2009		2010
	Unaudited			Unaudited				Unaudited		Unaudited
REVENUES:
Software licenses		$	457		$	600		$	1,013	$	877
Maintenance and services			2,194			2,329			4,356		4,797
Total revenues			2,651			2,929			5,369		5,674
COST OF REVENUES:
Software licenses			64			69			101		123
Maintenance and services			1,024			1,025			2,011		2,089
Total cost of revenues			1,088			1,094			2,112		2,212
GROSS PROFIT			1,563			1,835			3,257		3,462
OPERATING EXPENSES:
Research and development			274			213			579		520
Selling and marketing			711			766			1,446		1,532
General and administrative			444			455			905		916
Total operating expenses			1,429			1,434			2,930		2,968
INCOME FROM OPERATIONS			134			401			327		494
FINANCIAL EXPENSES, net			98			24			46		85
NET INCOME		$	36		$	377		$	281	$	409
BASIC NET EARNINGS PER SHARE		$	0.01		$	0.11		$	0.09	$	0.12
WEIGHTED AVERAGE NUMBER OF  SHARES USED IN COMPUTION OF  BASIC NET EARNINGS PER SHARE			3,157,889			3,456,729			3,144,706		3,404,640
DILUTED NET EARNINGS PER SHARE		$	0.01		$	0.10		$	0.08	$	0.11
WEIGHTED AVERAGE NUMBER OF  SHARES USED IN COMPUTION OF  DILUTED NET EARNINGS PER  SHARE			3,521,525			3,870,842			3,508,343		3,831,860