REG - Ethernity Networks - Results for the Year Ended 31 December 2024
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RNS Number : 9588O Ethernity Networks Ltd 30 June 2025
30 June 2025
Ethernity Networks Ltd.
("Ethernity" or the "Company")
Results for the Year Ended 31 December 2024
Ethernity Networks Ltd (AIM: ENET.L; OTCMKTS: ENETF), a leading supplier of
data processing and PON semiconductor technology for networking appliances,
today announces its audited results for the year ended 31 December 2024.
Key Highlights:
· FY 2024 revenue of $1.38 million represents 63% decrease vs. 2023
revenues (2023: $3.78 million), while gross profit decreased by 46% to $1.3m
(2023: $2.3m) ,however, the gross margin percentage increased to 92.1% in 2024
from 61.9% in 2023 reflecting an increase of 30.2%
· Operating loss decreased from $5.3 million in 2023 to $5.1 million in
2024, reflecting a decrease of 4%
· EBIDTA loss decreased by 10% to $3.48 million (2023: $3.86 million)
· Net cash funds raised during the year amounted to $1.86 million
· Cash and cash equivalents at 31 December 2024 of $0.05 million
($0.1million restricted cash in other long term assets) (31 December 2023:
$1.99 million). During January 2025 the Company collected $0.39 million from
its customers
David Levi, Chief Executive, said: "In October 2023, the Company entered into
a Temporary Suspension of Proceedings ("TSP") process-a significant and
unexpected development following nearly 20 years of operations. The Company
faced this period with considerable uncertainty but succeeded in generating
interest in its Universal Edge Platform ("UEP") offering, which integrates
Ethernity's patented data processing technology, software applications, and a
fully production-ready appliance. This traction ultimately led to the ASIC
opportunity that the Company is now focused on executing.
"Most importantly, and notably, the Company successfully completed full
repayment to all creditors under the settlement plan earlier this year-an
achievement that allows the Company to move forward without the constraints of
operating under a creditor arrangement.
"The past year-and particularly the fourth quarter of 2024-brought a renewed
sense of excitement and momentum within both the management team and the
Board, largely driven by the growing potential of our transformative ASIC
business. This was further validated by the successful and extensive testing
of our FPGA-based UEP, which demonstrated strong performance and market
relevance.
"We are making meaningful progress toward establishing a differentiated and
scalable ASIC business that leverages our core strengths in networking and
data processing. Our focus is on delivering a cutting-edge ASSP
(Application-Specific Standard Product) solution that addresses two key
markets: wireless backhaul and broadband access. For the wireless backhaul
segment, our offering includes patented Layer-1 bonding and a highly
efficient, patented routing engine that enable cost-effective high-capacity
transport and other unique features for that market. On the broadband side,
our solution incorporates advanced PON (Passive Optical Network) technologies
along with the associated software stack-providing an integrated platform
capable of supporting next-generation access networks.
"I believe this dual-market strategy, grounded in proprietary technology and
strong customer interest, will significantly elevate our market profile and
position Ethernity Networks as a leading semiconductor innovator in the access
and edge networking domains. We look ahead with optimism and determination as
we work to bring this vision to market"
Posting of Annual Report
The annual report and accounts for the year ended 31 December 2024 is being
posted to shareholders shortly and will be available on the Company's website
at www.ethernitynet.com. The notice of annual general meeting will be
dispatched in due course.
For further information, please contact:
Ethernity Networks Ltd Tel: +972 3 748 9846
David Levi, Chief Executive Officer
Tomer Assis, Chief Financial Officer
Allenby Capital Limited (Nominated Adviser and Joint Broker) Tel: +44 (0)20 3328 5656
James Reeve / Piers Shimwell (Corporate Finance)
Amrit Nahal / Stefano Aquilino (Sales and Corporate Broking)
CMC Markets UK plc (Joint Broker) Tel: +44 (0)20 3003 8632
Douglas Crippen
Peterhouse Capital Limited (Joint Broker) Tel: +44 (0)20 7562 0930
Lucy Williams / Duncan Vasey
About Ethernity (www.ethernitynet.com)
Ethernity Networks, headquartered in Israel, Ethernity Networks (AIM: ENET.L
OTCMKTS: ENETF) provides innovative data processing and Passive Optical
Network ("PON") semiconductor technology for networking appliances. The
Company's comprehensive networking and security solutions deliver a Carrier
Ethernet Switch Router data plane and control software, featuring a rich set
of networking capabilities, robust security, and a wide array of virtual
function accelerations to optimize telecommunications networks.
Ethernity's semiconductor technology has been deployed in both FPGA and ASIC
form factors and has been integrated into over one million networking
platforms worldwide. Its complete, flexible solutions adapt rapidly to
customers' evolving needs, reducing time-to-market and enabling efficient
deployment of 5G, edge computing, mobile backhaul, carrier Ethernet, broadband
access networks, and various NFV appliances including 5G UPF, vRouter, and
vBNG.
Chairman's Statement
I am pleased to present my report as Chairman of the Board.
2024 began under challenging circumstances as the Company continued to operate
under a creditor arrangement. Despite these difficulties, I am pleased to
report that, as of the date of this report, the Company has successfully
fulfilled all of its obligations under the creditor settlement agreement. This
marks an important milestone in restoring stability and credibility to the
business.
During this period, the Company experienced a decline in revenue, primarily
due to external factors that impacted potential new customers of the Company
and, more significantly, the uncertainty associated with the Company operating
under creditor oversight. This uncertainty impacted customer confidence and
limited our ability to execute on new opportunities.
Despite these headwinds, I am encouraged by the $1.05m contract signed with a
Tier-1 US Aerospace vendor in 2024, which was subsequently extended to $1.3m
following the year-end, and the significant interest we have received in
recent months-particularly in the final quarter of FY2024-regarding the
potential fabrication of an ASSP (Application Specific Standard Product) to be
co-funded by an interested OEM. This initiative is based on the Company's
existing, fully tested design currently operating on Ethernity's Universal
Edge Platform (UEP). The UEP has already been evaluated and validated by
several major OEMs, including a Tier-1 wireless backhaul vendor, underscoring
its technical robustness and market readiness.
Further strengthening Ethernity's strategic position is the growing
recognition of the Company's Passive Optical Network (PON) technology as a
valuable asset within the industry. In parallel, whilst contracts have not
been signed, we are making substantial progress in our discussions with the
Tier-1 wireless backhaul OEM around the development of an ASSP solution that
would not only meet their specific needs but also be offered to the broader
market.
With these developments in mind, I am optimistic that the Company will secure
the necessary funding to execute its transformative five-year ASSP
(Application-Specific Standard Product) business plan. This plan leverages our
proven technology, strategic IP, and customer relationships to position the
Company as a key player in the evolving semiconductor landscape.
I would like to thank our employees, partners, and shareholders for their
continued support and commitment during this transitional period. I look
forward to the next phase of growth with renewed confidence.
Outlook
The Company is optimistic of securing a strategic agreement for the
fabrication of an ASSP with a key OEM in the coming months.
In parallel, the Company sees potential to generate short-term revenue from
its FPGA-based solutions, including the ENET Switch/Router and PON products,
as outlined in the recent PON Strategy announcement released on 10 June 2025.
Subject to securing the necessary funding, I am confident that we can build a
strong business built on the foundation of our proven intellectual property
and existing solutions.
Yosi Albagli
Chairman
30 June 2025
Chief Executive's Statement
By the end of January 2024, the Company successfully exited the temporary
suspension of proceedings ("TSP") process and initiated a strategic transition
aimed at leveraging the completion of the first UEP (Universal Edge Platform)
development as a fully integrated system product. This marks a key evolution
beyond offering standalone FPGA SoCs (systems on chips), as Ethernity now
delivers comprehensive, end-to-end solutions that include the complete ENET
implementation on FPGA SoC, hardware platforms, and application software.
By moving to a system-based approach, Ethernity empowers customers to achieve
faster time-to-market thereby accelerating revenue generation. The
all-integrated UEP appliances-combining advanced FPGA SoCs, Ethernity's
semiconductor expertise, and robust application software, eliminate the need
for extensive in-house product development. This enables Ethernity's
customers, including those without significant in-house engineering resources,
to quickly bring high-performance solutions to the market.
This strategic shift positions Ethernity to strengthen its competitive market
presence, expand its OEM customer base, and attract new partners capable of
contributing meaningfully to the Company's future growth.
Ethernity Networks stands out for its cost-effective, patented routing data
plane functionality implemented on FPGAs. This technology provides our
customers with a significant competitive advantage - they can deliver Carrier
Ethernet services using our base data processing engine at an attractive price
point, while retaining the flexibility to unlock advanced routing capabilities
via software licensing. This unique routing engine offering embedded within
the ENET Data processor pipe line was the key reason a Tier-1 Aerospace OEM
selected Ethernity as its supplier, entering into a licensing agreement
initially valued at $1.05 million, which was subsequently extended to
approximately $1.35 million in H1 2025.
Our patented routing solution, embedded within the UEP, was fully validated
and has now been tested and integrated successfully into this customer's
platform.
While we are encouraged by the contract signed with this Tier-1 U.S. Aerospace
OEM, it is disappointing that we did not secure the anticipated FPGA SoC
orders from our U.S. fixed wireless customers, despite earlier discussions and
indications suggesting otherwise. This outcome was primarily due to a nearly
50% price increase in the specific FPGA SoC compared to 2022, including a 20%
price hike implemented in Q4 2024, which influenced the customer's procurement
decision.
Additionally, we were unable to generate further FPGA-based business for the
UEP during 2024. One potential engagement was impacted by the customer's
financial difficulties, while another opportunity, centered around licensing
discussions and FPGA SoC procurement, did not materialize due to the
customer's preference to acquire a complete end-product from Ethernity under a
resale model, which did not align with the Company's business strategy.
In addition, a third potential FPGA customer, a Tier-1 wireless backhaul OEM
that evaluated our UEP platform during 2024, proposed transitioning the
FPGA-based design directly into an ASSP solution. The OEM noted that the UEP
already encompasses all the required features for their platform, with the key
advantage being its full integration with software applications. This level of
integration significantly reduces the development burden typically placed on
OEMs when adopting new silicon solutions. Recognizing the value of a
ready-to-deploy, fully integrated system, the OEM has expressed a potential
willingness to co-fund the development and, in a request for information (RFI)
submitted to the Company, indicated that it would be willing to allow
Ethernity to commercialize the resulting device as an ASSP for the global
market.
In parallel to the testing conducted by the aforementioned Tier-1 OEM, another
leading wireless backhaul vendor evaluated our product during 2024. Although
the process was temporarily halted due to internal personnel team changes, the
evaluation later resumed under a different group within the company. Following
this renewed engagement, the vendor has recently expressed strong interest in
acquiring the current UEP as a turnkey solution to support a unique wireless
use case, one that Ethernity's UEP is uniquely capable of addressing. Beyond
their immediate product interest, the vendor also demonstrated enthusiasm for
our planned ASSP, highlighting a potential willingness to co-fund its
development in collaboration with other strategic partners (See Strategic
Section for further details).
The ASSP opportunity, if realized, could represent a pivotal step in
Ethernity's transformation into a leading provider of high-performance,
cost-efficient ASSPs for the networking market.
As a result, management shifted the Company's focus toward building a
comprehensive development and financial plan for the proposed ASSP device.
This included obtaining detailed cost estimates from various sources to ensure
an accurate and sustainable execution strategy.
In parallel, the Company began transitioning its R&D efforts toward the
implementation of the ASSP, aligning technical resources with the strategic
direction of the business.
The Board believes that Ethernity's ASSP will offer a compelling value
proposition for OEM customers by combining the power of our cost-effective
Data Processing Unit (DPU) SoC combining patented routing LPM (Longest Prefix
Match) algorithm, patented L1 bonding, and other long standing architectural
patents, with our innovative low-latency PON technology. This comprehensive
suite provides a versatile umbrella of wired, fiber and wireless access
solutions. Therefore, with a clear ASSP roadmap the Company anticipates, based
on the customer interactions as detailed in this report, that there is an
opportunity to build a strong business foundation going forward, serving the
growing addressable markets of:
· Surging Bandwidth Demands: The ever-increasing demand for
bandwidth, driven by cloud services and artificial intelligence at the network
edge, creates a significant opportunity for Ethernity's solutions.
· IP-Based Network Expansion: The growth of IP-based
next-generation networks is a key market driver for our high-performance
offerings.
· Fiber Access Boom: The widespread deployment of fiber optics and
the dominance of PON technology for fiber access perfectly aligns with
Ethernity's strengths.
· Rise of Edge Computing: The growing adoption of edge computing
deployments creates a strong demand for our low-latency solutions.
· 5G Expansion: The global rollout of 5G networks fuels the need
for innovative wireless backhaul solutions, a core competency of Ethernity.
· Carrier Ethernet Adoption: The increasing adoption of Carrier
Ethernet for wireless backhaul applications presents a significant growth
opportunity.
Current trading
As reported in the trading update dated 23 April 2025 the Company anticipated
collecting $700,000 during the first four months of 2025, of which $400,000
was received at the beginning of January 2025. The Company also announced
receipt of an additional purchase order valued at $290,000 from the Tier-1
U.S. Aerospace OEM.
The majority of this order was successfully delivered and recognized in the
second quarter of 2025, along with completion of the original $1.05 million
base licensing agreement following completion of testing and porting of the
deliveries on the customer platform. As part of this Completion $160,000 was
regcognised as revenue. As a result, total revenue recognized from this
customer during First Half of 2025 (H1 2025) amounted to approximately
$498,000.
In addition to the Aerospace contract, the Company also generated recurring
income from royalties and maintenance services provided to other customers.
Recap on ASIC opportunity, strategy and outlook
Following extensive testing throughout 2024 by Tier-1 OEM vendors, the
Company's UEP solution, featuring its patented Layer 1 (L1) link bonding
technology and a fully integrated L2/L3 networking stack, demonstrated strong
performance and market fit. As a result, in Q4 2024, one of the leading
vendors approached the Company with a request to obtain a quote for the
development of an ASSP specifically tailored for mobile backhaul over
microwave and E-Band networks which would also be made available to the global
market.
In response, the Company developed a comprehensive business and development
plan for the proposed ASSP. This initiative has since attracted significant
interest, with four major wireless OEMs, collectively representing
approximately 49% of the global wireless backhaul market, expressing an
interest to potentially adopt the device.
The Board believes that these vendors collectively recognize the strategic
value of the Company's integrated intellectual property portfolio, comprising
the production-ready RTL code currently running on FPGA, the fully integrated
L2/L3 networking software stack, and the complete, operational UEP platform
that forms the basis for the proposed ASSP. Based on internal evaluations and
industry benchmarks, Ethernity estimates that the value of these combined
technology assets to a wireless vendor of Ethernity's existing FPGA based UEP
offering ranges between $16 million and $25 million compared to developing the
ASIC solution from scratch. Furthermore, the Company estimates that should
OEMs decide to develop such an ASIC from scratch, it would take them
approximately three years to reach the level of a production-ready platform
that the Company has already achieved, after which they could only begin the
ASIC development process, which would result in ASIC availability in
approximately five years. This underscores not only the commercial potential
of the ASSP initiative but also the broader market recognition of the
Company's differentiated and mature technology.
In response, subject to securing the funding that would be required to develop
the ASSP, the Company plans to transition its business operations, with the
strategic objective of becoming a semiconductor vendor.
The planned ASSP will address key requirements across the wireless backhaul,
carrier switch/router (CSR), Carrier Ethernet, and broadband
markets-positioning the Company to deliver high-performance, cost-effective
semiconductor solutions to leading global OEMs.
A number of wireless OEMs have indicated that they would be willing to
participate in joint funding of the ASSP with other vendors, however this
approach may create complications in future pricing and gross margin for the
ASSP opportunity. Therefore, with the expanded ASSP business into Broadband
market with the inclusion of PON, the Company is aiming to bring in one
strategic partner from the wireless domain and one from the PON domain.
Discussions regarding co-funding with one of the leading global Wireless
Backhaul OEMs are progressing well. The OEM has allocated additional internal
resources to support the engagement, which is expected to help facilitate its
execution and contribute significantly to the successful implementation of the
device.
Whilst no contracts have been signed to date, the business scope between
Ethernity and this leading wireless backhaul OEM, has been largely agreed in
principal, subject to final alignment and contract. This business scope
forms the foundation for the ongoing business and technical discussions and
the Company hopes to sign a letter of intent with this partner in the near
future.
The scope being finalised with the OEM includes terms which would result in a
significant NRE to partially fund the development of the ASSP/ASIC, along with
an extensive commitment for device orders following availability. Given the
strategic importance of volume production in fabricating an ASSP/ASIC, the
device will also be offered to other Wireless Backhaul OEMs which could
generate significant further revenue for the Company once available.
Furthermore, by integrating PON capabilities into the ASSP, the same device
would be extended to serve the Broadband market-potentially generating revenue
on par with the wireless backhaul segment.
Furthermore, the Company is currently focusing its technical and commercial
discussion with other vendors that are familiar with Ethernity's offerings and
value what we offer for the PON market. We anticipate that one of the OEMs
that generates significant revenue in the remote OLT market, will partially
co-fund the ASSP.
Should these opportunities progress as expected, the Company is confident that
it would be able to secure the required funding to be able to develop the ASSP
alongside the co-funding from its lead wireless backhaul OEM partners.
While the development of the ASSP is expected to take approximately 18-20
months from project initiation, the majority of the Company's revenue during
this period would be derived from the NRE associated with the co-funding of
the ASSP, along with additional revenue that the Company expects to generate
in the short-term from its FPGA-based solutions, including the ENET
Switch/Router and PON products, from licensing and selling customed FPGA based
hardware solution.
Once the ASSP is available, it is anticipated that the Company's revenue will
primarily come from supplying the device at a higher gross margin, along with
associated services related to the new ASSP.
Subject to securing the necessary funding, I am confident that we can
establish a transformative business operation built on the foundation of our
proven intellectual property and existing solutions, which, along with the
future availability of the ASSP, has the potential to generate significant
revenue for the Company and as a leader in the semiconductor telecom access
networking and broadband market.
David Levi
Chief Executive Officer
30 June 2025
Financial Review
Financial Performance
I am pleased to present my first Annual Report as CFO of the Company. I took
over the CFO role in the midst of a challenging period with a goal to maneuver
the financial planning for the Company that was operating under a Creditor
arrangement.
During this period the Company focused on pure 100% gross margin revenue
resulting from licensing fees, or royalties and refrained from taking any
commitment that would require pre-purchasing of components or pre-production
based on future orders, with its main goal to reduce to the minimum any cash
flow risks.
Furthermore, the Company operated in cooperation with the settlement manager
to complete the creditors payments to the first priority creditors and support
the Company in converting short terms liabilities to long term liabilities.
Key Highlights:
· FY 2024 revenue of $1.38 million represents 63% decrease vs. 2023
revenues (2023: $3.78 million), while gross profit decreased by 46% to $1.3m
(2023: $2.3m), however, the gross margin percentage increased to 92.1% in 2024
from 61.9% in 2023 reflecting an increase of 30.2ppts
· Operating loss decreased from $5.3 million in 2023 to $5.1 million in
2024, reflecting a decrease of 4%
· EBIDTA loss decreased by 10% to $3.48 million (2023: $3.86 million)
· Net cash funds raised during the year amounted to $1.86 million
· Cash and cash equivalents at 31 December 2024 of $0.05 million
($0.1million restricted cash in other long term assets) (31 December 2023:
$1.99 million). During January 2025 the Company collected $0.39 million from
its customers.
Key financial results
EBITDA
Although EBITDA is not a recognised reportable accounting measure, it provides
a meaningful insight into the operations of the Company when removing the
non-cash or intangible asset elements from trading results along with
recognising actual costs versus various IFRS adjustments, in this case being
the amortisation and non-cash items charged in operating income and the
effects of IFRS 16 treatment of operational leases.
The EBITDA for the financial year ended 31 December 2024 is presented as
follows:
EBITDA US Dollar Increase %
(Decrease)
For the year ended
31 December
2024 2023
Revenues 1,383,565 3,777,919 (2,394,354) (63%)
Gross Profit 1,274,826 2,340,142 (1,065,316) (46%)
Gross Margin % 92.1% 61.9% 30.2%ppts
Operating loss (5,089,505) (5,280,652) 191,147 (4%)
Adjusted for:
Amortisation of Intangible Assets 961,380 961,380 -
Depreciation charges on fixed assets 315,532 138,782 176,750
Depreciation in respect of IFRS16 334,400 315,884 18,516
EBITDA (3,478,193) (3,864,606) 386,413 (10%)
Add back Share based compensation charges 212,680 72,287 140,393
Add back vacation accrual charges 27,954 (109,026) 136,980
Add back impairments 140,843 220,220 (79,377)
Adjust IFRS16 rent expense reversals (216,479) (398,033) 181,554
Adjusted EBITDA (3,313,195) (4,079,158) 765,963 (19%)
The EBITDA losses decreased during the year 2024 by 10% from $3.86 million in
2023 to $3.48 million in 2024. The decrease is attributed to the decrease in
revenues as well as the cost savings which have been implemented across the
board in the various operating department expenses.
The adjusted EBITDA measure which adds back various non-cash items improved by
19% in comparison to the previous year from an adjusted EBITDA loss of $4.1
million in 2023 to $3.3 million in 2024.
The EBITDA comparison of the first six months of 2024 with the latter six
months of 2024 is presented as follows:
EBITDA US Dollar Increase %
(Decrease)
For the 6 months ended
31-Dec-24 30-Jun-24
Revenues 801,557 582,008 219,549 38%
Gross Profit as presented 708,224 566,602 141,622 25%
Gross Margin % 88.36% 97.35% (9.2%)ppts
Operating loss as presented (2,692,503) (2,397,002) (295,501) 12%
Adjusted for:
Amortisation of Intangible Assets 480,690 480,690 -
Depreciation charges on fixed assets 156,962 158,570 (1,608)
Depreciation in respect of IFRS16 167,200 167,200 -
EBITDA (1,887,651) (1,590,542) (297,109) 19%
Add back Share based compensation charges 71,780 140,900 (69,120)
Add back vacation accrual charges 27,954 0 27,954
Add back impairments 131,303 9,540 121,763
Adjust IFRS16 rent expense reversals 513 (216,992) 217,505
Adjusted EBITDA (1,656,101) (1,657,094) 993 (0%)
The EBITDA losses increased during the latter half of 2024 by 19% from $1.59
million in the first six months of 2024 to $1.89m in the latter half of 2024.
The adjusted EBITDA losses of $1.66 million during the latter half of 2024 is
equal to the adjusted EBITDA of the first six months of 20244.
Summarised trading results
Summarised Trading Results US Dollar Increase %
(Decrease)
Audited
For the year ended
31 December
2024 2023
Revenues 1,383,565 3,777,919 (2,394,354) (63%)
Gross Profit 1,274,826 2,340,142 (1,065,316) (46%)
Gross Margin % 92.1% 61.9% 30.2%ppts
Operating Loss (5,089,505) (5,280,652) 191,147 (4%)
Financing costs (770,645) (1,267,906) 497,261 (39%)
Financing income 27,441 183,811 (156,370) (85%)
Net comprehensive loss for the year (5,832,709) (6,364,747) 532,038 (8%)
Basic and Diluted earnings per ordinary share (0.01) (0.04) 0.03 (76%)
Weighted average number of ordinary shares for basic earnings per share 550,797,251 143,876,859
Revenue Analysis
Revenues for the twelve months ended 31 December 2024 decreases by 63% to
$1.38 million (2023: $3.78 million).
The revenue mix will continue to evolve as the Company progresses in achieving
the desired mix of the revenue streams from the sale of products and solutions
in addition to software revenue and NRE from IP licenses and services.
Margins
The gross margin percentage increased to 92.1% in 2024 from 61.9% in 2023
reflecting an increase of 30.2% percentage points which is mainly attributed
to the increased licensing revenues which carry a 100% profit margin compared
to sales of hardware and FPGA SoC.
Operating Costs and Research & Development Costs
After adjusting for the amortisation of the capitalised Research and
Development Costs, Depreciation, IFRS Share Based Compensation and payroll
non-cash accruals adjustments, the resultant increases (decreases) in
Operating costs, as adjusted would have been:
Operating Costs US Dollar Increase %
(Decrease)
For the year ended
31 December
2024 2023
Total R&D Expenses 3,743,495 5,160,697 (1,417,202) (27%)
R&D Intangible amortisation (961,380) (961,380) - 0%
Vacation accrual reversals (expenses) (25,919) 57,569 (83,488) (145%)
Share Based Compensation IFRS adjustment (208,631) (58,755) (149,876) 255%
Research and Development Costs net of amortisation, Share Based Compensation, 2,547,565 4,198,131 (1,650,566) (39%)
IFRS adjustments and Vacation accruals
Total G&A Expenses 2,086,180 1,841,842 244,338 13%
Share Based Compensation IFRS adjustment (4,049) (17,710) 13,661 (77%)
Vacation accrual reversals (expenses) 129 21,196 (21,067) (99%)
Impairment losses of financial assets (140,843) (220,220) 79,377 (36%)
Fixed Assets Depreciation Expense (315,532) (138,782) (176,750) 127%
Depreciation in respect of IFRS16 (334,400) (315,884) (18,516) 6%
General and Administrative expenses, net of depreciation, Share Based 1,291,485 1,170,442 121,043 10%
Compensation, IFRS adjustments, Vacation accruals and impairments.
Total Sales and Marketing Expenses 534,896 621,052 (86,156) (14%)
Share Based Compensation IFRS adjustment - 4,178 (4,178) (100%)
Vacation accrual reversals (expenses) (2,164) 30,261 (32,425) (107%)
Salesa and Marketing expenses, net of Share Based Compensation and Vacation 532,732 655,491 (122,759) (19%)
accruals.
Total 4,371,782 6,024,064 (1,652,282) (27%)
Research and Development costs after reducing the costs for the amortisation
of the capitalised Research and Development intangible asset, share based
compensation and adding back for vacation accrual adjustment have decreased by
39% from $4.2 million in 2023 to $2.5 million in 2024. This is mainly
attributed to the employees cost savings during 2024.
An increase of 10% is noted in the General and Administrative costs over 2024
to $1.3 million after adjusting for depreciation, share based compensation,
IFRS adjustments, impairments and vacation accrual adjustments. This increase
is attributable to the professional fees.
A decrease in the Sales and Marketing costs during the 2024 financial year is
mainly due to decrease in employee remuneration and related costsresulted in a
decrease of 19% of the Sales and Marketing costs net of the non-cash item
adjustments of IFRS share based compensation adjustment as well as the
vacation accrual adjustment from $0.66 million in 2023 to $0.53 million in
2024.
Recognition of Research and Development Costs
In line with the change in policy adopted by the Company from 1 July 2019, the
Company continues to no longer recognise the Research and Development costs as
an intangible asset and is recognising them as an expense and charged against
income in the year incurred.
For the years ended 31 December 2021, 2022, and 2023 management performed
their own internal assessment of the fair value of the intangible asset and
concluded that the value of the asset is fair and no impairment of the
intangible asset on the balance sheet is required. This process was repeated
by management for the financial year under review, the year ended 31 December
2024, and the company believes it is close to execute significant NRE business
deal related to the ASIC opportunity based on the Company's integrated
Intellectual property portfolio, as described in the Chief Executive's
Statement, and the assertion that the underlying value of the intangible asset
exceeds the carrying value on the balance sheet remains unchanged.
Balance Sheet
Although it was a challenging year, due to the Temporary Suspension of
Proceedings order ("TSP"), the Company continued to undertake its business and
operations as usual with no restrictions. The Company completed three
fundraisings during the year which resulted in net cash inflows amounting to
$1.9 million. As of 31 December 2024, the Company had fully repaid its
guaranteed creditors and partially paid the priority creditors, all in
compliance with the settlement plan.
Furthermore, there have been other changes on balance sheet items as follows:
· Increase in Trade receivables due to issue of invoices during December
2024.
· Inventories reduced as the Company no longer stocks up on high-cost
inventory following the ease of the global components shortage and reduction
in inventory lead-times.
· Intangible asset on the balance sheet continues to reduce in carrying
value due to the annual amortisation with an approximate 3.5 years of
amortisation remaining. The current carrying value of $3.5 million is a result
of the Company historically adopting the provisions of IAS38 relating to the
recognition of Development Expenses, which methodology as noted in the 2019
Annual Report has ceased from 1 July 2019.
· Operating lease right of use asset and the lease liability - in October
2021 the Company committed to a five-year agreement for its primary offices in
Airport City Israel. At the termination of the lease, the Company has an
option to renew it for a further five years. As at 31 December 2022 such
renewal option was considered as reasonably certain to be exercised according
to IFRS16. As at 31 December 2023, the Company's assessment was that such the
option for the five year extension may not be exercised due to the decline in
rental prices within the premises market. In light of the reassessment, the
lease asset as well as the lease liability have been adjusted to reflect the
current state of the Company's asset and commitment given the end of lease in
November 2026. Under the signed contract, the remaining liability as at 31
December 2024 is $0.76 million.
· Trade payables and other liabilities increased in light of the signing
of the settlement plan following the Company's exit of the Temporary
Suspension of Proceedings ("TSP"). According to the settlement plan, the
Company will repay in full all debts outstanding as of 16 October 2023 (date
at which the Company entered into the TSP) in quarterly instalments in the
order of the debts' seniority and in compliance with the settlement plan. In
May 2025, the Company completed all the payments due to all the creditors
under the settlement plan. Following the conclusion of the TSP, and the
settlement plan, the Company continues to undertake its business and
operations as usual with no restrictions.
Summary of Fundraising Transactions and related Liabilities in respect of
fundraising transactions
During the twelve-month period ended on 31 December 2024, the Company has
completed the following fundraisings:
· May 2024 - Gross proceeds of £0.8 million (approximately $1.01
million)
· September 2024 - Gross proceeds of £0.57 million (approximately
$0.76 million)
· December 2024 - Gross proceeds of £0.13 million (approximately $0.17
million)
The Company holds a liability for the outstanding warrants it has issued as
part of January 2023 placing amounting to £15,353.
Going Concern
In the presentation of the annual financial statements for the year ended 31
December 2024, the Company makes reference to going concern within the audit
report. Reference to this is further made in Note 2 to the Annual Financial
Statements presented herein.
Tomer Assis
Chief Financial Officer
30 June 2025
STATEMENT OF FINANCIAL POSITION
US dollars
31 December
Notes 2024 2023
ASSETS
Current
Cash 5 50,713 1,993,808
Trade receivables 6 385,000 186,145
Inventories 7 218,168 535,689
Other current assets 8 132,836 427,875
Current assets 786,717 3,143,517
Non-Current
Property and equipment 9 605,895 820,310
Intangible asset 10 3,540,040 4,501,420
Right -of -use asset 11 841,550 1,175,950
Other long term assets 12 110,678 35,144
Non-current assets 5,098,163 6,532,824
Total assets 5,884,880 9,676,341
LIABILITIES AND EQUITY
Current
Short Term Borrowings 13 - 96,306
Trade payables 1,361,112 1,237,113
Warrants liability 16.E. 1 15,353 2,841
Other current liabilities 12,14 1,333,174 1,607,897
Current liabilities 2,709,639 2,944,157
Non-Current
Other non-current liabilities 15 430,862 815,011
Non-current liabilities 430,862 815,011
Total liabilities 3,140,501 3,759,168
Equity 16
Share capital 271,255 103,417
Share premium 49,255,030 47,299,358
Shares to be allotted 323,725 -
Other components of equity 1,547,211 1,334,531
Accumulated deficit (48,652,842) (42,820,133)
Total equity 2,744,379 5,917,173
Total liabilities and equity 5,884,880 9,676,341
The accompanying notes are an integral part of the financial statements.
STATEMENT OF COMPREHENSIVE LOSS
US dollars
For the year ended
31 December
Notes 2024 2023
Revenue 18,28 1,383,565 3,777,919
Cost of sales 108,739 1,437,777
Gross margin 1,274,826 2,340,142
Research and development expenses 19 3,743,495 5,160,697
General and administrative expenses 20 2,086,180 1,841,842
Marketing expenses 21 534,896 621,052
Other income 22 (240) (2,797)
Operating loss (5,089,505) (5,280,652)
Financing costs 23 (770,645) (1,267,906)
Financing income 24 27,441 183,811
Loss before tax (5,832,709) (6,364,747)
Tax expense 25 - -
Net comprehensive loss for the year (5,832,709) (6,364,747)
Basic and diluted loss per ordinary share 26 (0.01) (0.04)
Weighted average number of ordinary shares for basic loss per share 550,797,251 143,876,859
The accompanying notes are an integral part of the financial statements.
STATEMENT OF CHANGES IN EQUITY
Notes Number of Share Share Other components Accumulated Total
shares Capital premium of equity deficit equity
Shares to be allotted
Balance at 31 December 2022 78,084,437 21,904 40,786,623 - 1,225,391 (36,455,386) 5,578,532
Employee share-based compensation - - - - 72,287 - 72,287
Net proceeds allocated to the issuance of ordinary shares 127,188,097 35,441 3,530,205 - - - 3,565,646
16.E. 1
Shares issued pursuant to share subscription agreement 16.E. 2 168,933,439 45,331 2,762,249 - - - 2,807,580
Expenses paid in shares and warrants 16.E. 3 2,515,118 741 220,281 - 36,853 - 257,875
Net comprehensive loss for the year - - - - - (6,364,747) (6, 364,747)
Balance at 31 December 2023 376,721,091 103,417 47,299,358 - 1,334,531 (42,820,133) 5,917,173
Employee share-based compensation - - - 212,680 - 212,680
Net proceeds allocated to the issuance of ordinary shares 286,941,090 88,397 856,022 - - - 944,419
16.E. 1
Shares issued pursuant to share subscription agreement 16.E. 3 333,750,000 78,745 1,074,592 - - - 1,153,337
Shares to be allotted - - - 323,725 323,725
Expenses paid in shares and warrants 16.E. 4 2,587,819 696 25,058 - - - 25,754
Net comprehensive loss for the year - - - - - (5,832,709) (5,832,709)
Balance at 31 December 2024 1,000,000,000 271,255 49,255,030 323,725 1,547,211 (48,652,842) 2,744,379
STATEMENT OF CASH FLOWS
US dollars
For the year ended 31 December
2024 2023
Operating activities
Net comprehensive loss for the year (5,832,709) (6,364,747)
Non-cash adjustments
Depreciation of property and equipment 315,530 138,129
Depreciation of right of use asset 334,400 315,884
Share-based compensation 212,680 72,287
Amortisation of intangible assets 961,380 961,380
Amortisation of liabilities due to foreign exchange movements (11,988) (113,078)
Lease liability Interest 98,098 200,261
Foreign exchange losses on cash balances 14,134 3,377
Capital Loss 160 -
Revaluation of financial instruments, net 576,015 818,521
Expenses paid in shares and options 25,754 257,875
Net changes in working capital
Decrease (increase) in trade receivables (198,855) 1,112,927
Decrease in inventories 317,521 237,387
Decrease (increase) in other current assets 295,039 (84,003)
Decrease (increase) in other long-term assets (75,534) 545
Increase in trade payables 123,999 451,530
Increase (decrease) in other liabilities (293,046) 422,658
Increase (decrease) in IIA royalty liability (19,019) 73,645
Net cash used in operating activities (3,156,441) (1,495,422)
Investing activities
Purchase of property and equipment (101,275) (148,113)
Net cash used by investing activities (101,275) (148,113)
Financing activities
Proceeds allocated to ordinary shares 1,027,982 3,756,391
Proceeds allocated to warrants 913,559 132,544
Issuance costs (83,561) (262,444)
Proceeds from short term borrowings 41,055 1,239,657
Repayment of short-term borrowings (136,809) (1,543,210)
Repayment of lease liability (433,471) (398,033)
Net cash provided by financing activities 1,328,755 2,924,905
Net change in cash (1,928,961) 1,281,370
Cash beginning of year 1,993,808 715,815
Exchange differences on cash (14,134) (3,377)
Cash end of year 50,713 1,993,808
Supplementary information:
Interest paid during the year 4,655 64,239
Interest received during the year 1,613 226
Supplementary information on non-cash activities:
Shares issued pursuant to share subscription agreement 767,848 1,778,468
Expenses paid in shares and options 25,754 257,875
Non-cash issuance costs - 26,757
Update of lease liability - 1,324,807
The accompanying notes are an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS AND GENERAL
ETHERNITY NETWORKS LTD. (hereinafter: the "Company"), was incorporated in
Israel on the 15th of December 2003 as Neracore Ltd. The Company changed its
name to ETHERNITY NETWORKS LTD. on the 10th of August 2004.
Ethernity Networks provides innovative data processing and Passive Optical
Network ("PON") semiconductor technology for networking appliances. The
Company's comprehensive networking and security solutions deliver a full
Carrier Ethernet Switch Router data plane and control software, featuring a
rich set of networking capabilities, robust security, and a wide array of
virtual function accelerations to optimize telecommunications networks.
Ethernity's semiconductor technology has been deployed in both FPGA and ASIC
form factors and has been integrated into over one million networking
platforms worldwide. Its complete, flexible solutions adapt rapidly to
customers' evolving needs, reducing time-to-market and enabling efficient
deployment of 5G, edge computing, mobile backhaul, carrier Ethernet, broadband
access networks, and various NFV appliances including 5G UPF, vRouter, and
vBNG.
In June 2017, Ethernity completed its Initial Public Offering ("IPO") and was
admitted to trading on the AIM Market of the London Stock Exchange under the
symbol "ENET." The Company initially targeted the Open RAN (Radio Access
Network) market-an initiative promoted by service providers to encourage
multi-vendor interoperability-by developing a programmable FPGA SmartNIC to
accelerate 5G data plane functions such as 5G UPF and vRouter.
However, the Open RAN market has not yet matured as expected. Operators
continue to deploy mobile networks using end-to-end solutions from single
vendors, limiting multi-vendor adoption. In response, Ethernity repurposed its
FPGA NIC designs to run on its standalone hardware platform (UEP) and
integrated its patented Layer 1 (L1) wireless link bonding technology. This
innovation has garnered significant interest from leading wireless backhaul
OEMs, positioning the Company to pursue new high-value opportunities.
Following extensive testing during 2024 by Tier 1 OEM vendors of the Company's
UEP solution, featuring its patented Layer 1 (L1) link bonding technology.
These vendors approached the Company in Q4 2024 with a request to develop an
Application-Specific Standard Product (ASSP) specifically designed for mobile
backhaul transmission over microwave and E-Band.
In response, the Company is transitioning its business operations with the
strategic objective of becoming a dedicated semiconductor vendor. This shift
builds on the Company's existing integrated appliance, which combines
proprietary semiconductor intellectual property for Layer 2/Layer 3 packet
processing, advanced PON technologies, and embedded software applications.
The planned ASSP will address key requirements across the wireless backhaul,
carrier switch/router (CSR), Carrier Ethernet, and broadband
markets-positioning the Company to deliver high-performance, cost-effective
semiconductor solutions to leading global OEMs.
On 12 October 2023, the Company voluntarily applied to the court in Tel Aviv,
Israel for a Temporary Suspension of Proceedings order ("TSP") and the
convening of a meeting of creditors in accordance with the Israeli Insolvency
and Economic Rehabilitation Law. This TSP order, which was granted by the
court, was requested by the Company to protect the Company's business, as the
Company experienced liquidity issues from the delay in payments from expected
debtors. At the time of this application, the Company's cash balance was
approximately $107,000, while the creditors amounts due approximated $1.6
million. The TSP order prevented the creditors of the Company from enforcing
any payments due to them.
Following an equity raise in December 2023 and the collection of funds from
the Company's debtors, the Company was able to make a settlement proposal,
whereby valid creditors at the time of the TSP order, will be repaid in full
per the timetable and conditions of the TSP court approved settlement plan
over a period of 12 months. Guaranteed and priority creditors would have
priority for repayment, followed by general creditors. The creditors approved
this proposal which was endorsed by the court on 4 February 2024 and the
Company exited the TSP process. As at 31 December 2024 the Company has fully
repaid its guaranteed creditors and partially paid the priority creditors, all
in compliance with the settlement plan. In May 2025, the Company completed all
the payments due to all the creditors under the settlement plan. Following the
conclusion of the TSP, and the settlement plan, the Company continues to
undertake its business and operations as usual with no restrictions.
NOTE 2 - GOING CONCERN
As of December 31, 2024 the Company has an accumulated deficit of $48.6
million and during the year ended December 31, 2024, the Company incurred a
net comprehensive loss of $5.6 million (2023: $6.4 million) and negative cash
flows from operating activities of $3.2 million (2023: $1.5 million). The
financial statements have been prepared assuming that the Company will
continue as a going concern. Under this assumption, an entity is ordinarily
viewed as continuing in business for the foreseeable future unless management
intends or has no realistic alternative other than to liquidate the entity or
to stop trading for at least, but not limited to, 12 months from the reporting
date. The assessment has been made of the Company's prospects, considering all
available information about the future, which has been included in the
financial budget, from managing working capital and among other factors such
as debt repayment schedules. Consideration has been given inter alia to values
of funds raised ($1.9 million). Furthermore, the R&D expenses excluding
non-cash expenses of amortization and share based compensation, decreased by
37% from $4.1 million in 2023 to $2.6 million in 2024
The Company depends on potential growing interest of original equipment
manufacturers (OEM) to adopt the Company's offerings and solutions, as well as
on the successful execution of new contracts with new and existing customers,
and income from existing contracts. Furthermore, the Company anticipates
advancing its ASIC business, including securing a significant NRE
(Non-Recurring Engineering) payment to support the ASIC development. This is
expected to generate additional interest from new potential customers and
significantly enhance the Company's profile. In addition, the Company is
confident that, subject to the successful execution of the ASIC contract, it
will be able to secure further funding. Considering the outlined factors,
including reduction in expenses, and based on experience, the directors have
an expectation that the Company will have access to adequate resources to
continue in operational existence for the foreseeable future.
However, the success of the Company's plans as outlined above is not assured
and thus a material uncertainty exists that may cast a significant doubt on
the Company's ability to continue as a going concern and fulfil its
obligations and liabilities in the normal course of business in the future.
The financial statements do not include any adjustments relating to
recoverability and classification of the recorded asset amounts, and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
NOTE 3 - MATERIAL ACCOUNTING POLICIES
The following accounting policies have been consistently applied in the
preparation and presentation of these financial statements for all of the
periods presented, unless otherwise stated. In 2024, no new standards that had
a material effect on these financial statements become effective.
A. Basis of presentation of the financial statements and statement of
compliance with IFRS
These financial statements have been prepared in accordance with International
Financial Reporting Standards (hereinafter - "IFRS"), as issued by the
International Accounting Standards Board ("IASB").
The financial statements have been prepared on an accrual basis and under the
historical cost convention, except for financial instruments measured at fair
value through profit and loss.
The Company has elected to present profit or loss items using the function of
expense method. Additional information regarding the nature of the expenses is
included in the notes to the financial statements.
The applicable law jurisdiction in which the Company operates is in Israel.
The financial statements for the year ended 31 December were approved and
authorised for issue by the board of directors on 29 June 2025.
B. Use of significant accounting estimates, assumptions, and
judgements
The preparation of financial statements in conformity with IFRS requires
management to make accounting estimates and assessments that involve use of
judgment and that affect the amounts of assets and liabilities presented in
the financial statements, the disclosure of contingent assets and liabilities
at the dates of the financial statements, the amounts of revenues and expenses
during the reporting periods and the accounting policies adopted by the
Company. Actual results could differ from those estimates.
Estimates and judgements are continually evaluated and are based on prior
experiences, various facts, external items and reasonable assumptions in
accordance with the circumstances related to each assumption.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimates are revised and in any future periods affected.
Regarding significant judgements and estimate uncertainties, see Note 4.
C. Functional and presentation currency
The Company prepares its financial statements on the basis of the principal
currency and economic environment in which it operates (hereinafter - the
"functional currency").
The Company's financial statements are presented in US dollars ("US$") which
constitutes the functional currency of the Company and the presentation
currency of the Company.
D. Foreign currency transactions and balances
Specifically identifiable transactions denominated in foreign currency are
recorded upon initial recognition at the exchange rates prevailing on the date
of the transaction. Exchange rate differences deriving from the settlement of
monetary items, at exchange rates that are different than those used in the
initial recording during the period, or than those reported in previous
financial statements, are recognised in the statement of comprehensive income
in the year of settlement of the monetary item. Other profit or loss items are
translated at average exchange rates for the relevant financial year.
Assets and liabilities denominated in or linked to foreign currency are
presented on the basis of the representative rate of exchange as of the date
of the statement of financial position.
Exchange rate differentials, are primarily related to cash balances and
financing transactions and as such are recognised in the financial statements
when incurred, as part of financing expenses or financing income, as
applicable.
The exchange rates as at the 31st of December, of one unit of foreign currency
to each US dollar, were:
2024 2023
New Israeli Shekel ("NIS") 0.274 0.276
Great British Pound ("GBP") 1.254 1.274
Euro 1.041 1.106
E. Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
includes all expenses directly attributable to the manufacturing process as
well as suitable portions of related production overheads, based on normal
operating capacity. Costs of ordinarily interchangeable items are assigned
using the first in, first out cost formula. Net realisable value is the
estimated selling price in the ordinary course of business less any directly
attributable selling expenses.
F. Property and equipment
Property and equipment items are presented at cost, less accumulated
depreciation and net of accrued impairment losses. Cost includes, in addition
to the acquisition cost, all of the costs that can be directly attributed to
the bringing of the item to the location and condition necessary for the item
to operate in accordance with the intentions of management.
The residual value, useful life span and depreciation method of fixed asset
items are tested at least at the end of the fiscal year and any changes are
treated as changes in accounting estimate.
Depreciation is calculated on the straight‑line method, based on the
estimated useful life of the fixed asset item or of the distinguishable
component, at annual depreciation rates as follows:
%
Computers 33
Testing equipment 15-33
Furniture and equipment 6-15
Leasehold improvements Over period of lease
Leasehold improvements are depreciated on a straight-line basis over the
shorter of the lease term (including any extension option held by the Company
and intended to be exercised) and the expected life of the improvement.
Depreciation of an asset ceases at the earlier of the date that the asset is
classified as held for sale and the date that the asset is derecognised. An
asset is derecognised on disposal or when no further economic benefits are
expected from its use.
G. Research and development expenses
Expenditures on the research phase of projects to develop new products and
processes are recognised as an expense as incurred.
Development activities involve a plan or a design for the production of new or
substantially improved products and processes. Development costs that are
directly attributable to a project's development phase are recognised as
intangible assets, provided they meet all of the following recognition
requirements:
• the technical feasibility of completing the intangible asset so that it
will be available for use or sale.
• intention to complete the intangible asset and use or sell it.
• ability to use or sell the intangible asset.
• ability to demonstrate how the intangible asset will generate probable
future economic benefits. Among other things, the entity can demonstrate the
existence of a market for the output of the intangible asset or the intangible
asset itself or, if it is to be used internally, the usefulness of the
intangible asset.
• the availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset.
• ability to measure reliably the expenditure attributable to the intangible
asset during its development.
Development costs not meeting these criteria for capitalisation are expensed
as incurred.
Directly attributable costs include (if relevant) employee costs incurred on
software development along with an appropriate portion of relevant overheads
and borrowing costs.
The Company maintained the policy of recognising as an intangible asset, the
costs arising from the development of its solutions, specifically the directly
associated costs of its Research and Development center.
The Company periodically reviews the principles and criteria of IAS 38 as
outlined above. Up to and until June 2019, the Company has determined that all
the above criteria were met.
Effective as from 1 July 2019 and thereafter, the Company concluded that it
would no longer continue recognising these costs as an intangible asset due to
the fact that the criteria in IAS38 was not met.
Regarding impairment analysis, see Note 2L.
The amortisation of an intangible asset begins when the asset is available for
use, i.e., it is in the location and condition needed for it to operate in the
manner intended by management. The development asset is amortised on the
straight-line method, over its estimated useful life, which is estimated to be
ten years.
The useful life and the amortisation method of each of the intangible assets
with finite lives are reviewed at least at each financial year end. If the
expected useful life of an asset differs from the previous estimate, the
amortisation period is changed accordingly. Such a change is accounted for as
a change in accounting estimate in accordance with IAS 8.
H. Financial instruments
A financial instrument is any contract that gives rise to a financial asset of
one entity and a financial liability or equity instrument of another entity.
1. Classification and measurement of financial assets and financial
liabilities
Initial recognition and measurement
The Company initially recognises trade receivables on the date that they
originated. All other financial assets and financial liabilities are initially
recognised on the date on which the Company becomes a party to the contractual
provisions of the instrument. A financial asset or a financial liability are
initially measured at fair value with the addition, for a financial asset or a
financial liability that are not presented at fair value through profit or
loss, of transaction costs that can be directly attributed to the acquisition
or the issuance of the financial asset or the financial liability. Trade
receivables that do not contain a significant financing component are
initially measured at the price of the related transaction.
Financial assets - subsequent classification and measurement
A financial asset is measured at amortised cost if it meets the two following
cumulative conditions and is not designated for measurement at fair value
through profit or loss:
• The objective of the entity's business model is to hold the
financial asset to collect the contractual cash flows; and
• The contractual terms of the financial asset create entitlement on
specified dates to cash flows that are solely payments of principal and
interest on the principal amount outstanding.
On initial recognition, financial assets that do not meet the above criteria
are classified to measurement at fair value through profit or loss (FVTPL).
Further, irrespective of the business model, financial assets whose
contractual cash flows are not solely payments of principal and interest are
accounted for at FVTPL. All derivative financial instruments fall into this
category.
Financial assets are not reclassified in subsequent periods, unless, and only
to the extent that the Company changes its business model for the management
of financial debt assets, in which case the affected financial debt assets are
reclassified at the beginning of the reporting period following the change in
the business model.
Financial assets at amortised cost
The Company has balances of trade and other receivables and deposits that are
held under a business model, the objective of which is collection of the
contractual cash flows. The contractual cash flows in respect of such
financial assets comprise solely payments of principal and interest that
reflects consideration for the time-value of the money and the credit risk.
Accordingly, such financial assets are measured at amortised cost.
In subsequent periods, these assets are measured at amortised cost, using the
effective interest method and net of impairment losses. Interest income,
currency exchange gains or losses and impairment are recognised in profit or
loss. Any gains or losses on derecognition are also carried to profit or loss.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are carried in the
statement of financial position at fair value with all gains and losses and
net changes in fair value recognised in the statement of comprehensive loss as
financing income or cost. This category includes derivative instruments
(including embedded derivatives that were separated from the host contract).
Financial liabilities - classification, subsequent measurement and gains and
losses
Financial liabilities are classified to measurement at amortised cost or at
fair value through profit or loss. All financial liabilities are recognised
initially at fair value and, in the case of loans, borrowings, and payables,
net of directly attributable transaction costs.
Financial liabilities are measured at amortised cost
This category includes trade and other payables, loans and borrowings
including bank overdrafts. These financial liabilities are measured at
amortised cost in subsequent periods, using the effective interest method.
Interest expenses and currency exchange gains and losses are recognised in
profit or loss. Any gains or losses on derecognition are also carried to
profit or loss.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective
interest method. The effective interest method amortisation is included as
finance costs in profit or loss.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are measured at
fair value, and any net gains and losses, including any interest expenses, are
recognised in profit or loss.
Financial liabilities at fair value through profit or loss include financial
liabilities held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss, including derivative
financial instruments entered into by the Company, including warrants
derivative liability related to warrants with an exercise price denominated in
a currency other than the Company's functional currency and also including the
Company's liability to issue a variable number of shares, which include
certain embedded derivatives (such as prepayment options) under a share
subscription agreement or under a structured investment deed - see Note 16.
Separated embedded derivatives are classified as held for trading.
Financial liabilities designated upon initial recognition at fair value
through profit or loss are designated at the initial date of recognition, and
only if the criteria in IFRS 9 are satisfied.
2. Derecognition of financial liabilities
Financial liabilities are derecognised when the contractual obligation of the
Company expires or when it is discharged or cancelled.
3. Impairment
Financial assets
The Company creates a provision for expected credit losses in respect of
Financial assets measured at amortised cost.
Expected credit losses are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk since initial
recognition, expected credit losses are provided for credit losses that result
from default events that are possible within the next 12 months. For those
credit exposures for which there has been a significant increase in credit
risk since initial recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of the timing
of the default (a lifetime expected credit losses).
The Company measures, if relevant, the provision for expected credit losses in
respect of trade receivables at an amount that is equal to the credit losses
expected over the life of the instrument.
In assessing whether the credit risk of a financial asset has significantly
increased since initial recognition and in assessing expected credit losses,
the Company takes into consideration information that is reasonable and
verifiable, relevant and attainable at no excessive cost or effort. Such
information comprises quantitative and qualitative information, as well as an
analysis, based on the past experience of the Company and the reported credit
assessment, and contains forward-looking information.
Measurement of expected credit losses
Expected credit losses represent a probability-weighted estimate of credit
losses. Credit losses are measured at the present value of the difference
between the cash flows to which the Company is entitled under the contract and
the cash flows that the Company expects to receive.
Expected credit losses are discounted at the effective interest rate of the
financial asset.
4. Derivative financial instruments
Derivative financial instruments are accounted for at FVTPL.
Embedded derivatives
A derivative embedded in a hybrid contract, with a financial liability or
non-financial host, is separated from the host and accounted for as a separate
derivative if: the economic characteristics and risks are not closely related
to the host; a separate instrument with the same terms as the embedded
derivative would meet the definition of a derivative; and the hybrid contract
is not measured at fair value through profit or loss. Embedded derivatives are
measured at fair value with changes in fair value recognised in profit or
loss. Reassessment only occurs if there is either a change in the terms of the
contract that significantly modifies the cash flows that would otherwise be
required or a reclassification of a financial asset out of the fair value
through profit or loss category.
As described in Note 16.E., the Company has designated its liability with
respect to various issuances of warrants and shares, which include several
embedded derivatives, as part of the FVTPL category.
I. Share-based compensation
Share-based compensation transactions that are settled by equity instruments
that were executed with employees or others who render similar services, are
measured at the date of the grant, based on the fair value of the granted
equity instrument. This amount is recorded as an expense in profit or loss
with a corresponding credit to equity, over the period during which the
entitlement to exercise or to receive the equity instruments vests.
For the purpose of estimating the fair value of the granted equity
instruments, the Company takes into consideration conditions which are not
vesting conditions (or vesting conditions that are performance conditions
which constitute market conditions). Non-market performance and service
conditions are included in assumptions about the number of options that are
expected to vest. The total expense is recognised over the vesting period,
which is the period over which all of the specified vesting conditions are to
be satisfied. At the end of each reporting period, an estimate is made of the
number of instruments expected to vest. No expense is recognised for awards
that do not ultimately vest because of service conditions and/or if non-market
performance conditions have not been met. As an expense is recognised over the
vesting period, when an expense has been recorded in one period and the
options are cancelled in the following period, then the previously recorded
expenses for options that never vested, as reversed. Grants that are
contingent upon vesting conditions (including performance conditions that are
not market conditions) which are not ultimately met are not recognised as an
expense. A change in estimate regarding prior periods is recognised in the
statement of comprehensive income over the vesting period. No expense is
recognised for award that do not ultimately vest because service condition
and/or non-market performance condition have not been made.
Share-based payment transactions settled by equity instruments executed with
other service providers are measured at the date the services were received,
based on the estimated fair value of the services or goods received, unless
their value cannot be reliably estimated. In such a case, the transaction is
measured by estimating the fair value of the granted equity instruments. This
amount is carried as an expense or is capitalised to the cost of an asset (if
relevant), based on the nature of the transaction.
J. Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.
Fair value measurement is based on the assumption that the transaction will
take place in the asset's or the liability's principal market, or in the
absence of a principal market in the most advantageous market.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
The Company uses valuation techniques that are appropriate in the
circumstances and for which sufficient data are available to measure fair
value. Maximising the use of relevant observable inputs and minimising the use
of unobservable inputs.
All assets and liabilities measured at fair value or for which fair value is
disclosed are categorised into levels within the fair value hierarchy based on
the lowest level input that is significant to the entire fair value
measurement:
· Level 1 - unadjusted quoted prices are available in active markets
for identical assets or liabilities that the Company has the ability to access
as of the measurement date.
· Level 2 - pricing inputs are other than quoted prices in active
markets that are directly observable for the asset or liability or indirectly
observable through corroboration with observable market data.
· Level 3 - pricing inputs are unobservable for the non-financial asset
or liability and only used when there is little, if any, market activity for
the non-financial asset or liability at the measurement date. The inputs into
the determination of fair value require significant management judgment or
estimation. Level 3 inputs are considered as the lowest priority within the
fair value hierarchy.
For assets and liabilities that are recognised in the financial statements at
fair value on a recurring basis, the Company determines whether transfers have
occurred between levels in the hierarchy by re-assessing categorisation (based
on the lowest level input that is significant to the fair value measurement as
a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes
of assets and liabilities on the basis of the nature, characteristics and
risks of the asset or liability and the level of the fair value hierarchy, as
explained above.
Fair-value related disclosures for financial instruments that are measured at
fair value or where fair values are disclosed, are summarised in Note 27.
K. Revenue recognition
The Company generates revenues mainly from:
· Sales of solutions-based product offerings
· sales of programmable devices ("FPGA") with embedded intellectual
property ("IP") developed by the Company,
· IP developed by the Company together with software application tools
to assist its customers to design their own systems based on the Company IP
and
· maintenance and support services provided to customers.
The Company recognises revenue when the customer obtains control over the
promised goods or when the Company has delivered the products or services. The
revenue is measured according to the amount of the consideration to which the
Company expects to be entitled in exchange for the goods or services provided
to the customer.
Identification of the contract
The Company treats a contract with a customer only where all of the following
conditions are fulfilled.
1. The parties to the contract have approved the contract (in writing,
orally or according to other customary business practices) and they are
committed to satisfying their obligations thereunder;
2. The Company is able to identify the rights of each party in relation
to the goods or services that are to be transferred;
3. The Company is able to identify the payment terms for the goods or
services that are to be transferred;
4. The contract has commercial substance (i.e., the entity's risk,
timing and amount of future cash flows are expected to change as result of the
contract); and
5. It is probable that the consideration to which the Company is
entitled to in exchange for the goods or services transferred to the customer
will be collected.
Identification of performance obligations
On the contract's inception date, the Company assesses the goods or services
committed to in the contract with the customer and identifies, as a
performance obligation, any promise to transfer to the customer one of the
following:
· Goods or services that are distinct; or
· A series of distinct goods or services that are substantially the
same and have the same pattern of transfer to the customer.
The Company identifies goods or services promised to the customer as being
distinct when the customer can benefit from the goods or services on their own
or in conjunction with other readily available resources and the Company's
promise to transfer the goods or services to the customer separately
identifiable from other promises in the contract. In order to examine whether
a promise to transfer goods or services is separately identifiable, the
Company examines whether it is providing a significant service of integrating
the goods or services with other goods or services promised in the contract
into one integrated outcome that is the purpose of the contract.
Contracted revenues attached to milestone performance in a contract are
recognised by the Company when it has completed a milestone requirement and
the Company has delivered the goods and/or services connected to such
milestone.
Determination of the transaction price
The transaction price is the amount of the consideration to which the Company
expects to be entitled in exchange for the goods or services promised to the
customer, other than amounts collected for third parties. The Company takes
into account the effects of all the following elements when determining the
transaction price; variable consideration (see below), the existence of a
significant financing component, non-cash consideration, and consideration
payable to the customer.
Variable consideration
The transaction price includes fixed amounts and amounts that may change as a
result of discounts, credits, price concessions, incentives, penalties, claims
and disputes and contract modifications where the consideration in their
respect has not yet been agreed to by the parties.
In accordance with the requirements in IFRS 15 on constraining estimates of
variable consideration, the Company includes the amount of the variable
consideration, or part of it, in the transaction price at contract inception,
only when it is considered highly probable that its inclusion will not result
in a significant revenue reversal in the future when the uncertainty has been
subsequently resolved. At the end of each reporting period and if necessary,
the Company revises the amount of the variable consideration included in the
transaction price.
Satisfaction of performance obligations
Revenue is recognised when the Company satisfies a performance obligation, or
by transferring control over promised goods or having provided services to the
customer, as applicable.
Sales of goods
Revenues from the sale of programmable devices are recognised at the point in
time when control of the asset is transferred to the customer, which is
generally upon delivery of the devices.
Contracts with milestone payments
Certain contracts with major customers are structured to provide the Company
with payment upon the achievements of certain predefined milestones which
might include, delivery of existing schematics, prototypes, software drivers
or design kit, or development of new product offerings or new features of
existing products such as programmable devices ("design tools").
Management has determined that the performance obligations under such
arrangements which are generally based on separate milestones, are recognised
at the point in time when such separate milestone is transferred to the
customer, generally upon completion of the related milestone.
Amounts received (including specific up-front payments), which relate to
milestones that were not yet achieved, are deferred and are presented as
deferred revenues.
Multiple element transactions
Some of the Company's contracts with customers contain multiple performance
obligations. For these contracts, the Company accounts for individual
performance obligations separately if they are distinct. The transaction price
is allocated to the separate performance obligations on a relative standalone
selling price basis. The Company determines the standalone selling prices
based on an overall pricing objectives, taking into consideration market
conditions and other factors.
Revenues are then recognised for each separate performance obligations - sales
of goods or designed tools, based on the criteria described in the above
paragraph.
Revenue from royalties
The Company is entitled to royalties based on sales performed by third parties
of products which contain IP developed by the Company.
For arrangements that include such sales-based royalties, including milestone
payments based on the level of sales, and the license of the IP developed by
the Company is deemed to be the predominant item to which the royalties
relate, the Company recognises revenue at the later of (i) when the
performance obligation to which some or all of the royalty has been allocated
has been satisfied (or partially satisfied), or (ii) when the related sales
occur.
Accordingly, revenues from royalties that are reported by the customer are
recognised based on the actual sales of products as reported to the Company.
Revenues from maintenance and support
Revenue from maintenance and support is recognised over the term of the
maintenance and support period.
L. Impairment testing of non-financial assets
At the end of each reporting period, the Company reviews the carrying amount
of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any).
For impairment assessment purposes, assets are grouped at the lowest levels
for which there are largely independent cash inflows (cash-generating units).
As a result, some assets are tested individually for impairment, and some are
tested at the cash-generating unit level.
An impairment loss is recognised for the amount by which the asset's (or
cash-generating unit's) carrying amount exceeds its recoverable amount, being
the value in use. To determine the value in use, management estimates expected
future cash flows from each asset or cash-generating unit and determines a
suitable discount rate, in order to calculate the present value of those cash
flows. The data used for impairment testing procedures are linked to the
Company's latest approved budget, see also Note 10.
M. Leased assets
The Company considers whether a contract is or contains a lease. A lease is
defined as 'a contract, or part of a contract, which conveys the right to use
an asset (the underlying asset) for a period of time in exchange for
consideration.' To apply this definition the Company assesses whether the
contract meets three key evaluations which are whether:
· the contract contains an identified asset, which is either
explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Company
· the Company has the right to obtain substantially all of the
economic benefits from use of the identified asset throughout the period of
use, considering its rights within the defined scope of the contract
· the Company has the right to direct the use of the identified
asset throughout the period of use. The Company assesses whether it has the
right to direct 'how and for what purpose' the asset is used throughout the
period of use.
Measurement and recognition of leases as a lessee
At the lease commencement date, the Company recognises a right-of-use asset
and a lease liability on the balance sheet. The right-of-use asset is measured
at cost, which is made up of the initial measurement of the lease liability,
any initial direct costs incurred by the Company, an estimate of any costs to
dismantle and remove the asset at the end of the lease, and any lease payments
made in advance of the lease commencement date (net of any incentives
received).
The Company depreciates the right-of-use assets on a straight-line basis from
the lease commencement date to the earlier of the end of the useful life of
the right-of-use asset or the end of the lease term. The Company also assesses
the right-of-use asset for impairment when such indicators exist.
At the lease commencement date, the Company measures the lease liability at
the present value of the lease payments unpaid at that date, discounted using
the interest rate implicit in the lease if that rate is readily available or
the Company's incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up
of fixed payments (including in substance fixed), variable payments based on
an index or rate, amounts expected to be payable under a residual value
guarantee and payments arising from options reasonably certain to be
exercised.
Subsequent to initial measurement, the liability is reduced for payments made
and increased for interest. It is re-measured to reflect any reassessment or
modification, or if there are changes in in-substance fixed payments.
When the lease liability is re-measured, the corresponding adjustment is
reflected in the right-of-use asset, or profit and loss if the right-of-use
asset is already reduced to zero.
The Company has elected to account for short-term leases and leases of
low-value assets using the practical expedients. Instead of recognising a
right-of-use asset and lease liability, the payments in relation to these are
recognised as an expense in profit or loss on a straight-line basis over the
lease term.
On the statement of financial position, right-of-use assets have been included
under non-current assets and the current portion of lease liabilities have
been included in other current liabilities.
N. Standards, amendments and interpretations to existing standards
that are not yet effective and have not been adopted early by the Company.
Standards and amendments that are not yet effective and have not been adopted
early by the Company are not expected to have a significant impact on the
financial statements in the period of initial application and therefore the
disclosures have not been made.
NOTE 4 - SIGNIFICANT MANAGEMENT JUDGEMENT IN APPLYING
ACCOUNTING POLICIES AND ESTIMATION UNCERTAINTY
When preparing the financial statements, management makes a number of
judgements, estimates and assumptions about the recognition and measurement of
assets, liabilities, income and expenses.
Significant management judgement
• Leases - determination of the appropriate lease period to measure
lease liabilities
The Company enters into leases with third-party landlords and in order to
calculate the lease liability, the Company assess if any lease option
extensions will be exercised. The lease for the Company's offices was for 5
years with an option to extend it for a further 5 years. The Company initially
expected this lease to be extended for an additional 5 years. At the end of
2023, the Company's assessment was that it may not exercise the additional
5-year option given the decline in rental prices within the premises market -
see Note 11.
Estimation uncertainty
• Impairment of non-financial assets
In assessing impairment of non-financial assets (primarily, internally
developed intangible assets), management estimates the recoverable amount of
each asset or cash generating units (if relevant) based on expected future
cash flows and uses an interest rate to discount them (i.e. the value in use).
Estimation uncertainty and significant management judgement are involved with
the assumptions about future operating results and the determination of a
suitable discount rate. The company believes it is close to executing a major
NRE business deal related to the ASIC opportunity which is in negotiation
phase based on the Company's integrated Intellectual property portfolio. See
Note 10 for assumptions used in determining the recoverable amount of
intangible assets.
• Fair value measurement of financial instruments
When the fair values of financial assets and financial liabilities recorded in
the statement of financial position cannot be measured based on quoted prices
in active markets, Management uses various valuation techniques to determine
the fair value of such financial instruments and non-financial assets. This
involves developing estimates and assumptions consistent with how market
participants would price the instrument. Management bases its assumptions on
observable data as far as possible but this is not always available. In that
case, management uses the best information available. Estimated fair values
may vary from the actual prices that would be achieved in an arm's length
transaction at the reporting date. Changes in assumptions relating to these
factors could affect the reported fair value of financial instruments (see
Note 16).
NOTE 5 - CASH
Cash consists of the following:
US dollars
31 December
2024 2023
In Great British Pounds 5,722 855,348
In U.S. Dollar 5,980 470,595
In New Israeli Shekel 39,011 667,865
50,713 1,993,808
The cash does not have any restrictions as to what it may be used for.
NOTE 6 - TRADE RECEIVABLES
Trade receivables consist of the following:
US dollars
31 December
2024 2023
Trade receivables and unbilled revenue 1,064,843 885,145
Less: provision for expected credit losses (679,843) (699,000)
Total receivables 385,000 186,145
All amounts are short-term. The net carrying value of these receivables is
considered a reasonable approximation of fair value. All of the Company's
trade and other receivables have been reviewed for the possibility of loss (an
allowance for impairment losses). See also Note 27A.
NOTE 7 - INVENTORIES
US dollars
31 December
2024 2023
Components and raw materials 218,168 331,815
Finished cards and boards - 203,874
Total inventories 218,168 535,689
NOTE 8 - OTHER CURRENT ASSETS
Other current assets consist of the following:
US dollars
31 December
2024 2023
Prepaid Expenses 54,085 377,419
Government institutions 78,751 50,456
Total other current assets 132,836 427,875
NOTE 9 - PROPERTY AND EQUIPMENT
Details of the Company's property and equipment are as follows:
US dollars
Testing equipment Computers Furniture and equipment Leasehold improve-ments Total
Gross carrying amount
Balance 1 January 2024 1,269,807 176,909 55,397 11,193 1,513,306
Additions 101,275 - - - 101,275
Disposals - (2,138) - - (2,138)
Balance 31 December 2024 1,371,082 174,771 55,397 11,193 1,612,443
Depreciation
Balance 1 January 2024 (499,906) (167,454) (22,933) (2,703) (692,996)
Disposals - 1,978 - - 1,978
Depreciation (299,431) (9,134) (3,267) (3,698) (315,530)
Balance 31 December 2024 (799,337) (174,610) (26,200) (6,401) (1,006,548)
Carrying amount 31 December 2024 571,745 161 29,197 4,792 605,895
US dollars
Testing equipment Computers Furniture and equipment Leasehold improve-ments Total
Gross carrying amount
Balance 1 January 2023 1,122,474 176,129 55,397 11,193 1,365,193
Additions 147,333 780 - - 148,113
Balance 31 December 2023 1,269,807 176,909 55,397 11,193 1,513,306
Depreciation
Balance 1 January 2023 (378,576) (155,512) (19,473) (1,306) (554,867)
Depreciation (121,330) (11,942) (3,460) (1,397) (138,129)
Balance 31 December 2023 (499,906) (167,454) (22,933) (2,703) (692,996)
Carrying amount 31 December 2023 769,901 9,455 32,464 8,490 820,310
NOTE 10 - INTANGIBLE ASSET
Details of the Company's intangible asset (R&D) is as follows:
US dollars
Total
Gross carrying amount
Balance 1 January 2024 9,550,657
Additions -
Balance 31 December 2024 9,550,657
Amortisation
Balance 1 January 2024 5,049,237
Amortisation 961,380
Balance 31 December 2024 6,010,617
Carrying amount 31 December 2024 3,540,040
US dollars
Total
Gross carrying amount
Balance 1 January 2023 9,550,657
Additions -
Balance 31 December 2023 9,550,657
Amortisation
Balance 1 January 2023 4,087,857
Amortisation 961,380
Balance 31 December 2023 5,049,237
Carrying amount 31 December 2023 4,501,420
The Company tested the capitalised intangible assets for impairment as of 31
December 2024. Such analysis revealed a similar calculation as that determined
as at 31 December 2023 and therefore no impairment is warranted.
Having given due consideration to the following, the Company believes that no
impairment is required.
· Considering the past and future expected revenues from the
capitalized R&D assets;
· The anticipated outcomes of current discussions and engagements
with customers;
· The customer projections and where the customer believes
engagement, testing, field trials and deployment will take place;
· Signed engagements or commercial discussion phases and anticipated
outturns;
· Revenues recognised and collected to date which are attributed to
the intangible asset technology.
· The company believes it is close to executing a major NRE business
deal related to the ASIC opportunity which is in negotiation phase based on
the Company's integrated Intellectual property portfolio.
The valuation method determined, to best reflect the fair value of the
intangible assets, was the Discounted Cash Flow ("DCF") to be generated from
such assets between 2025 through 2033.
The primary assumptions used in determining the value-in-use of these
intangible assets are as follows:
· Corporate tax rate for the Company remains at 23%.
· The pre-tax discount rate used to value future cash flows is 28.3%
(post-tax 23.5%).
· Securing a major deal with a third party which is in the
negotiation phase.
The possibility exists that there could be a change in these key assumptions
used to calculate the value-in-use of the intangible assets, which could cause
the balance recorded in these financial statements to exceed such
value-in-use. As at 31 December 2024 the value-in-use of the intangible assets
exceeds the amount shown in these financial statements.
NOTE 11 - LEASES
A. Details of the Company's right of use assets are as follows:
US dollars
Buildings
Gross carrying amount
Balance 1 January 2024 1,834,042
Balance 31 December 2024 1,834,042
Accumulated depreciation
Balance 1 January 2024 (658,092)
Depreciation expense (334,400)
Balance 31 December 2024 (992,492)
Total right-of-use assets as at 31 December 2024 841,550
US dollars
Buildings
Gross carrying amount
Balance 1 January 2023 3,158,849
Expectation change, of option to exercise the lease (1,324,807)
Balance 31 December 2023 1,834,042
Accumulated depreciation
Balance 1 January 2023 (342,208)
Depreciation expense (315,884)
Balance 31 December 2023 (658,092)
Total right-of-use assets as at 31 December 2023 1,175,950
B. Lease liabilities are presented in the statement of financial
position as follows:
US dollars
31 December
2024 2023
Current 377,287 341,991
Non-current 382,263 764,366
759,550 1,106,357
C. In October 2021, the Company committed to a five-year lease
agreement for its primary offices in Airport City Israel. At the termination
of the lease, the Company has an option to renew it for a further five years.
As at 31 December 2022 such renewal option was considered as reasonably
certain to be exercised according to IFRS 16. At 31 December 2023, the
Company's assessment was that it may not exercise the additional 5-year option
given the change in the Company's needs and the decline in rental market
prices. As such the Company recalculated the lease liability using an updated
discount rate. The amount of such reduction in the liability, was accordingly
reduced from the right-of-use asset value.
Each lease generally imposes a restriction that, the right-of-use asset can
only be used by the Company. Leases are either non-cancellable or may only be
cancelled by incurring a substantive termination fee. Some leases contain an
option to extend the lease for a further term or for the employee who used the
leased item to purchase the underlying leased asset outright at the end of the
lease term. The Company is prohibited from selling or pledging the underlying
leased assets as security. For leases over office buildings and factory
premises the Company must keep those properties in a good state of repair and
return the properties in their original condition at the end of the lease.
Further, the Company must insure items of property, plant and equipment and
incur maintenance fees on such items in accordance with the lease contracts.
D. The lease liabilities are secured by the related underlying
assets. Future minimum lease payments at 31 December 2024 were as follows:
Minimum lease payments due
US dollars
2025 2026-2027 Total
Lease payments 439,225 402,623 841,848
Finance charges (61,938) (20,360) (82,298)
Net present values 377,287 382,263 759,550
NOTE 12 - OTHER LONG TERM ASSETS
Other long term assets consist of:
US dollars
31 December
2024 2023
Restricted cash 100,340 24,806
Other 10,338 10,338
Total other long term assets 110,678 35,144
NOTE 13 - SHORT- TERM BORROWINGS
Borrowings include the following financial liabilities:
Annual % Interest US dollars
rate((1)) 31 December
2023 2024 2023
Bank borrowings P+4.5% - 96,306
Total short- term borrowings - 96,306
((1) ) The loans bore variable interest of prime + 4.5%. The
loans were fully repaid by February 2024.
NOTE 14 - OTHER CURRENT
LIABILITIES
Other short-term liabilities consist of:
US dollars
31 December
2024 2023
Salaries, wages and related costs 282,599 458,435
Provision for paid vacation due to employees 146,549 118,955
Current portion of IIA royalty liability (see Note 15) 6,027 23,000
Accrued expenses and other 373,897 127,691
Deferred revenue 39,722 250,200
Short term lease liability 377,287 341,991
Related parties * 107,093 287,625
Total other short-term liabilities 1,333,174 1,607,897
* Relates to compensation from prior years and the outstanding
preferred loan to the Company (see Note 29.A.). These amounts do not bear
interest.
NOTE 15 - OTHER NON-CURRENT LIABILITIES
Other non-current liabilities consist of:
US dollars
31 December
2024 2023
IIA royalty liability * 48,599 50,645
Lease liability 382,263 764,366
Total other long term assets 430,862 815,011
* During the years 2005 through 2012, the Company received grants from the
Israel Innovation Authority ("IIA") totaling approximately $3.1 million, to
support the Company's various research and development programs. The Company
is required to pay royalties to the IIA at a rate of 3.5%, of the Company's
revenue attributable to the technology funded by the IIA, up to an amount
equal to the grants received plus interest from the date of the grant, which
after having repaid approximately $0.58 million (2023: 0.54 million) of these
grants over numerous years, as at 31 December 2024 the amount still due is
approximately $4.5 million. Such contingent obligation has no expiration date.
All products, and IP sales from 2016 and later are based on newer architecture
which is not funded by the IIA therefore, the IIA is not eligible for any
royalty from revenue associated with product or IPs generated from deals after
2016.
NOTE 16 - EQUITY
A. Details regarding share capital and number of shares at 31
December 2024 and at 31 December 2023 are:
Share capital:
US dollars
31 December
2024 2023
Ordinary shares of NIS 0.001 par value 271,255 103,417
Total share capital 271,255 103,417
Number of shares:
31 December
2024 2023
Ordinary shares of NIS 0.001 par value - authorised 1,600,000,000 600,000,000
Ordinary shares of NIS 0.001 par value - issued and paid up 1,000,000,000 376,721,091
B. Description of the rights attached to the Ordinary Shares
All ordinary shares have equal rights including voting rights, rights to
dividends and to distributions upon liquidation. They confer their holder the
rights to receive notices, attend and vote at general meetings.
C. Share premium
Share premium includes proceeds received from the issuance of shares, after
allocating the nominal value of the shares issued to share capital.
Transaction costs associated with the issuance of shares are deducted from the
share premium, net of any related income tax benefit. The costs of issuing new
shares charged to share premium during the year ended 31 December 2024 was
$83,561 (2023: $262,484).
D. Other components of equity
Other components of equity include the value of equity-settled share and
option-based payments provided to employees and consultants. When employees
and consultants forfeit their options, the costs related to such forfeited
options are reversed out to other components of equity - see Note 17.A.
E. Shares issued during the accounting periods
During the year ended 31 December 2024 the amount of 623,278,909 (2023:
298,636,654) ordinary shares were issued, as follows:
Number of shares issued during year ended 31 December
Note 2024 2023
Issuance of ordinary shares )issued together with warrants(
1 286,941,090 127,188,097
Shares issued pursuant to share subscription agreement 2 - 168,933,439
Shares issued pursuant to structured investment deed 3 333,750,000 -
Expenses paid for in shares 4 2,587,819 2,515,118
623,278,909623,278,909 298,636,654
1 Details of the equity raises are as follows:
January 2023 equity raise
In January 2023 the Company issued 23,571,430 shares attached to a
corresponding 23,571,430 warrants. Each share with its attached warrant was
issued for £0.07, realising gross proceeds of $2.02 million (£1.65 million)
and net proceeds after issuance expenses of approximately $1.89 million
(£1.54 million).
Each warrant was initially exercisable at £0.15 with a life term of
approximately 24 months. The warrants are not transferable, are not traded on
an exchange and have an accelerator clause, whereby these warrants may be
called by the Company if the closing mid-market share price of the Company
exceeded £0.20 over a 5-consecutive day period. If such 5-consecutive day
period condition is met, the Company may serve notice on the warrant holders
to exercise their relevant warrants within 7 calendar days, failing which,
such remaining unexercised warrants shall be cancelled.
As the exercise price of the warrants is denominated in GBP and not in the
Company's functional currency, it was determined that the Company's obligation
under such warrants cannot be considered as an obligation to issue a fixed
number of equity instruments in exchange for a fixed amount of cash.
Accordingly, it was determined that such warrants represent a derivative
financial liability required to be accounted for at fair value through the
profit or loss category. Upon initial recognition the Company allocated the
gross proceeds as follows: an amount of approximately $133,000 was allocated
as a derivative warrants liability with the remainder of the proceeds
amounting to $1.75 million (after deduction of the allocated issuance costs of
$0.14 million) being allocated to share capital and share premium. The
issuance expenses were allocated in a consistent manner to the above
allocation. The expenses related to the warrant component were carried to
profit or loss as an immediate expense while the expenses related to the share
capital component were netted against the amount carried to equity. In
subsequent periods the company measures the derivative financial liability at
fair value and the periodic changes in fair value are carried to profit or
loss under financing costs or financing income, as applicable. The fair value
of the derivative warrant liability is categorized as level 3 of the fair
value hierarchy.
The fair value valuation of the warrants was based on the Black-Scholes option
pricing model, calculated in two stages. Initially, the fair value of these
call warrants issued to investors were calculated, assuming no restrictions
applied to such call warrants. As the Company, under certain circumstances,
has a right to force the investors to either exercise their warrants or have
them cancelled, the second calculation calculates the value of the warrants as
call warrants that were issued by the investor to the company. The net fair
value results from reducing the call investor warrants fair value from the
call warrants fair value, as long as the intrinsic value of the call warrants
(share price at the period end less exercise price of the warrants) is not
greater than such value. Should the intrinsic value of the warrants be higher
than the Black-Scholes two stage method described above, then the intrinsic
value of the warrants is considered to be a more accurate measure to use in
determining the fair value. The following factors were used in calculating the
fair value of the warrants at their issuance:
Risk free
rate
4.2%
Volatility
82.3%
In May 2023, the Company changed the terms of the warrants as follows:
Changed: From To
Exercise price of warrants £ 0.15 £ 0.060
Share price at which accelerator clause may be activated £ 0.20 £ 0.075
David Levi and Shavit Baruch hold 3,028,571 and 668,771 warrants respectively,
by virtue of their participation in the January 2023 fundraise as outlined
below. The terms of the warrants David Levi and Shavit Baruch holder were
varied alongside the other warrants issued as detailed above.
Of the 23,571,430 shares and 23,571,430 warrants subscribed for, the
director's participation in this issuance was 3,697,342 shares and 3,697,342
warrants, on the same terms that outside investors participated as detailed
below:
· David Levi subscribed for 3,028,571 placing shares for an aggregate
sum of £212,000.
· Shavit Baruch subscribed for 668,771 placing shares for an aggregate
sum of £46,814.
None of these warrants had been exercised by 31 December 2024 and their fair
value of $0 (2023: approximately $3,000) is disclosed as a warrants liability
in the statement of financial position.
Upon this successful equity raise being concluded, the brokers for this
transaction received 573,429 two year warrants exercisable at £0.07 per
warrant. The fair-value of these warrants at the time of issuance was
approximately $23,000. As at 31 December 2024, none of these warrants have
been exercised.
May 2023 equity raise
In May 2023 the Company issued 26,116,667 shares at £0.03 per share,
realising gross proceeds of $0.98 million (£0.78 million) and net cash
proceeds after issuance expenses of $0.92 million (£0.74 million).
Of the 26,116,667 shares subscribed for, the director's participation in this
issuance was 916,668 shares, on the same terms that outside investors
participated as detailed below:
· David Levi, subscribed for 833,334 Placing Shares for an aggregate
sum of £25,000.
· Yosi Albagli, subscribed for 83,334 Placing Shares for an aggregate
sum of £2,500.
The gross proceeds, after deduction of the issuance costs were allocated to
share capital and share premium.
Upon this successful equity raise being concluded, the brokers for this
transaction received 772,500 two year warrants exercisable at £0.03 per
warrant. The fair-value of these warrants at the time of issuance was
approximately $14,000. As at 31 December 2024, none of these warrants have
been exercised.
December 2023 equity raise
In December 2023 the Company issued 70,000,000 shares at £0.01 per share,
realising gross proceeds of $0.88 million (£0.70 million) and net cash
proceeds after issuance expenses of $0.83 million (£0.66 million).
Concurrent with this equity raise the Company's CEO and director, David Levi,
converted $94,500 (£75,000) of loans owed to him, into 7,500,000 shares.
The gross proceeds, after deduction of the issuance costs were allocated to
share capital and share premium.
No warrants were issued in this equity raise.
September 2024 equity raise
In September 2024 the Company issued 189,174,999 shares attached to a
corresponding 189,174,999 warrants. Each share with its attached warrant was
issued for £0.003, realising gross proceeds of $0.76 million (£0.57 million)
and net cash proceeds after issuance expenses of $0.70 million (£0.53
million).
David Levi, a director and CEO of the Company subscribed for 9,008,333 of
these shares and 9,008,333 corresponding warrants, on the same terms that
outside investors participated, for an aggregate sum of £27,025.
Each warrant is exercisable at £0.0075 with a life term of 18 months. The
warrants are not transferable, are not traded on an exchange and have an
accelerator clause, whereby these warrants may be called by the Company if the
closing mid-market share price of the Company equal or exceed £0.0150 over a
5-consecutive day period. If such 5-consecutive day period condition is met,
the Company may serve notice on the warrant holders to exercise their relevant
warrants within 7 calendar days, failing which, such remaining unexercised
warrants shall be cancelled.
As the exercise price of the warrants is denominated in GBP and not in the
Company's functional currency, it was determined that the Company's obligation
under such warrants cannot be considered as an obligation to issue a fixed
number of equity instruments in exchange for a fixed amount of cash.
Accordingly, it was determined that such warrants represent a derivative
financial liability required to be accounted for at fair value through the
profit or loss category. Upon initial recognition the Company allocated the
gross proceeds as follows: an amount of approximately $30,000 was allocated as
a derivative warrants liability with the remainder of the proceeds amounting
to $0.73 million (after deduction of the allocated issuance costs of
approximately $60,000) being allocated to share capital and share premium. The
issuance expenses were allocated in a consistent manner to the above
allocation. The expenses related to the warrant component were carried to
profit or loss as an immediate expense while the expenses related to the share
capital component were netted against the amount carried to equity. In
subsequent periods the company measures the derivative financial liability at
fair value and the periodic changes in fair value are carried to profit or
loss under financing costs or financing income, as applicable. The fair value
of the derivative warrant liability is categorized as level 3 of the fair
value hierarchy.
The fair value valuation of the warrants was based on the Black-Scholes option
pricing model, calculated in two stages. Initially, the fair value of these
call warrants issued to investors were calculated, assuming no restrictions
applied to such call warrants. As the Company, under certain circumstances,
has a right to force the investors to either exercise their warrants or have
them cancelled, the second calculation calculates the value of the warrants as
call warrants that were issued by the investor to the company. The net fair
value results from reducing the call investor warrants fair value from the
call warrants fair value, as long as the intrinsic value of the call warrants
(share price at the period end less exercise price of the warrants) is not
greater than such value. Should the intrinsic value of the warrants be higher
than the Black-Scholes two stage method described above, then the intrinsic
value of the warrants is considered to be a more accurate measure to use in
determining the fair value. The following factors were used in calculating the
fair value of the warrants at their issuance:
Risk free
rate
5.5%
Volatility
319.0%
As at 31 December 2024, none of these warrants have been
exercised.
Upon this equity raise being concluded, the brokers for this transaction
received 1,666,667 shares with a fair value of approximately $7,000. No
warrants were issued with these shares.
December 2024 equity raise
In December 2024 the Company issued 97,766,091 shares at £0.00133 per share,
realising gross proceeds of $0.17 million (£0.13 million).
David Levi subscribed for 4,887,218 of these shares issued for an aggregate
sum of £6,500.
The gross proceeds, after deduction of the issuance costs were allocated to
share capital and share premium.
No warrants were issued in this equity raise.
2 Shares issued pursuant to share subscription agreement
In February 2022, an institutional investor ("Investor") who had previously
subscribed for shares in the Company, signed a new $2.0 million share
subscription agreement bearing a face value of $2,060,000.
The Investor has the right, at its sole discretion to require
the Company to issue shares in relation to the subscription amount outstanding
(or a part of it), under which, the number of shares to be issued for such
settlement, shall be determined by dividing the face value of the subscription
amount by the Settlement Price.
The Settlement Price is equal to the sum of (i) the Reference Price and (ii)
the Additional Price.
The Reference Price is the average of the 3 daily volume-weighted average
prices ("VWAPs") of Shares selected by the Investor during a 15 trading day
period immediately prior to the date of notice of their issue, rounded down to
the next one tenth of a penny. The Additional Price is equal to half of the
excess of 85% of the average of the daily VWAPs of the Shares during the 3
consecutive trading days immediately prior to the date of notice of their
issue over the Reference Price.
Accounting treatment
As the company's obligation under the share subscription agreement with
respect for each subscription amount received by the Company, represent an
obligation to be settled through the issuance of a variable number of shares
and as the agreements include embedded derivatives (such as principal amounts
indexed to an average price of equity instrument) the Company has designated
this obligation as financial liability at fair value through profit or loss
under "liability related to share subscription agreement".
Accordingly, upon initial recognition and at each reporting period the
liability is measured at fair value with changes carried to profit or loss
under financing costs or financing income, as applicable.
Upon settlement or a partial settlement of such liability, when the investor
calls for the settlement of the aggregate subscription amount outstanding (or
any part of it), for a fixed number of shares, as calculated upon such
settlement notice, the fair value of the liability, related to the settled
portion is carried to equity.
The fair value of the liability related to share subscription agreement is
categorised as level 3 of the fair value hierarchy. See Note 27.B.
Activity for year ending 31 December 2023
All remaining outstanding subscription amounts were converted during 2023,
thereby bringing the relationship to a conclusion, without any balances
remaining as at 31 December 2023:
The following subscription amounts were converted during 2023:
Notice date of conversion Face value converted - USD Shares Issued
22 May 2023 230,000 6,629,236
31 July 2023 100,000 4,897,352
29 September 2023 74,000 7,406,851
(*) 10 November 2023 1,336,000 150,000,000
168,933,439
(*) Per settlement deed, described below.
As mentioned above, the Investor converts subscription amounts into shares of
the Company at a discounted price. Upon each conversion, the difference
between the actual market value of shares issued to the Investor and the
amounts converted amounted to $22,771 in 2023, which is recorded as a
reduction to finance income.
In November 2023 the Company and the Investor entered into a settlement deed,
whereby the Company would issue 150,000,000 shares to the Investor (the
"Settlement Shares") to terminate the Subscription Agreement and extinguish
the Company's liability to the Investor. The Settlement Shares would be issued
in tranches, to comply with a restriction that the Investor cannot hold an
interest in more than 24.99% of the Company's issued share capital. The
Settlement Shares were issued in tranches. 44.9 million shares on 10 November
2023, 43.6 million shares on 29 November 2023 and 61.5 million shares on 14
December 2023. The resulting finance charges recognized from this transaction
was approximately $1,030,000.
3 Shares issued pursuant to structured investment deed
In May 2024 the Company entered into a structured investment deed and issued
40,000,000 shares ("Subscription Shares") and a contingent warrant in exchange
for gross proceeds of £800,000 ($1.01m). The net proceeds received after
issuance expenses was $0.94m.
The Warrant is initially exercisable at a price of 1 pence per share for a
period of 44 days from the closing. The exercise price is reset on the 45th
day after closing, following which it will be calculated as the average (in
pounds Sterling, rounded down to three decimal places) of the lowest five,
daily Volume Weighted Average Price ("VWAP") of the Company's share price on
the stock-market, during the 20 trading days before the receipt of a warrant
exercise notice by the Company, less a 15% discount, rounded down to the
nearest decimal place.
The Warrant has an 8-month exercise period and can be exercised in full or in
part. The amount available to be exercised under the Warrant is £800,000,
less the value of the 40,000,000 Subscription Shares, calculated by reference
to the relevant exercise price, such that the investor will be entitled to
exercise the Warrant only for an amount exceeding the difference between the
maximum amount of £800,000 (or a lower amount outstanding at the time
following prior exercise of the Warrant) and the value of 40,000,000
Subscription Shares at the relevant exercise price. The exercise price of the
Warrant is prefunded by way of the £800,000 gross fundraise amount and,
accordingly, no additional payment will be made by the investor to the Company
in connection with the exercise of the Warrant.
Accounting treatment
As the exercise price of the warrants is denominated in GBP and not in the
Company's functional currency, it was determined that the Company's obligation
under such warrants cannot be considered as an obligation to issue a fixed
number of equity instruments in exchange for a fixed amount of cash.
Accordingly, it was determined that such warrants represent a derivative
financial liability required to be accounted for at fair value through the
profit or loss category.
At issuance, the structured warrant is a hybrid instrument containing
components which feature in regular options and other components which are
different to regular options. The valuation method considered to be
appropriate for such an instrument is the Naïve approach, which is calculated
by multiplying:
a. the share price of the Company at such date, by
b. the total number of shares that the warrant holder would have been
issued if the entire warrant was exercised at such issuance date, assuming
that the 1 pence per share exercise price had already expired.
Upon an exercise of the structured warrant or part thereof, the fair market
value of the shares issued are recorded in share capital and share premium,
with the difference between that amount and the principal warrant amount
exercised, being carried through to the profit or loss as finance expenses.
The fair market value of the shares issued is considered as the three day
average closing share price, commencing from the date of admission to the
stock exchange.
The periodic change in the fair value is carried to profit or loss under
financing costs or financing income, as applicable. The fair value of the
derivative warrant liability is categorised as level 3 of the fair value
hierarchy.
Initial warrant valuation
Upon initial recognition the Company allocated the gross investment amount of
£800,000 ($1.01 million) as follows:
a. $0.9 million as a derivative warrants liability.
b. The remainder of the proceeds being $0.1 million, to share capital
and premium.
The issuance expenses of approximately $0.07m were allocated to the equity
components in the same proportion as they were initially recorded. These
expenses were accounted for as follows:
a. The expenses related to the warrant component were carried to
profit or loss as an immediate expense.
b. The expenses related to the share capital component were netted off
against the amount carried to equity.
Warrant exercises
During 2024, in addition to the issuance of 40,000,000 shares as mentioned
above, the following shares of the Company were issuable upon exercises of the
warrant instrument:
Date of exercise in 2024 Date of Admission Warrant exercise amount in GBP Issue price per share in Pence Number of shares issued
12 July 17 July 2024 395,000 0.40 98,750,000
21 October 25 October 2024 195,000 0.10 195,000,000
Total 293,750,000
23 December 2 January 2025 178,000 0.08 222,500,000 *
768,000 516,250,000
* As these shares were issued in 2025, they are shown in the Statement of
Changes in Equity as shares to be allotted.
As at 31 December 2024, the entire warrant instrument had been exercised and
as such no balance related to this warrant is reflected in the Statement of
Financial Position.
4 Expenses paid for in shares
As part of the agreed remuneration as non-Executive Chairman for the period
from 1 March 2022 to 28 February 2023, Joseph Albagli is entitled to receive
shares equal to a monthly amount of £1,250. In July 2023 the Company issued
126,347 shares in lieu of the £15,000 owing to Joseph Albagli for the
above-mentioned period. During March 2024 the Company issued 921,152 shares in
lieu of the compensation owing to Joseph Albagli for the period from 1 March
2023 to 29 February 2024. See Note 29.C.
In January 2023, service providers to the Company agreed to receive 2,388,771
shares at the January 2023 equity raise issue price of GBP 0.07 in
satisfaction of £167,214 of outstanding fees due to them. These shares were
subject to a one-year lock-in period.
In September 2024, service providers to the Company agreed to receive
1,666,667 shares at the September 2024 equity raise issue price of GBP 0.003
in satisfaction of £5,000 of outstanding fees due to them.
NOTE 17 - SHARE-BASED
COMPENSATION
A. In 2013 the Company's Board of Directors approved a share option
plan for the grant of options without consideration, to employees, service
providers and directors of the Company, which are exercisable into the
Company's ordinary shares. The exercise price and vesting period (generally
four years) for each grantee of options, is determined by the Company's Board
of Directors and specified in such grantee's option agreement. In accordance
with Section 102 of the Israel tax code, the Israeli resident grantee's
options, are held by a trustee. The options are not cashless (they need to be
paid for) and expire upon the expiration date determined by the Board of
Directors (generally ten years from the date of the grant). The expiration
date may be brought forward upon the termination of grantee's employment or
services to the Company. Options do not vest after the termination of
employment or services to the Company.
The following table summarises the salient details and values regarding the
options granted (all amounts are in US Dollars unless otherwise indicated):
Option grant dates
29 Oct 20 Feb 22 Feb
2024 2024 2023
Number of options granted 63,600,000 33,200,000 590,000
Exercise price in $ 0.0032 0.0189 0.1660
Recipients of the options Employees and sub contractors Employees Employees
Approximate fair value at grant date (in $):
Total benefit 96,463 298,368 31,685
Per option benefit 0.0015 0.0090 0.0537
Assumptions used in computing value:
Risk-free interest rate 4.28% 4.33% 3.93%
Dividend yield 0.00% 0.00% 0.00%
Expected volatility 70% 70% 70%
Expected term (in years) 10.0 10.0 10.0
Expensed amount recorded for year ended:
31 December 2023 - - 7,296
31 December 2024 15,953 166,752 (264)
The remaining value of these options at 31 December 2024, which have yet to be
recorded as expenses, amount to $180,938 (2023: $45,045).
As some of these employees left the employ of the company prior to 31 December
2024, their options were cancelled.
Share based compensation was treated in these financial statements as follows:
US dollars
Year ended 31 December
2024 2023
Total expensed amount recorded 212,680 72,287
Total 212,680 72,287
The following tables present a summary of the status of the employee option
grants by the Company as of 31 December 2024 and 2023:
Weighted
average
exercise
Number price (US$)
Year ended 31 December 2024
Balance outstanding at beginning of year 1,757,000 0.37
Granted 96,800,001 0.01
Exercised - -
Forfeited (1,622,000) 0.02
Balance outstanding at end of the year 96,935,001 0.01
Balance exercisable at the end of the year 9,250,915
Weighted
average
exercise
Number price (US$)
Year ended 31 December 2023
Balance outstanding at beginning of year 3,691,920 0.31
Granted 590,000 0.17
Exercised - -
Forfeited (2,524,920) (0.26)
Balance outstanding at end of the year 1,757,000 0.37
Balance exercisable at the end of the year 1,177,333
B. The option pool was increased to 50,000,000 options by a
resolution passed on 14 January 2024 and was increased to 113,600,000 options
by a resolution passed on 29 October 2024 and approved by the tax authorities.
C. The following table summarises information about employee options
outstanding at 31 December 2024:
Weighted Weighted
Outstanding average Weighted Exercisable average
at 31 remaining average at 31 remaining
Exercise December contractual exercise December contractual
price 2024 life (years) price (US$) 2024 life (years)
$0.20 20,000 2.2 0.20 20,000 2.2
£0.002 63,600,000 9.2 0.003 - 9.2
£0.02 31,800,001 9.2 0.02 7,949,997 9.2
£0.12 11,000 5.6 0.16 11,000 5.6
£0.14 35,000 5.3 0.17 17,500 5.3
£0.20 230,000 5.9 0.26 230,000 5.9
£0.21 20,000 5.5 0.26 20,000 5.5
£0.21 200,000 5.9 0.27 200,000 5.9
£0.29 174,000 5.9 0.39 87,000 5.9
£0.29 400,000 7.1 0.39 366,668 7.1
£0.33 30,000 5.6 0.46 22,500 5.6
£0.40 130,000 4.4 0.54 97,500 4.4
£0.45 225,000 5.6 0.60 168,750 5.6
£1.00 20,000 4.6 1.25 20,000 4.6
£1.05 40,000 2.2 1.28 40,000 2.2
96,935,001 9,250,915
The following table summarises information about employee options outstanding
at 31 December 2023:
Weighted Weighted
Outstanding average Weighted Exercisable average
at 31 remaining average at 31 remaining
Exercise December contractual exercise December contractual
price 2023 life (years) price (US$) 2023 life (years)
$0.20 20,000 3.2 0.20 20,000 3.2
£0.12 33,000 6.6 0.16 33,000 6.6
£0.14 130,000 6.3 0.17 50,000 6.3
£0.20 230,000 6.9 0.26 230,000 6.9
£0.21 70,000 6.5 0.26 70,000 6.5
£0.21 200,000 6.9 0.27 200,000 6.9
£0.29 164,000 8.1 0.39 41,000 8.1
£0.29 400,000 8.1 0.39 233,333 8.1
£0.33 65,000 6.6 0.46 32,500 6.6
£0.40 130,000 5.0 0.54 65,000 5.0
£0.45 225,000 6.6 0.60 112,500 6.6
£1.05 40,000 3.2 1.28 40,000 3.2
£1.00 30,000 4.5 1.32 30,000 4.5
£1.00 20,000 5.6 1.25 20,000 5.6
1,757,000 1,177,333
The fair value of options granted to employees was determined at the date of
each grant. The fair value of the options granted are expensed in the profit
and loss, except for those that were allocated to capitalised research and
development costs (up to and including 30 June 2019).
D. Shares and equity instruments issued in lieu of payment for
services provided
a. Upon the successful equity raise concluded in January 2023, as
described in Note 16.E. 1 , the brokers responsible for this transaction
received 573,429 two year warrants exercisable at £0.07 per warrant. The
fair-value of these warrants at the time of issuance was approximately
$23,000.
b. In January 2023, service providers to the Company agreed to receive
2,388,771 shares at the January 2023 equity raise issue price of GBP 0.07 in
satisfaction of £167,214 of outstanding fees due to them. See Note 16.E. 4 .
c. Upon the successful equity raise concluded in May 2023, as described
in Note 16.E. 1 , the brokers responsible for this transaction received
772,500 two year warrants exercisable at £0.03 per warrant. The fair-value of
these warrants at the time of issuance was approximately $14,000.
d. During 2024 the Company issued 921,152 (2023: 126,347) shares to the
Company's non-executive chairman in lieu of $19,000 (2022: $19,000) owing as
part of his agreed remuneration. See also Note 16.E. 4 and Note 29.C.
e. In September 2024, service providers to the Company agreed to receive
1,666,667 shares at the September 2024 equity raise issue price of GBP 0.003
in satisfaction of £5,000 of outstanding fees due to them. See Note 16.E. 1 .
NOTE 18 - REVENUE
US dollars
Year ended 31 December
2024 2023
Sales 1,043,600 3,386,583
Royalties 210,473 231,344
Maintenance and support 129,492 159,992
Total revenue 1,383,565 3,777,919
NOTE 19 - RESEARCH AND DEVELOPMENT EXPENSES
US dollars
Year ended 31 December
2024 2023
Employee remuneration, related costs and subcontractors ((*)) 2,538,025 3,845,860
Maintenance of software and computers 52,815 151,473
Insurance and other expenses 191,275 120,719
Amortisation 961,380 961,380
Grant procurement expenses - 81,265
Total research and development expenses 3,743,495 5,160,697
((*)) Including share based compensation. 208,631 58,755
NOTE 20 - GENERAL AND ADMINISTRATIVE EXPENSES
US dollars
Year ended 31 December
2024 2023
Employee remuneration and related costs ((*)) 188,946 459,345
Professional fees 957,872 488,198
Rentals and maintenance 148,587 220,066
Depreciation 649,932 454,013
Impairment losses of trade receivables 140,843 220,220
Total general and administrative expenses 2,086,180 1,841,842
((*)) Including share based compensation. 4,049 17,710
NOTE 21 - MARKETING EXPENSES
US dollars
Year ended 31 December
2024 2023
Employee remuneration and related costs ((*)) 408,417 541,674
Marketing expenses 118,921 66,669
Travel expenses 7,558 12,709
Total marketing expenses 534,896 621,052
((*)) Including share based compensation. - (4,178)
NOTE 22 - OTHER INCOME
This is a government grant related to an expense item and is recognised as
other income.
NOTE 23 - FINANCING COSTS
US dollars
Year ended 31 December
2024 2023
Bank fees, interest and others 13,874 82,570
Lease liability financial expenses 98,098 200,260
Revaluation of liability related to share subscription agreement and 974,980
structured investment deed, measured at FVTPL
588,721
Expenses allocated to issuing warrants 69,952 10,096
Total financing costs 770,645 1,267,906
NOTE 24 - FINANCING INCOME
US dollars
Year ended 31 December
2024 2023
Revaluation of warrant derivative liability 12,706 129,703
Interest received 1,613 226
Exchange rate differences, net 13,122 53,882
Total financing income 27,441 183,811
NOTE 25 - TAX EXPENSE
A. The Company is assessed for income tax in Israel - its country of
incorporation. The Israeli corporate tax rates for the relevant years is 23%.
B. As of 31 December 2024, the Company has carry-forward losses for
Israeli income tax purposes of approximately $40 million (2023: $35 million).
These tax losses have no expiry date. According to management's estimation of
the Company's future taxable profits, it is no longer probable in the
foreseeable future, that future taxable profits would utilise all the tax
losses.
C. Theoretical tax reconciliation
For the years ended 31 December 2024 and 2023, the following table reconciles
the expected tax expense (benefit) per the statutory income tax rate to the
reported tax expense in profit or loss as follows:
US dollars
Year ended 31 December
2024 2023
Loss before tax 5,832,709 6,364,747
Tax expense (benefit) at statutory rate 23% 23%
Expected tax expense (benefit) at statutory rate (1,341,523) (1,463,892)
Changes in taxes from permanent differences in share-based compensation 48,916 16,626
Increase in loss carryforwards 1,292,607 1,447,266
Income tax expense - -
NOTE 26 - BASIC AND DILUTED LOSS PER ORDINARY SHARE
A. The earnings and the weighted average number of shares used in
computing basic loss per ordinary share, are as follows:
US dollars
Year ended 31 December
2024 2023
Loss for the year attributable to ordinary shareholders 5,832,709 6,364,747
Number of shares
Year ended 31 December
2024 2023
Weighted average number of ordinary shares used in the computation of basic 550,797,251 143,876,859
loss per ordinary share
B. As the Company has losses attributable to the ordinary
shareholders, the effect on diluted loss per ordinary share is anti-dilutive
and therefore the outstanding warrants and employee options have not been
taken into account - see Note 17.
NOTE 27 - FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
A. Financial risk and risk management
The activity of the Company exposes it to a variety of financial risks and
market risks. The Company re-assesses the financial risks in each period and
makes appropriate decisions regarding such risks. The risks are managed by
Company management which identifies, assesses and hedges against the risks.
· Exposure to changes in exchange rates
The Company is exposed to risks relating to changes in the exchange rate of
the NIS and other currencies versus the U.S. dollar (which constitutes the
Company's functional currency). Most of the revenues of the Company are
expected to be denominated in US dollars, while the substantial majority of
its expenses are in shekels (mainly payroll expenses). Therefore, a change in
the exchange rates may have an impact on the results of the operations of the
Company.
Currency basis of financial instruments
US dollars
31 December 2024
NIS GBP Euro US $ Total
Assets
Cash 39,011 5,722 - 5,980 50,713
Trade receivables 54,843 - - 330,157 385,000
93,854 5,722 - 336,137 435,713
Liabilities
Trade payables 1,008,594 73,396 - 279,122 1,361,112
Warrants liability - 15,353 - - 15,353
IIA royalty liability - - - 48,599 48,599
Non-current lease liabilities 382,263 - - - 382,263
1,390,857 88,749 - 327,721 1,807,327
(1,297,003) (83,027) - 8,416 (1,371,614)
US dollars
31 December 2023
NIS GBP US $ Total
Assets
Cash 667,865 855,348 470,595 1,993,808
Trade receivables 31,145 - 155,000 186,145
699,010 855,348 625,595 2,179,953
Liabilities
Short term borrowings 96,306 - - 96,306
Trade payables 899,920 22,417 314,776 1,237,113
Warrants liability - 2,841 - 2,841
IIA royalty liability - - 50,645 50,645
Non-current lease liabilities 764,366 - - 764,366
1,760,592 25,258 365,421 2,151,271
(1,061,582) 830,090 260,174 28,682
· Sensitivity to changes in exchange rates of the NIS and other
currencies to the US dollar
A change in the exchange rate of the NIS and other currencies to the USD as of
the dates of the relevant statement of financial position, at the rates set
out below, which according to Management are reasonably possible, would
increase (decrease) the profit and loss by the amounts set out below. The
analysis below was performed under the assumption that the rest of the
variables remained unchanged.
US dollars
Sensitivity to changes in exchange rates
of the non US dollar currencies to the US dollar
Effect on profit (loss)/equity (before tax) from the changes caused by the Book value Effect on profit (loss)/equity (before tax) from the changes caused by the
market factor market factor
Increase at the rate of 31 December Decrease at the rate of
10% 5% 2024 5% 10%
Cash (4,473) (2,237) 44,733 2,237 4,473
Trade receivables (5,484) (2,742) 54,843 2,742 5,484
Trade payables 108,199 54,100 (1,081,990) (54,100) (108,199)
Warrants liability 1,535 768 (15,353) (768) (1,535)
Non-current lease liabilities 38,226 19,113 (382,263) (19,113) (38,226)
Total 138,003 69,002 (1,380,030) (69,002) (138,003)
US dollars
Sensitivity to changes in exchange rates
of the non US dollar currencies to the US dollar
Effect on profit (loss)/equity (before tax) from the changes caused by the Book value Effect on profit (loss)/equity (before tax) from the changes caused by the
market factor market factor
Increase at the rate of 31 December Decrease at the rate of
10% 5% 2023 5% 10%
Cash (152,321) (76,161) 1,523,213 76,161 152,321
Trade receivables (3,115) (1,557) 31,145 1,557 3,115
Short term borrowings 9,631 4,815 (96,306) (4,815) (9,631)
Trade payables 92,234 46,117 (922,337) (46,117) (92,234)
Warrants liability 284 142 (2,841) (142) (284)
Non-current lease liabilities 76,437 38,218 (764,366) (38,218) (76,437)
Total 23,150 11,574 (231,492) (11,574) (23,150)
· Credit risk
All of the cash and cash equivalents and other short-term financial assets as
of 31 December, 2024 and 2023 were deposited with one of the major banks in
Israel.
Trade receivables as of 31 December 2024 and 2023 were from customers in
Israel, the U.S., Europe, and Asia, which included the major customers as
detailed in Note 28. The Company performs ongoing reviews of the credit
worthiness of customers, the amount of credit granted to customers and the
possibility of loss therefrom. The Company includes an adequate allowance for
impairment losses (expected credit loss).
· Trade receivables
IFRS 9 provides a simplified model of recognising lifetime expected credit
losses for all trade receivables as these items do not have a significant
financing component.
In measuring the expected credit losses, the trade receivables have been
assessed by management on a collective basis as well as on a case by case
basis. Trade receivables are written off when there is no reasonable
expectation of recovery. Management have indicated a concern regarding the
receivable from a few customers, for which a provision has been made. As at 31
December 2024, the provision for expected credit losses was $679,843 (2023:
$699,000) - see Note 6 for more details.
US dollars
Balance at 1 January 2023 579,000
Additions 150,000
Reductions (30,000)
Balance at 31 December 2023 699,000
Additions
Reductions (19,157)
Balance at 31 December 2024 679,843
Liquidity risk
The Company financed its activities from its operations, issuing shares and
warrants, shareholders' loans and short and long-term borrowings from the
bank. For further details on the Company's liquidity, refer to Note 2. All the
non-current liabilities at 31 December 2024 and 2023 were lease liabilities
which are serviced monthly. The short-term borrowings at 31 December 2024 and
2023 and the trade payables and other current liabilities are expected to be
paid within 1 year. It is therefore not expected that the Company will
encounter difficulty in meeting its obligations associated with financial
liabilities that are settled by delivering cash or another financial asset.
The Company's non-derivative financial liabilities have contractual maturities
as summarized below:
US dollars
31 December 2024
Within 6 months 6 to 12 months 1 to 3 More than
years 3 years
Trade payables 1,361,112 - - -
Other short-term liabilities 952,874 3,014 - -
IIA royalty liability 2,682 2,700 15,000 47,118
Lease liabilities including future interest costs 219,613 219,613 841,849 -
Total 2,536,281 225,327 856,849 47,118
US dollars
31 December 2023
Within 6 months 6 to 12 months 1 to 3 More than
years 3 years
Short term borrowings 96,306 - - -
Trade payables 123,711 1,113,402 - -
Other short-term liabilities 1,033,123 232,783 - -
IIA royalty liability 11,500 11,500 15,000 60,000
Lease liabilities including future interest costs 221,005 221,005 884,020 405,176
Total 1,485,645 1,578,690 899,020 465,176
B. Fair value of financial instruments
General
The financial instruments of the Company include mainly trade receivables and
debit balances, credit from banking institutions and others, trade payables
and credit balances, IIA liability, and balances from transactions with
shareholders.
The principal methods and assumptions used in calculating the estimated fair
value of the financial instruments are as follows (fair value for disclosure
purposes):
Financial instruments included in current asset items
Certain instruments (cash and cash equivalents, other short-term financial
assets, trade receivables and debit balances) are of a current nature and,
therefore, the balances as of 31 December, 2024 and 2023, approximate their
fair value.
Financial instruments included in current liability items
Certain instruments (credit from banking institutions and others, trade
payables and credit balances, suppliers and service providers and balances
with shareholders) - in view of the current nature of such instruments, the
balances as at 31 December, 2024 and 2023 approximate their fair value. Other
instruments are measured at fair value through profit or loss.
Financial instruments' fair value movements
The reconciliation of the carrying amounts of financial instruments classified
within Level 3 (based on unobservable inputs) is as follows:
US dollars
Financial liabilities
Liability related to share subscription agreement Warrants liability
Balance at 1 January 2023 (1,836,555) -
Recognition in asset (liability) - (132,544)
Proceeds received for shares issued 1,778,468 -
Warrants exercised 58,087 129,703
Fair Value at 31 December 2023 - (2,841)
Recognition in asset (liability) - (913,559)
Liability exchanged for shares issued 991,107
Revaluation Adjustment - (90,060)
Fair Value at 31 December 2024 - (15,353)
Both the financial assets and the two types of financial liabilities are
measured at fair value through profit and loss.
Measurement of fair value of financial instruments
The following valuation techniques are used for instruments categorised in
Level 3:
Liability related to share subscription agreement
The fair value of the liability related to share subscription agreement is
categorised as level 3 of the fair value hierarchy.
The liability is valued by adding:
· the number of shares that the Investor would receive from a unilateral
exchange for his outstanding subscription amount, multiplied by the current
share price of the Company, and
· the outstanding subscription amount that the Company may choose to
repay in cash amount.
Pursuant to the February 2022 share subscription agreement, the investor has
the right, at its sole discretion to require the Company to issue shares in
relation to the subscription amount outstanding (or a part of it), under
which, the number of shares to be issued for such settlement, shall be
determined by dividing the face value of the subscription amount by the
Settlement Price. The Settlement Price is equal to the sum of (i) the
Reference Price and (ii) the Additional Price. The Reference Price is the
average of the 3 daily volume-weighted average prices ("VWAPs") of Shares
selected by the Investor during a 15 trading day period immediately prior to
the date of notice of their issue, rounded down to the next one tenth of a
penny. The Additional Price is equal to half of the excess of 85% of the
average of the daily VWAPs of the Shares during the 3 consecutive trading days
immediately prior to the date of notice of their issue over the Reference
Price. As at 31 December 2023, this liability had been extinguished - see Note
16.E. 2 .
Warrants liability
This liability is valued at the fair value of the Warrants as described in
detail in Note 16.E. 1 regarding the January 2023 equity raise and the
September 2024 equity raise. Should the Company's share price increase, then
the warrants' fair value will increase by a lower amount, as is inherent in
the Black Scholes option pricing model. In addition, as the Company has a
"put" warrant which is triggered under certain circumstances when the
Company's share price reaches a certain share price, the value of the Warrants
will not increase indefinitely for the period that the "put" option is in
place.
C. Capital management
The objectives of the Company's policy are to maintain its ability to continue
operating as a going concern with a goal of providing the shareholders with a
return on their investment and to maintain a beneficial equity structure with
a goal of reducing the costs of capital. The Company may take different steps
toward the goal of preserving or adapting its equity structure, including a
return of equity to the shareholders and/or the issuance of new shares for
purposes of paying debts and for purposes of continuing the research and
development activity conducted by the Company. For the purpose of the
Company's capital management, capital includes the issued capital, share
premium and all other equity reserves attributable to the equity holders of
the Company.
NOTE 28 - SEGMENT
REPORTING
A. The Company has implemented the principles of IFRS 8 ('Operating
Segments'), in respect of reporting segmented activities. In terms of IFRS 8,
the management has determined that the Company has a single area of business,
being the development and delivery of high-end network processing technology.
The Company's revenues from customers are divided into the following
geographical areas:
US dollars
Year ended 31 December
2024 2023
Asia - 154,700
Europe - 12,390
Israel 244,073 758,445
United States 1,139,492 2,852,384
1,383,565 3,777,919
%
Year ended 31 December
2024 2023
Asia - 4.1%
Europe - 0.3%
Israel 17.6% 20.1%
United States 82.4% 75.5%
100.0% 100.0%
Revenue from customers in the Company's domicile, Israel, as well as its major
market, the United States and Asia, have been identified on the basis of the
customer's geographical locations.
The Company's revenues from major customers as a percentage of total revenue
was:
%
Year ended 31 December
2024 2023
Customer A 56% 54%
Customer B 20% 19%
Customer C 15% 15%
Customer D 7% 5%
Customer E 2% 3%
100% 96%
B. All of the Company's non-current assets are located in the Company's
country of domicile.
NOTE 29 - RELATED
PARTIES
A. Founders
In April 2017, the employment agreement of the two founders of the Company,
Mr. David Levi and Mr. Shavit Baruch, was amended, in terms of which each of
them, in addition to their salary, is entitled to a performance bonus of 5% of
the Company's annual profit before tax. For each year, the bonus shall be
capped at $250,000 each. Such bonus is dependent on their continual employment
by the Company.
Shavit Baruch had an amount due to him for compensation originating in prior
years. As at 31 December 2024, the Company owed him in this regard a balance
of $107,093 (2023: $106,683) - see Note 14.
In October 2023, David Levi, a co-founder of the Company provided a
non-interest bearing loan to the Company of 1,000,000 NIS (approx. £200,000
or $250,000), This loan was approved by the court and, entitles David Levi to
be repaid as a priority creditor in any event, by the end of the Temporary
Suspension of Proceedings ("TSP") process.
In December 2023, David Levi subscribed for 7,500,000 shares at the same price
as outside investors paid in the Company's equity raise of £700,000
($880,000). David Levi settled the purchase price for these shares in exchange
for the satisfaction of 347,350 NIS (£75,000 or $ 94,500) of his non-interest
bearing priority loan.
The 652,650 NIS remaining amount of the non-interest bearing loan was repaid
to David Levi on 6 February 2024.
On 26 September 2024, David Levi subscribed for 9,008,333 new ordinary shares
in the Company (the "Subscription Shares") at a price of 0.3p per share. David
Levi was also granted one warrant for every Subscription Share subscribed for,
exercisable at a price of 0.75p per share. The warrants are exercisable for a
period of 18 months.
On 4 December 2024, David Levi subscribed for 4,887,218 new ordinary shares of
the Company at a price of 0.133p per share.
B. Chief Financial Officer
Mark Reichenberg stepped down from the board on 31 July 2023, when his tenure
as CFO terminated and the 209,000 ESOP options he held were cancelled.
From August 2023, Ayala Deutsch took over the CFO duties and was formally
appointed as permanent CFO in February 2024, when she was also appointed to
the board of directors. Ayala Deutsch stepped down from her position as CFO
and board member on 9 October 2024.
Tomer Assis was appointed as CFO on 9 October 2024 and received 1,500,000 ESOP
options with a fair value of $2,275, vesting quarterly over a 3 year period.
C. Remuneration of key management personnel including directors for the
year ended 31 December 2024
US dollars
Name Position Salary and benefits Share based compe-nsation
Pension Total
benefits
David Levi Chief Executive Officer 226,817 39,447 75,158 341,422
Shavit Baruch VP R&D 212,628 42,882 31,026 286,536
Tomer Asiss ((4)) Chief Financial Officer 34,825 - 412 35,237
Ayala Deutsch ((3)) Chief Financial Officer 93,421 22,378 (1,304) 114,495
Joseph Albagli ((1)) Non Executive Chairman 27,990 - 3,360 31,350
Richard Bennett Non Executive Director 23,449 - - 23,449
Julie Kunstler ((2)) Non Executive Director 8,115 - - 8,115
Aviva Banczewski ((2)) Non Executive Director 7,964 - - 7,964
635,209 104,707 108,652 848,568
((1) ) As part of the agreed compensation, monthly shares equal to
the value of £1,250 are accrued. In March 2024 - 921,152 shares accrued have
been allotted. The accrued shares as of March 2025, amounting to 6,936,578
shares will be allotted during 2025.
((2) ) Appointed 16 April 2024.
((3) ) Ceased to act as CFO and director on 9 October 2024.
((4) ) Appointed as CFO on 9 October 2024.
Remuneration of key management personnel including directors for the year
ended 31 December 2023
US dollars
Name Position Salary and benefits Share based compe-nsation
Pension
benefits Total
David Levi Chief Executive Officer 222,157 38,543 17,177 277,877
Mark Reichenberg ((2)) Chief Financial Officer 100,146 16,262 - 116,408
Shavit Baruch VP R&D 208,022 41,886 17,177 267,085
Chen Saft-Feiglin ((3)) Non Executive Director 17,959 - - 17,959
Zohar Yinon ((3)) Non Executive Director 16,712 - - 16,712
Joseph Albagli ((1)) Non Executive Chairman 31,493 - 18,655 50,148
Richard Bennett Non Executive Director 24,864 - - 24,864
621,353 96,691 53,009 771,053
((1) ) As part of the agreed compensation, monthly shares equal to
the value of £1,250 are accrued. In July 2023 - 126,347 shares accrued have
been allotted. The remaining accrued shares as of year-end were allotted in
March 2024, amounting to 921,152 shares.
((2) ) Terminated employment and ended directorship on 31 July
2023.
((3) ) Ceased to act as directors on 14 November 2023.
D. Directors' equity interests in the Company as at 31 December 2024
Shares Options and warrants
Name Direct holdings Unexercised vested options Unvested options Total options and warrants
41,704,616 12,053,493 30,391,372 42,444,865
David Levi
Shavit Baruch 5,760,438 1,242,145 9,767,263 11,009,408
Joseph Albagli 1,177,939 123,666 2,625,789 2,749,455
48,642,993 13,419,304 42,784,424 56,203,728
As set out further in Note 16, some of the above directors have participated
in certain of the placings during the year ended 31 December 2024.
Directors' equity interests in the Company as at 31 December 2023
Shares Options and warrants
Name Direct holdings Unexercised vested options Unvested options Unexercised 6p warrants Total options and warrants
20,949,065 177,379 83,331 3,028,571 3,289,281
David Levi
Shavit Baruch 5,760,438 177,379 83,331 668,771 929,481
Joseph Albagli 256,787 - - - -
26,966,290 354,758 166,662 3,697,342 4,218,762
As set out further in Note 16, the above directors have participated in
certain of the placings and the variation of the warrant instruments during
the year ended 31 December 2023.
NOTE 30 - RECONCILIATION
OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
Lease Liabilities Short Term Borrowings Warrants liability Total
1,106,357 96,306 2,841 1,205,504
1 January 2024
Cashflow
- Repayments (335,373) (136,807) - (472,180)
- Proceeds - 41,055 913,559 954,614
Non-cash movement
- Liability exchanged for shares issued - - (991,107) (991,107)
- Revaluation Adjustment - - 90,060 90,060
- Exchange rate differences (11,434) (554) - (11,988)
31 December 2024 (()*()) 759,550 - 15,353 774,903
( )
(()*()) Including current maturities of $377,287
Lease Liabilities Short Term Borrowings Warrants liability Total
2,712,938 428,935 - 3,141,873
1 January 2023
Cashflow
- Repayments (197,772) (1,543,210) - (1,740,982)
- Proceeds - 1,239,657 132,544 1,372,201
Non-cash movement
- Terminations (1,324,807) - - (1,324,807)
- Revaluation Adjustment - - (129,703) (129,703)
- Exchange rate differences (84,002) (29,076) - (113,078)
31 December 2023 (()*()) 1,106,357 96,306 2,841 1,205,504
( )
(()*()) Including current maturities of $341,991.
For financial
liabilities to be settled through issuance of ordinary shares see notes 16.E
and 27B.
NOTE 31 - SUBSEQUENT EVENTS
1. In January 2025, the Company came to an agreement with a
supplier, that the NIS 2.75 million (approximately $0.76 million) owed, would
convert into a loan payable over 22 months. The first 3 payments payable would
each be NIS 0.36 million (approximately $0.1 million), with the balance of the
amounts spread out until the last payment in November 2026. Once all the
payments have been completed, a total amount of NIS 3.06 million
(approximately $0.84 million) would have been paid.
2. In February 2025 the Company extended the 24 month expiry date of
19,874,088 warrants issued in conjunction with the January 2023 share
issuance, by a further 24 months to 8 February 2027. See Note 16.E. 1 . The
3,028,571 and 668,771 warrants held by the directors David Levi and Shavit
Baruch respectively were not extended and expired on 8 February 2025.
3. In March 2025, the Company raised further equity capital of
£88,750 before expenses, by issuing 177,500,000 shares at 0.05 pence per
share.
4. In April 2025, at an Extraordinary General Meeting, the Company's
authorized share capital was increased to 6,400,000 NIS.
5. In May 2025, the Company raised further equity capital of
£800,000 before expenses, by issuing 3,636,363,633 shares and 3,636,363,633
associated warrants (together, a "unit"), at 0.022 pence per unit. The
warrants may be exercised within 12 months from 7 May 2025 at a price per
share of 0.022 pence. These warrants have an identical accelerator clause as
those warrants issued in the January 2023 equity raise, excepting for the
accelerator price which is set at 0.045 pence per share - see Note 16.E. 1 .
The directors David Levi and Yosi Albagli also subscribed for some of these
shares and associated warrants. A further 163,409,086 warrants with the same
terms as the warrants issued in this equity raise, were issued as payment of
fees to the brokers who arranged this equity raise.
6. As of the date of issuance of these financial statements, the
amount due to Shavit Baruch for compensation originating in prior years is
$46,000. See Notes: 14 and 29.A
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