REG - T42 IOT Tracking Sol - 2024 Final Results
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RNS Number : 7401O T42 IOT Tracking Solutions PLC 27 June 2025
27 June 2025
t42 IoT Tracking Solutions plc
("t42" or the "Company")
Full year results
t42 IoT Tracking Solutions plc (AIM: TRAC), a global provider of real-time
tracking and monitoring solutions for containers, is pleased to announce its
audited results for the year ended 31 December 2024.
Financial Highlights
· Revenue of $4.16m (2023: $4.01m), with an increased contribution from
the supply chain solutions.
· Adjusted EBITDA loss of $206,000 (2023: EBITDA gain of $341,000).
· Gross margin decreased to 38%, due to cost increases in the hardware
segment (2023: 53%).
· Total operating expenses increased to $2.48m (2023: $2.25m).
Operational and Post-period Highlights
Of the four major contracts signed in 2024, one is already outperforming
expectations. Year-on-year growth in Lokies orders is nearly 100%, and this is
expected to have a positive impact on 2025 results. The other contracts are
progressing as planned. As previously reported, these contracts represent
cumulative potential orders of up to 100,000 units, primarily from customers
in Latin America. Subject to full execution and delivery timelines, the
contracts are expected to generate approximately $20m in hardware and SaaS
revenues over the next three years.
Since the beginning of 2025, we have seen a significant increase of nearly
100% in purchase orders for both Lokies and Tetis, which will contribute to
revenues in the current year.
Avi Hartmann, CEO of t42, commented:
"We offer a comprehensive, cutting edge, technological solution for monitoring
and securing containers, effectively addressing a critical challenge in
maritime, land transportation and air cargo. Our solution guarantees
reliability, security, and economic feasibility while significantly reducing
implementation time and accelerating return on investment for our customers.
We are actively pursuing business opportunities in key markets such as South
and North America, evident from recent agreements signed and the substantial
business potential they represent.
I would like to express, on behalf of the Board and myself, our sincere
gratitude to Igor Vatenmacher, who stepped down as CFO in April this year.
Igor's drive and determination has greatly helped to guide T42 through
challenging times in the past and set it on a road to a brighter future.
Although Igor has stepped down from his executive role, he has not left the
Company - he now continues to serve as a non-executive director, contributing
his vast experience and unique insights in his new role."
Contacts:
t42 IoT Tracking Solutions PLC
Michael Rosenberg, Chairman 07785 727595
Avi Hartmann, CEO +972 5477 35663
Strand Hanson Limited (Nominated Adviser and Financial Adviser) 020 7409 3494
James Harris/ Richard Johnson/ Imogen Ellis
Peterhouse Capital Limited 020 7469 0930
Lucy Williams/Charles Goodfellow/Eran Zucker
The Annual Report will be made available to shareholders shortly and be
available from the Company's website at: www.t42.co.uk/
(http://www.t42.co.uk/) . A notice of AGM will be dispatched to shareholders
in due course.
CHAIRMAN'S STATEMENT
We are pleased to report T42's audited results for the year ended 31 December
2024.
Revenues increased to $4.16 million, up from $4.01 million in 2023. We expect
continued fulfillment of the agreements announced during 2024 over the coming
years.
The software segment maintained a strong gross margin of 82%, while the
hardware segment recorded a negative gross margin of 7%, compared to a
positive 20% last year. The decline is primarily due to the following factors:
1. Write-offs of old inventory as part of the Company's shift to
focusing on innovative products in other areas for both new and existing
markets.
2. Increase in the cost of components production, which caused an
erosion in gross profitability.
3. Sharp increase in shipping costs.
We are addressing these issues and expect margin improvement in the current
year.
Several years ago, we pivoted the Company's strategy from vehicle tracking to
container monitoring solutions. This led to a rebranding to t42 and a
fundamental change in our core business. As part of this transition, key
personnel were replaced, and an experienced, focused management team was
brought in. The signs of success are evident in the 2024 results.
We have developed new products in collaboration with leading manufacturers,
identified new customers, and introduced innovative business models and
solutions. Within a short period, we have demonstrated that we are on the
right path, and this positive momentum is reflected in our results.
In 2024, we experienced significant growth in the container segment, including
the signing of new multi-year agreements that exceeded the sales volumes of
2023. This momentum is driven by the high quality of our Lokies locks and
increasing demand for our new TETIS models.
We have made substantial technological improvements, particularly in power
consumption - a key operational advantage for our customers.
This trend continues: new customers are being secured, pilot projects are
advancing, and market potential is turning into a pipeline of commercial
opportunities. We are also investing in our complementary TETIS product with a
focus on energy efficiency.
Much of the container segment growth stems from agreements signed in the first
half of 2024. We now expect actual orders under these agreements to exceed
customers' initial forecasts. We are in advanced negotiations with one major
customer regarding 2025 order forecasts, which may result in a material
increase to the original contract scope.
There is no doubt that t42's solutions are shaping the future of container
monitoring. The expected increase in 2025 orders marks a significant step
toward fulfilling the Company's potential and its aspiration to be a leader in
the container tracking market.
In the Helios segment, our platform was selected for national deployment in a
South American country to improve safety and reduce road accidents in public
and heavy transportation, including buses and trucks.
R&D
Over the past twelve months, t42 has achieved significant technological
milestones, reflecting its commitment to innovation and excellence in the IoT
space.
We launched a new version of the Lokies product line with a smaller shackle
for increased flexibility and safety, without compromising durability and
reliability.
We also focused on road safety solutions, enhancing user experience, and
expanding into new markets. In a first-of-its-kind project in Mexico, we
developed an interface for the Helios device, connected to an external vehicle
display, for secure driver identification. The interface features intelligent
audio-visual alerts based on speed, location, and direction.
Following a pilot of several hundred units, a 100% success rate was reported
in preventing incidents that previously led to losses and insurance claims. We
have already received interest from customers in other countries and expect to
expand this solution throughout 2025 and 2026.
We upgraded the t42 platform to enable the creation of thousands of speed and
direction zones, including real-time alerts to edge devices for fleet
management.
We also enhanced deployment tools, allowing for faster and more accurate
device activations, enabling large-scale rollouts with minimal downtime.
FINANCIAL REVIEW
· Group revenues of $4.16 million (2023: $4.01 million) - an
increase of 4%.
· Gross margin decreased to 38% (2023: 53%). The software segment
maintained a strong margin of 82%, while the hardware segment recorded a
margin loss of 7% (2023: 20% margin profit).
· Total operating expenses increased to $2.48 million (2023: $2.25
million).
· Net loss after tax increased to $1.75 million (2023: $0.42
million), and the operating loss increased to $0.9 million (2023: $0.1
million).
· A foreign exchange rate gain of $72k was recorded mainly due to
the depreciation of the Israeli shekel against the US dollar (2023: $27k
gain).
· Trade receivables slightly declined to $0.88 million (2023: $0.89
million).
· Inventory of $1.12 million (2023: $1.44 million).
· Trade payables increased to $1.11 million (2023: $0.84 million).
· Cash flow from operations was approximately $0.6 million,
compared to a negative cash flow of $0.2 million in 2023.
The auditor's report draws attention to the deficit in working capital as of
31 December 2024, including loans due to be repaid within 12 months, and that
there may be an uncertainty as the Company's ability to continue as a going
concern. However, given the expectation of increased revenues, the Board is
confident that additional funding, if necessary, will be available.
CLN Update
The Company has received non-binding proposals from holders of the Company's
secured convertible loan notes ("CLNs") for principal of £925,000 and
$1,300,000 (excluding accrued interest) which were due in May 2025, expressing
willingness to convert or extend the terms of the loan, subject to
renegotiation. The lenders have confirmed that they will not be seeking
repayment while the extensions are being negotiated.
OUTLOOK
After several years of market entry challenges and technology validation in
the container space, we made a strategic decision to rebrand the Company and
focus on container tracking solutions. This move sends a clear message: t42 is
here to lead.
In 2024, we experienced over 100% growth in container-related sales compared
to 2023, and negotiations are already underway to expand existing agreements.
It is now clear that we are not just participating in the market - we are
becoming a key player.
But our ambition goes further - to lead the next wave of innovation in the
industry. This requires breakthroughs, an advanced strategy, and
collaborations with visionary industry leaders. We are already in advanced
discussions with such partners and hope to share developments soon.
The journey has begun - long, challenging, and at times turbulent, but full of
opportunities. The Board's expectations for t42 are high, and we look forward
to updating on key milestones.
Michael Rosenberg OBE
Non-Executive Chairman
_______________
CORPORATE GOVERNANCE STATEMENT
General
The Board has adopted the QCA Corporate Governance Code ("the QCA Code"),
further detail of which is set out on the Company's website. The following
comments are intended to provide an update on the application of these
guidelines where appropriate. The Company seeks to comply with the principles
of the QCA Code that the Board considers appropriate, given the size and
nature of the business. However, there may be certain cases where
non-compliance is appropriate due to the nature of the business and its non-UK
status, as explained further below.
Division of responsibilities
As of today, the T42 IoT Tracking Solutions PLC Board consists of four
directors, three of whom are non-executive, including the Chairman. Although
the Company is a relatively small company with a small board, the roles of
Chairman and Chief executive are separate, clearly established roles, with a
clear division of responsibilities between them.
The Chairman
The Chairman is responsible for the leadership of the Board. The Chairman sets
the agenda for Board meetings and encourages an open and constructive debate.
Since the Company is based in Tel Aviv, some Board meetings take place by
conference call but normally at least two meetings a year take place
physically in Israel with all Board members attending. However, given the
current troubles in Israel it was decided to hold all meetings in 2024 by
conference call. During 2024, a total of 11 Board meetings were held and all
directors attended all meetings either in person or by conference call. There
were 2 audit committee meetings held during the year under review, and all
members of the committee attended. There was one remuneration committee
meeting held during the year under review, which all members attended.
The non-executive directors
The Chairman is responsible for the leadership of the Board. The Chairman sets
the agenda for Board meetings and encourages an open and constructive debate.
Since the Company is based in Tel Aviv, some Board meetings take place by
conference call but normally at least two meetings a year take place
physically in Tel Aviv with all Board members attending. However, given the
current troubles in Israel it was decided to hold all meetings in 2024 by
conference call
Time Commitment
Each non-executive director is required to be able to devote sufficient time
to his role as a director in the light of other commitments external to the
Board. In practice, despite their limited contractual time obligations to the
Board which in general are one or two days a month, the non-executive
directors devote considerable time over and above their commitments to the
Company in support of the other executive members of the Board. On average,
they provide at least one day a week and sometimes more to assist management.
The executive director is fully committed to the Company and spends as much
time as is needed, both in normal working hours and very often much more.
The business model and strategy
The strategic objectives of the Company are becoming clear in the shipping
container market. The Company's target is to reach each and every container
and convert it into a transmitting data point. The Company is targeting to use
the opportunity of the present global environment of supply chain challenges
and logistics costs in order to penetrate the mass market. The Company's
legacy products and experience will support the business to challenge this
market and provide a comprehensive solution.
To understand and meet shareholder needs and expectations
The Board keeps in regular contact with investors with a view to understanding
their needs and expectations. During 2024, with the assistance of the
Company's brokers, presentations were made to a number of investors. In
addition, the Board welcomes contact from investors via the Company's brokers,
and via the website. Shareholders are encouraged to attend the Company's
Annual General Meetings where they can meet and directly communicate with the
Board.
Taking into account wider stakeholder and social responsibilities and their
implications for long-term success
The Company's tracking products are sold via distributors; therefore, the
Company has little influence over individual product sales. Thus, although the
Company continues to monitor performance of its distribution network, it is
not generally in touch with end users and has limited influence over the
processes followed by distributors. However, the Board constantly reviews the
distribution network by measuring the performance of individual distributors.
Where products are manufactured by external firms, the Company regularly
inspects the production facilities and processes used.
The Board is committed to reviewing and assessing stakeholder expectations and
guides the Company's senior management to act in accordance with feedback
received.
Embed effective risk management
The Board is fully aware of, and monitors closely, the risks that may apply to
the business. These include counterparty credit risk, foreign exchange risk
and, from time to time, political risks in countries where the Company is
actively marketing its products. It is also influenced by the covenants
imposed by its bankers on credit risk for certain countries. Operational risks
are identified and assessed by management and are reported to the Board when
necessary. The Audit Committee also addresses these risks at its regular
meetings. During 2024, management has actively been seeking to widen the
manufacturing bases for the Company's products so as to lessen reliance on any
single manufacturer, thus minimizing risk to the business. In order to monitor
risk, regular visits are made to the manufacturing facility and the Board is
informed of any issues that need addressing. The key risks facing the Company
together with any mitigation taken are considered further on pages 11-12 of
this document.
Ensure that the directors have the necessary up-to-date experience and skills
The Board currently comprises one executive and three non-executive directors
with an appropriate balance of sector, financial and public market skills, and
experience. The experience and knowledge of each of the directors gives them
the ability to constructively challenge strategy and to scrutinise
performance. In addition, the Non-Executive Chairman, Michael Rosenberg,
brings further strategic, commercial, transaction and leadership experience
which will be invaluable as the Board pursues the Company's growth strategy
and continues to transform the Company.
Ethical matters
As a small company, the directors are constantly in touch with members of the
staff. There are about 20 members based in the office in Israel and their
needs and aspirations are regularly reviewed.
Main governance structures and processes
The Non-Executive Chairman, Michael Rosenberg, has responsibility for ensuring
proper corporate governance and can also rely on the support of the non-board
CFO, Mr Sabag, who is also very familiar with corporate governance
requirements.
Further information on the Board and its Committees:
Michael Rosenberg OBE (Non-Executive Chairman)
Michael has many years of experience both as a corporate financier and as an
entrepreneur, involved in a number of new businesses in the healthcare, media
and financial sectors. He has considerable global experience, having been
chairman of the UK DTI committee on trade with Hong Kong and as member of the
China Britain Business Council. He was, for many years, also chairman of the
British Export Healthcare Association, now known as ABHI, and led a number of
UK trade missions overseas. He was a founder of the investment bank now known
as Numis Securities where he served as chairman for a number of years until
his retirement in 1999.
Over many years he has also served on the boards of other Israeli companies
listed on AIM, including Pilat Media Global PLC, as well as several other
non-listed companies.
Avi Hartmann (Chief Executive Officer)
Avi has spent his life as an entrepreneur focused on the technology of
tracking systems. He was a founder of Mobiltel Communications Services, which
was purchased by Pelephone in Israel in 1999. Together with his son, Uri
Hartmann, and his then partner, Doron Kedem, he founded t42 IoT Tracking
Solutions PLC in 2004.
Martin Blair (Non-Executive Director)
Martin qualified as a chartered accountant with Ernst & Young in 1982 and
between 1983 and 1986 also worked for PwC. He then spent 15 years in a
variety of senior financial roles, primarily for media and technology
companies, both in UK and the US. Martin became the CFO for Pilat Media Global
PLC, a company which previously traded on both AIM and the Tel Aviv Stock
Exchange. Pilat Media Global developed, marketed and supported new generation
business management software solutions for content and service providers in
the media industry. Martin is also currently non-executive Chairman of the
Board and Audit Chair at Cake Box Holdings PLC (AIM: CAKE).
Igor Vatenmacher (Non-Executive Director (Chief Financial Officer until April
2025))
Igor is a certified public accountant in Israel and has a bachelor's degree in
economics from Ben Gurion University of the Negev, and an Executive MBA degree
with honours, specializing in financing, banking, capital markets and
financial engineering, from the Hebrew University in Jerusalem. He began his
career with Ernst and Young. Igor joined t42 IoT Tracking Solutions PLC in
December 2017 and brings highly qualified accounting experience to the
Company. Since his appointment, he has assisted with the development of more
sophisticated internal systems and controls essential to the growth of the
business. He joined the Board of the Company in January 2019 as CFO,
transitioning to a non-executive role in April 2025.
Audit Committee
The Audit Committee consists of the non-executive directors, Martin Blair and
Michael Rosenberg, and is chaired by Martin Blair. The Audit Committee, inter
alia, determines and examines matters relating to the financial affairs of the
Company, including the terms of engagement of the Company's auditors and, in
consultation with the auditors, the scope of the annual audit. The Audit
Committee met several times during 2024. In June 2025, the Audit Committee
reviewed the financial statements for the year ended 31 December 2024, paying
particular attention to the level of debtors. The Audit Committee met in
September 2024 to consider the interim financial statements for the six months
ended 30 June 2024. Again, the Committee focused on stock valuation and debtor
levels. The Board considers that, given the size and nature of the business,
it is not beneficial to include a full audit committee report in the annual
report and accounts for 2024. This will be kept under annual review by the
Board.
The Remuneration Committee reviews the performance of the directors and makes
recommendations to the Board on matters relating to their remuneration and
terms of employment. The Committee also makes recommendations to the Board on
proposals for the granting of share options and other equity incentives plan
pursuant to any share option scheme or equity incentive scheme in operation
from time to time. The committee meets as and when necessary to assess the
suitability of candidates proposed for appointment by the Board, but not less
than once per annum. Members of the Remuneration Committee comprise Michael
Rosenberg, who acts as chairman of the committee, with Martin Blair as a
member.
The Board considers that, given the size and nature of the business, it is not
beneficial to include a Remuneration Committee report in the annual report and
accounts for 2024. This will be kept under annual review by the Board.
On behalf of the Board,
M. Rosenberg, Non-Executive Chairman
_______________
t42 IoT Tracking Solutions PLC
Directors' Report for the Year Ended December 31, 2024
The directors present the annual report together with the financial statements
and auditors' report for the year ended December 31, 2024.
The Company was incorporated in Jersey and two wholly-owned trading
subsidiaries: Starcom Systems Limited and t42 Ltd, were incorporated in Jersey
and in Israel, respectively.
Principal activities and review of business
t42 pioneering Advanced Real-Time Tracking and Management Solutions
t42 is a global leader in the field of advanced, automated real-time systems,
specializing in the remote tracking and management of vehicles, containers,
and assets. Our commitment to innovation is underpinned using cutting-edge
Artificial Intelligence (AI) and Machine Learning (ML) technologies. We offer
a unique and revolutionary real-time cargo tracking solution that caters to a
diverse clientele.
At the forefront of our product line are the revolutionary Tetis, Lokies, and
Kylos products. These products provide a comprehensive 360 degree view of
containers and goods throughout the entire supply chain. Our commitment to
excellence is evident in the strength, stability, and continuous performance
of all our systems.
Accounts production
The financial statements for the year ended December 31, 2024, have been
prepared in accordance with International Financial Reporting Standards as
adopted by the EU ("IFRS").
Dividends
The directors do not propose a final dividend.
Directors
Michael Rosenberg Appointed February 2013
Avi Hartmann Appointed February 2013
Igor Vatenmacher Appointed January 2019
Martin Blair Appointed May
2019
Remuneration of Directors
Remuneration of directors for the year ending 31 December 2024: (All amounts
presented in thousands of USD)
Executive Director Salary Pension and Related Expenses Fees Total
A Hartmann 167 24 - 191
I Vatenmacher 108 33 - 141
Non-Executive Directors
M Rosenberg - - 51 51
M Blair - - 57 57
Total 2024 275 57 108 440
Directors' remuneration in share options: (In thousands)
Total vested Vested/ (Expired) during the year Total Vested at 31/12/24 Total Un-vested at 31/12/24 Grant Total
Executive Director at 01/01/24 Exercised
A Hartmann 1,123 - 42 1,165 - 1,165
I Vatenmacher 333 - 42 375 - 375
Non-Executive Directors
M Rosenberg 814 - - 814 - 814
M Blair 364 - - 364 - 364
Charitable and Political Donations
The Group did not make any charitable or political contributions during the
year.
Corporate governance
The Company adopts the Quoted Company Alliance's (QCA) Corporate Governance
Code ("QCA Code") and the Board believes this is the appropriate code for the
Company to adhere to. The Board assesses its compliance with the QCA Code on
an annual basis.
In common with other organizations of a similar size, the executive directors
are heavily involved in the day to day running of the business and meet
regularly on an informal basis as well as at Board Meetings.
The Board of directors meets regularly and is responsible for formulating
strategy, monitoring financial performance and approving major items of
capital expenditure.
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable laws and regulations.
Company law requires the directors to prepare Group and parent Company
financial statements for each financial year. Under that law, the directors
are required to prepare the Group and parent Company financial statements in
accordance with International Financial Reporting Standards ("IFRS") as
adopted by the EU.
The financial statements are required by law to give a true and fair view of
the state of affairs of the Group and parent Company and of the profit and
loss of the Group for that period.
In preparing each of the Group and parent Company financial statements, the
directors are required to:
i) Select suitable accounting policies and then
apply them consistently;
ii) Make judgments and accounting estimates that are
reasonable and prudent; and
iii) State whether they have been prepared in accordance
with IFRS as adopted by the EU, subject to any material departures disclosed
and explained in the parent Company financial statements; and prepare the
financial statements on the "going concern" basis unless it is inappropriate
to presume that the Group and the parent Company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy, at any time, the financial position of the
Group and parent Company and enable them to ensure that the financial
statements comply with the Companies Act 2006 and Article 4 of the IAS
Regulations. They have a general responsibility for taking such steps as are
reasonably open to safeguard the assets of the Group and parent Company and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a Directors' Report to comply with that law and those regulations.
In determining how amounts are presented within terms in the income statement
and balance sheet, the directors have regarded the substance of the reported
transaction or arrangement in accordance with generally accepted accounting
principles or practice.
So far as each of the directors is aware at the time the report is approved:
There is no relevant audit information of which the Company's auditors are
unaware; and
The directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
auditors are aware of that information.
Going concern
The directors have prepared and reviewed sales forecasts and budgets for the
next twelve months and, having considered these cash flows and the
availability of other financing sources if required, have concluded that the
Group will remain a "going concern." After this process and having made
further relevant enquiries, the directors have a reasonable expectation that
the Group and the Company have adequate resources to continue in operational
existence for the foreseeable future. For this reason, they continue to adopt
the "going concern" basis in preparing the accounts.
Risks
Foreign exchange risks
Most of the Group's sales and income are in US Dollars and the US Dollar is
the currency in which the Company reports. The expenses, however, are divided
between the US Dollar, British Pound and the Israeli Shekel. The cost of goods
(components) are paid in US Dollars and part of the operational costs, such as
rent and other service providers, quote their fees in Israeli Shekel. Labor
costs are paid in Israeli Shekels. The Company has, therefore, a partial
currency risk in the event that the Israeli Shekel strengthens against the US
Dollar, which could have an effect on the bottom line of the Group's financial
results.
The Group consults with foreign currency experts from main Israeli banks
regarding the main financial institutions' expectations for foreign currency
changes. Management reviews them carefully and will consider with the board
whether it should purchase financial instruments sold by local banks to
protect itself from this foreign exchange risk.
Interest Rate Risks
The Company is exposed to interest risks as it uses credit lines and loans
from its banks. Changes in the effective Prime interest rate published monthly
by the Bank of Israel can influence the Company's financing costs.
Credit Risk
The Group is exposed to credit risks if its customers fail to pay for goods
supplied by the Group. In order to minimize this risk, the Group has a policy
of:
(a) Selling only to respectable integrators and distributors and not to the
end customer.
(b) Orders from customers in certain regions are shipped only after an
approved letter of credit is received by the Group's bank.
(c) New customers in common pays at least 30% before initial shipping.
Capital Risk management
The Group manages its cash carefully. In order to reduce its risk, the Group
may take measures to reduce its fixed costs (labor) if performance is below
the directors' expectations. The Group may conduct a placing for new shares of
the Company in order to raise additional capital as required when monitoring
its performance, and to continue its operations.
Supplier payment policy
It is the Group's policy to settle the terms of payment with suppliers when
agreeing to the terms of the transaction, to ensure that suppliers are aware
of these terms and to abide by them.
CREST
The Company's ordinary shares are eligible for settlement through CREST, the
system for securities to be held and transferred in electronic form rather
than on paper. Shareholders are not obliged to use CREST and can continue to
hold and transfer shares on paper without loss of rights.
Electronic Communications
The Company may deliver shareholder information, including Annual and Interim
Reports, Forms of Proxy and Notices of General Meetings, in an electronic
format to shareholders.
If you would like to receive shareholder information in electronic format,
please register your request on the Company's Registrar's electronic database
at www.linkassetservices.com. You will initially need your unique investor
code which you will find at the top of your share certificate. There is no
charge for this service. If you wish to subsequently change your mind, you may
do so by contacting the Company's Registrars by post or through their website.
If you elect to receive shareholder information electronically, please note
that it is the shareholder's responsibility to notify the Company of any
change in his name, address, email address or other contact details.
Shareholders should also note that, with electronic communication, the
Company's obligations will be satisfied when it transmits the notification of
availability of information, or such other document as may be involved, to the
electronic address it has on file. The Company cannot be held responsible for
any failure in transmission beyond its control any more than it can be held
responsible for postal failure.
In the event of the Company becoming aware that an electronic notification is
not successfully transmitted, a further two attempts will be made. In the
event that the transmission is still unsuccessful, a hard copy of the
notification will be mailed to the shareholder. In the event that specific
software is required to access information placed on the Company's website, it
will be available via the website without charge.
Before electing for electronic communications, shareholders should ensure that
they have the appropriate equipment and computer capabilities sufficient for
this purpose. The Company takes all reasonable precautions to ensure no
viruses are present in any communication it sends out but cannot accept
responsibility for loss or damage arising from the opening or use of any email
or attachments from the Company and recommends that shareholders subject all
messages to virus checking procedures prior to use. Any electronic
communication received by the Company that is found to contain any virus will
not be accepted.
Shareholders wishing to receive shareholder information in the conventional
printed form will continue to do so and need take no further action.
Should you have any further questions in this regard, please contact the
Company's Registrars, Share Registrars Limited.
On behalf of the Board,
M. Rosenberg, Non-Executive Chairman
Report of Independent Auditors to the Board of Directors and Stockholders of
t42 IoT Tracking Solutions PLC
We have audited the accompanying consolidated statements of financial position
of t42 IoT Tracking Solutions PLC and its subsidiaries (hereinafter - "the
Group") as of December 31, 2024 and the related consolidated statements of
comprehensive income, changes in equity and cash flows for the year then
ended. These financial statements are the responsibility of the Group board of
directors and management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
The Company's annual consolidated financial statements as of December 31, 2023
and the year then ended were audited by other accountants that their report
included drawing attention to the group's financial position and doubts
regarding the Company's ability to continue as a going concern.
We conducted our audit in accordance with generally accepted auditing
standards in Israel, including those prescribed by the Israeli Auditors'
Regulations (Auditor's Mode of Performance - 1973). Those standards require
that we plan and perform the audit to obtain reasonable assurance as to
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by the board of
directors and management as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of the Group as of December 31, 2024 and the consolidated results of its
operations, changes in equity and cash flows for the year then ended in
conformity with international financial reporting standards (IFRS).
Without qualifying our opinion, we draw attention to Note 1 (e) in the
financial statements regarding the Company's accumulated losses of 17.6
million USD from operations since inception, deficit in working capital of 4.2
million USD and loans in the amount of 3.2 million USD to be repaid during the
next 12 months. These factors, among others, indicate that there may be an
uncertainty as the Company's ability to continue as a going concern. The
management is making efforts to raise additional funds required to continue
and develop the group's operation and believes that due to the growth in the
group's activity and other activities taken, the Company will have sufficient
cash flow to continue in its activity and meet its liabilities.
Key Audit Matters
Key audit matters are matters arising from the current period audit of the
financial statements that were communicated or required to be communicated to
the board of directors and that: (1) relate to accounts or disclosures that
are material to the financial statements and (2) involve our especially
challenging, subjective, or complex judgements. We determined that there are
no key audit matters.
Shtainmetz Aminoach & Co.
Certified public accountants (Israel)
A member of UHY worldwide
Tel Aviv, June 27, 2025
T42 IOT TRACKING SOLUTIONS PLC
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. Dollars in thousands
December 31,
Note 2024 2023
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 6 341 422
Right-of-use assets 23 1,039 1,044
Intangible assets 7 759 952
Trade receivables 3 136 -
Bank deposit 5 9 -
Total Non-Current Assets 2,284 2,418
CURRENT ASSETS
Cash and cash equivalents 147 186
Deposits 5 - 35
Trade receivables 3,24 740 892
Other accounts receivables 86 27
Inventory 4 1,117 1,439
Total Current Assets 2,090 2,579
TOTAL ASSETS 4,374 4,997
DEFICIT AND LIABILITIES
14 (2,682) (939)
DEFICIT
NON-CURRENT LIABILITIES
Long-term bank loans, net of current maturities 10 13 88
Leasehold liabilities 23 770 814
Financial liabilities in fair value 11A, B - 31
Amortized cost of loans 11 - 917
Total Non-Current Liabilities 783 1,850
CURRENT LIABILITIES
Short-term bank credit 12 68 145
Current maturities of long-term bank loans 10 74 64
Trade payables 1,106 844
Other accounts payable 9 1,070 433
Current maturities of leasehold liabilities 23 202 168
Financial liabilities in fair value 11B, C 238 12
Amortized cost of loans 11A, B,D 2,745 1,681
Related parties 21 770 739
Total Current Liabilities 6,273 4,086
TOTAL DEFICIT AND LIABILITIES 4,374 4,997
The accompanying notes
are an integral part of the consolidated financial statements.
27 June 2025
Date of Approval Aviran Sabag Avi Hartmann
CFO
of the Financial Statements CEO
T42 IOT TRACKING SOLUTIONS PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S. Dollars in thousands (except shares data)
+
Year ended December 31,
Note 2024 2023
Revenues 24,25 4,158 4,005
Cost of revenues 15 (2,565) (1,882)
Gross profit 1,593 2,123
Operating expenses:
Research and development (159) (92)
Sales and marketing 19 (366) (485)
General and administrative expenses 16 (1,888) (1,665)
Other expenses, net (64) (3)
Total operating expenses (2,477) (2,245)
Operating loss (884) (122)
Finance income 17 262 604
Finance expenses 18 (1,126) (902)
Net finance income (expenses) (864) (298)
Total comprehensive loss for the year (1,748) (420)
Loss per share:
Basic and diluted loss per share 14, 20 (0.032) (0.008)
The accompanying notes are an integral part of the consolidated financial
statements.
T42 IOT TRACKING SOLUTIONS PLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. Dollars in thousands
Share Premium on Shares Capital Reserve from Share-Based Payments Total deficit
Capital Reserve
Accumulated
Loss
Balance as of January 1, 2023 - 13,531 89 1,246 (15,404) (538)
Issuance of share capital (net of expenses) - 12 - - - 12
Share based payment (see Note 14d) - - - 7 - 7
Comprehensive loss for the year - - - - (420) (420)
Balance as of December 31, 2023 - 13,543 89 1,253 (15,824) (939)
Share based payment (see Note 14d) - - - 5 - 5
Comprehensive loss for the year - - - - (1,748) (1,748)
Balance as of December 31, 2024 - 13,543 89 1,258 (17,572) (2,682)
The accompanying notes are an integral part of the consolidated financial
statements.
T42 IOT TRACKING SOLUTIONS PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. Dollars in thousands
Year Ended December 31,
2024 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the year (1,748) (420)
Adjustments for:
Depreciation and amortization 523 469
Financial expenses, Changes in fair value of financial liabilities and 700 43
exchange rate differences, net
Share-based payment expenses 5 7
Gain from modification of debt terms (190) -
Capital gain - (10)
Intangible assets impairment 122 -
Changes in assets and liabilities:
Decrease in inventory 322 142
Decrease (Increase) in trade receivables 17 (404)
Decrease (Increase) in other accounts receivable (35) 44
Decrease in Income Tax Authorities - 57
Increase (Decrease) in trade payables 166 (300)
Increase in other accounts payable 720 173
Net cash provided by (used in) operating activities 602 (198)
CASH FLOWS FOR INVESTING ACTIVITIES:
Purchases of property, plant and equipment (10) (16)
Proceeds from sales of property, plant and equipment - 52
Increase in deposits - 94
Investment in intangible assets (142) (134)
Net cash used in investing activities (152) (4)
CASH FLOWS FOR FINANCING ACTIVITIES:
Decrease in short-term bank credit, net (77) (366)
Proceeds from (payment to) related parties, net 19 (5)
Payment of leasehold liabilities (191) (183)
Repayment of loans (240) (546)
Receipt of convertible loans - 1,300
Consideration of the issue of shares, net - 14
Net cash provided by (used in) financing activities (489) 214
Increase (Decrease) in cash and cash equivalents (39) 12
Cash and cash equivalents at the beginning of the year 186 174
Cash and cash equivalents at the end of the year 147 186
Appendix A - Additional Information
Interest paid during the year 338 313
The accompanying notes are an integral part of the consolidated financial
statements.
T42 IOT TRACKING SOLUTIONS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 1 - GENERAL
a. The Reporting Entity
t42 IoT Tracking Solutions PLC ("the Company") was incorporated in Jersey on
November 28, 2012. The Company and its subsidiaries ("the Group") is a global
supplier in the field of advanced, automated real-time systems, specializing
in the remote tracking and management of vehicles, containers, and assets.
The Company fully owns t42 Ltd., an Israeli company, and Starcom Systems
Limited, a company incorporated in Jersey.
The Company's shares are admitted for trading on the AIM market of the London
Stock Exchange ("AIM").
The address of the official Company office is in Israel at t42 IoT Tracking
Solutions offices, which are located at 96 Dereh Ramatayim Street, Hod
Hasharon, Israel.
The address of the Company's registered office is at Starcom Systems Limited
offices, which is:
Forum 4, Grenville Street, St. Helier, Jersey, Channel Islands, JE4 8TQ.
b. Definitions in these financial statements:
1. International Financial Reporting Standards ("IFRS") - Standards and
interpretations adopted by the International Accounting Standards Board
("IASB") that include international financial reporting standards (IFRS) and
international accounting standards (IAS), with the addition of interpretations
to these Standards as determined by the International Financial Reporting
Interpretations Committee (IFRIC) or interpretations determined by the
Standards Interpretation Committee (SIC), respectively.
2. The Company - t42 IoT Tracking Solutions PLC.
3. The Subsidiaries - t42 Ltd. and Starcom Systems Limited.
4. Starcom Jersey - Starcom Systems Limited.
5. The Group - t42 IoT Tracking Solutions PLC. and the Subsidiaries.
6. Related Party - As determined in International Accounting Standard No. 24.
c. Operating Turnover Period
The ordinary operating period turnover for the Group is a year. As a result,
the current assets and current liabilities include items that are expected and
intended to be realized at the end of the ordinary operating turnover period
for the Group.
d. Functional and Presentation Currency
The consolidated financial statements are presented in U.S. dollars
(hereinafter: "dollars") that is the functional currency of the Group and is
rounded to the nearest thousands, except when otherwise indicated.
The dollar is the currency that represents the economic environment in which
the Group operates.
The Group's transactions and balances denominated in dollars are presented at
their original amounts. Transactions in foreign currencies are translated to
the respective functional currency of Group entities at exchange rates at the
dates of the transactions. Monetary assets and liabilities denominated in
foreign currencies at the reporting date are translated to the functional
currency at the exchange rate at that date. The foreign currency gain or loss
on monetary items is the difference between amortized cost in the functional
currency at the beginning of the year, adjusted for effective interest and
payments during the year, and the amortized cost in foreign currency
translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on translation are recognized in profit
or loss.
e. As of December 31, 2024, the Group has accumulated losses of $17.6 million
from operations since inception and has a deficit in working capital of $4.2
million, including loans in the amount of $3.2 million to be repaid or
converted during the next 12 months. In addition, the year ended on December
31,2024 resulted in an operating loss of $2.5 million. These factors indicate
that there may be an uncertainty as the Company's ability to continue as a
going concern. The management continues to focus its efforts to raise
additional funds required to continue the Group's operations and negotiating
with lenders to find an overall solution in which loans repayments will be
postponed over a longer period of time and/or will be converted to equity. The
management believes that due to the growth in the Group's activity and other
efficient measures taken, the Company will have sufficient cashflow to
continue in its activities and meet its liabilities.
NOTE 2A - BASIS OF PREPARATION
a. Statement of compliance
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs).
The consolidated financial statements were authorized for issue by the
Company's Board of Directors on 27 June 2025.
b. Basis of Measurement
The consolidated financial statements have been prepared on the historical
cost basis, except for financial liabilities at fair value through profit or
loss that are stated at fair value.
NOTE 2B - USE OF ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these
estimates.
Upon formulation of accounting estimates used in preparation of the Group
financial statements, management is required to make assumptions in regard to
circumstances and events that are significantly uncertain. Management arrives
at these decisions 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 recognized in the period in which the
estimates are revised and in any future periods affected.
Information about assumptions made by the Group with respect to the future and
other reasons for uncertainty with respect to estimates that have a
significant risk of resulting in a material adjustment to carrying amounts of
assets and liabilities in the next financial year are included in the
following notes:
Note 7 on Recoverability of development costs.
Note 11 on fair value measurement of financial liabilities and derivatives.
Note 8 on Recognition of deferred tax assets in respect of tax losses.
Determination of fair value
Preparation of the financial statements requires the Group to determine the
fair value of certain assets and liabilities. Further information about the
assumptions that were used to determine fair value is included in the
following note 11.
When determining the fair value of an asset or liability, the Group uses
observable market data as much as possible. There are three levels of fair
value measurements in the fair value hierarchy that are based on the data used
in the measurement, as follows:
• Level 1: quoted prices (unadjusted) in active markets
for identical assets or liabilities.
• Level 2: inputs other than quoted prices included
within Level 1 that are observable, either directly or indirectly
• Level 3: inputs that are not based on observable
market data (unobservable inputs).
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES
a. Basis of consolidation
Subsidiaries are entities controlled by the Group. The financial statements of
subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control is lost. The
accounting policies of subsidiaries are like the policies adopted by the
Group.
All intra-group transactions, balances, income, and expenses of the companies
are eliminated on consolidation.
b. Foreign currency and linkage basis
Assets and liabilities stated in foreign currency are translated to USD at
exchange rates at the reporting date. The income and expenses of operations
stated in the foreign currency are translated to USD at exchange rates at the
dates of the transactions.
Foreign currency differences are recognized in other comprehensive income.
Exchange rates and changes in exchange rates during the reported periods are
as follows:
As of December 31,
2024 2023
Exchange Rate of NIS in U.S. $ 0.274 0.276
Exchange Rate of GBP in U.S. $ 1.254 1.274
For the Year Ended December 31,
2024 2023
Change in Exchange Rate of U.S. $ (0.72)% 2.90%
Change in Exchange Rate of GBP (1.57%) (5.80%)
c. Financial instruments
(i) Financial assets
The Group initially recognizes trade receivables and debt instruments issued
on the date that they are created. All other financial assets are recognized
initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument. A financial asset is initially
measured at fair value plus transaction costs that are directly attributable
to the acquisition or issuance of the financial asset. A trade receivable
without a significant financing component is initially measured at the
transaction price.
Financial assets are derecognized when the contractual rights of the Group to
the cash flows from the asset expire, or the Group transfers the rights to
receive the contractual cash flows on the financial asset in a transaction in
which substantially all the risks and rewards of ownership of the financial
asset were transferred. When the Group retains substantially all of the risks
and rewards of ownership of the financial asset.
Financial assets and liabilities are offset and the net amount presented in
the statement of financial position when, and only when, the Group currently
has a legal right to offset the amounts and intends either to settle on a net
basis or to realize the asset and settle the liability simultaneously.
The Group has balances of trade and other receivables and deposits that are
held within a business model whose objective is collecting contractual cash
flows. The contractual cash flows of these financial assets represent solely
payments of principal and interest that reflect consideration for the time
value of money and the credit risk. Accordingly, the group's financial assets
are measured at amortized cost.
These assets are subsequently measured at amortized cost using the effective
interest method. The amortized cost is reduced by impairment losses. Interest
income, foreign exchange gains and losses and impairment are recognized in
profit or loss. Any gain or loss on derecognition is recognized in profit or
loss.
c. Financial instruments (cont.)
(ii) Non-derivative financial liabilities
Non-derivative financial liabilities include bank credit and borrowings from
banks and others, finance lease liabilities, and trade and other payables.
The Group initially recognizes debt securities issued on the date that they
originated. All other financial liabilities are recognized initially on the
trade date at which the Group becomes a party to the contractual provisions of
the instrument.
Financial liabilities (other than financial liabilities at fair value through
profit or loss) are recognized initially at fair value less any directly
attributable transaction costs. Subsequent to initial recognition these
financial liabilities are measured at amortized cost using the effective
interest method.
Financial liabilities are derecognized when the obligation of the Group, as
specified in the agreement, expires or when it is discharged or cancelled.
An exchange of debt instruments having substantially different terms, is
accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. Furthermore, a substantial
modification of the terms of an existing financial liability, or an exchange
of debt instruments having substantially different terms between an existing
borrower and lender, are accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability at fair
value.
In such cases the entire difference between the amortized cost of the original
financial liability and the fair value of the new financial liability is
recognized in profit or loss as financing income or expense.
The terms are substantially different if the discounted present value of the
cash flows according to the new terms, including any commissions paid, less
any commissions received and discounted using the original effective interest
rate, is different by at least ten percent from the discounted present value
of the remaining cash flows of the original financial liability
In a non-substantial modification in terms of debt instruments, the new cash
flows are discounted using the original effective interest rate, and the
difference between the present value of the new financial liability and the
present value of the original financial liability is recognized in profit or
loss.
(iii) Hybrid financial instruments
Liabilities that are convertible into shares denominated in foreign currency
or are linked foreign currency are a hybrid instrument (combined) that is
presented fully as a financial liability.
The instrument is split into two components for measurement purposes: A
liability component without a conversion feature that is measured at amortized
cost according to the effective interest method, and a conversion option that
is an embedded derivative and is measured at fair value at each reporting
date. Interest related to the financial liabilities is recognized in profit or
loss.
Any directly attributable transaction costs are allocated to the liabilities
and equity components in proportion to their initial carrying amounts.
(iv) Derivatives that are not serve hedging purposes
The changes in fair value of these derivatives are recognized in profit or
loss, as financing income or expense. Inter alia, the Group implements the
said accounting treatment to changes in the fair value of the conversion
component of convertible loans and warrants granted to lenders.
d. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with
maturities of three months or less from the acquisition date that are subject
to an insignificant risk of changes in their fair value and are used by the
Group in the management of its short-term commitments.
e. Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares are recognized as a deduction
from equity, net of any tax effects.
The consideration received from the issuance of a parcel of securities is
attributed initially to financial liabilities that are measured each period at
fair value through profit or loss, and then to financial liabilities that are
measured only upon initial recognition at fair value. The remaining amount is
the value of the equity component.
Direct issuance costs are attributed to the specific securities in respect of
which they were incurred, whereas joint issuance costs are attributed to the
securities on a proportionate basis according to the allocation of the
consideration from the issuance of the parcel
f. Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated
depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets, at the following annual rates:
%
Computers and software 33
Office furniture and equipment 7 - 15
Laboratory equipment 15
Leasehold improvements are depreciated by the straight-line method over the
term of the lease, ten-year period, (including option terms) or the estimated
useful lives of the improvements, unless it is reasonably certain that the
Group will obtain ownership by the end of the lease term.
At each balance sheet date, the Group examines the residual value, the useful
life and the depreciation method it uses. If the Group identifies material
changes in the expected residual value, the useful life or the future pattern
of consumption of future economic benefits in the asset that may indicate that
a change in the depreciation is required, such changes are treated as changes
in accounting estimates. In 2024, no material changes have taken place with
any material effect on the financial statements of the Group.
g. Intangible assets: Research and development
Expenditure on research activities, undertaken with the prospect of gaining
new scientific or technical knowledge and understanding, is recognized in
profit or loss as incurred.
Development activities involve a plan or design for the production of new or
substantially improved products and processes. Development expenditure is
capitalized only if development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are
probable, and the Group intends and has sufficient resources to complete
development and to use or sell the asset.
The expenditure capitalized includes the cost of material and direct labor
that are directly attributable to preparing the asset for its intended use.
Other development expenditure is recognized in profit or loss as incurred.
g. Intangible assets: Research and development (cont.)
Capitalized development expenditure is measured at cost less accumulated
amortization and accumulated impairment losses. Amortization is calculated
using the straight-line method over the estimated useful lives of the assets:
between five to ten years.
At each balance sheet date, the Group reviews whether any events have occurred
or changes in circumstances have taken place, which might indicate that there
has been an impairment of the intangible assets. When such indicators of
impairment are present, the Group evaluates whether the carrying value of the
intangible asset in the Group's accounts can be recovered from the cash flows
anticipated from that asset, and, if necessary, records an impairment
provision up to the amount needed to adjust the carrying amount to the
recoverable amount.
h. Leases
On the inception date of the lease, the Group determines whether the
arrangement is a lease or contains a lease, while examining whether it conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. In its assessment of whether an arrangement
conveys the right to control the use of an identified asset, the Group
assesses whether it has the following two rights throughout the lease term:
(a) The right to obtain substantially all the economic benefits from use of
the identified asset;
(b) The right to direct the identified asset's use.
1. Lease assets and lease liabilities
Contracts that award the Group control over the use of a leased asset for a
period of time in exchange for consideration, are accounted for as leases.
Upon initial recognition, the Group recognizes a liability at the present
value of the balance of future lease payments (these payments do not include
certain variable lease payments) and concurrently recognizes a right-of-use
asset at the same amount of the lease liability, adjusted for any prepaid or
accrued lease payments, plus initial direct costs incurred in respect of the
lease.
Since the interest rate implicit in the Group's leases is not readily
determinable, the incremental borrowing rate of the Lessee is used. Subsequent
to initial recognition, the right-of-use asset is accounted for using the cost
model and depreciated over the shorter of the lease term or useful life of the
asset.
The Group has elected to apply the practical expedient by which short-term
leases of up to one year and/or leases in which the underlying asset has a low
value, are accounted for such that lease payments are recognized in profit or
loss on a straight-line basis, over the lease term, without recognizing an
asset and/or liability in the statement of financial position.
2. Lease term
The lease term is the non-cancellable period of the lease plus periods covered
by an extension or termination option if it is reasonably certain that the
lessee will or will not exercise the option, respectively
3. Variable lease payments
Variable lease payments that depend on an index or a rate are initially
measured using the index or rate existing at the commencement of the lease and
are included in the measurement of the lease liability. When the cash flows of
future lease payments change as the result of a change in an index or a rate,
the balance of the liability is adjusted against the right-of-use asset.
Other variable lease payments that are not included in the measurement of the
lease liability are recognized in profit or loss in the period in which the
event or condition that triggers payment occurs.
h. Leases (cont.)
4. Depreciation of right-of-use assets
After lease commencement, a right-of-use asset is measured on a cost basis
less accumulated depreciation and accumulated impairment losses and is
adjusted for re-measurements of the lease liability. Depreciation is
calculated on a straight-line basis over the useful life or contractual lease
period, whichever earlier, as follows:
Offices - 10
years
Vehicles - 3 years
i. Inventories
Inventories are measured at the lower of cost and net realizable value. The
cost of inventories is based on the moving average/first-in first-out (FIFO)
principle, and includes expenditure incurred in acquiring the inventories and
the costs incurred in bringing them to their existing location and condition.
In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
j. Impairment
Financial assets
The Group recognizes a provision for expected credit losses (provision for
doubtful accounts) in respect of financial assets at amortized cost which are
mainly trade receivables.
The Group has elected to measure the provision for expected credit losses in
respect of trade receivables at an amount equal to the full lifetime credit
losses of the instrument.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition, and when estimating expected credit
losses, the Group considers reasonable and supportable information that is
relevant and available with no undue cost or effort. Such information includes
quantitative and qualitative information, and an analysis, based on the
Group's past experience and informed credit assessment, and it includes
forward-looking info.
The Group assumes that the credit risk of a financial asset has increased
significantly since initial recognition when contractual payments are past due
for more than 60 days.
The Group considers a financial asset to be in default when the borrower is
unlikely to pay its credit obligations to the Group in full or when the
payments of the financial assets are past due for more than 120 days.
Credit losses are measured as the present value of the difference between the
cash flows due to the Group in accordance with the contract and the cash flows
that the Group expects to receive. At each reporting date, the Group assesses
whether financial assets carried at amortized cost is credit-impaired. A
financial asset is 'credit-impaired' when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset
have occurred.
Evidence that a financial asset is credit-impaired includes the following
events: Significant financial difficulty of the borrower, payments being past
due, it is probable that the borrower will enter bankruptcy or other financial
reorganization.
Provisions for expected credit losses of financial assets measured at
amortized cost are deducted from the gross carrying amount of the financial
assets.
The gross carrying amount of a financial asset is written off when the Group
does not have reasonable expectations of recovering a financial asset at its
entirety or a portion thereof. This is usually the case when the Group
determines that the debtor does not have assets or sources of income that may
generate sufficient cash flows for paying the amounts being written off.
However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group's procedures for
recovery of amounts due
Non-financial assets
The carrying amounts of the Group's non-financial assets, other than
inventories are reviewed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use and its
fair value less costs of disposal. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects the assessments of market participants regarding
the time value of money and the risks specific to the asset for which the
estimated future cash flows from the asset were not adjusted.
An impairment loss is recognized if the carrying amount of an asset exceeds
its estimated recoverable amount. Impairment losses are recognized in profit
or loss.
k. Revenues
The Group recognizes revenue when the customer obtains control over the
promised goods or services. The revenue is measured according to the amount of
the consideration to which the Group expects to be entitled in exchange for
the goods or services promised to the customer, other than amounts collected
for third parties.
When determining the transaction price the Group takes into account the
effects of all relevant elements like: discounts, refunds, credits and an
existence of a significant financing component.
In order to measure the transaction price, the Group adjusts the amount of the
promised consideration in respect of the effects of the time value of money if
the timing of the payments agreed between the parties provides the customer a
significant financing benefit.
c. Financial instruments
(i) Financial assets
The Group initially recognizes trade receivables and debt instruments issued
on the date that they are created. All other financial assets are recognized
initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument. A financial asset is initially
measured at fair value plus transaction costs that are directly attributable
to the acquisition or issuance of the financial asset. A trade receivable
without a significant financing component is initially measured at the
transaction price.
Financial assets are derecognized when the contractual rights of the Group to
the cash flows from the asset expire, or the Group transfers the rights to
receive the contractual cash flows on the financial asset in a transaction in
which substantially all the risks and rewards of ownership of the financial
asset were transferred. When the Group retains substantially all of the risks
and rewards of ownership of the financial asset.
Financial assets and liabilities are offset and the net amount presented in
the statement of financial position when, and only when, the Group currently
has a legal right to offset the amounts and intends either to settle on a net
basis or to realize the asset and settle the liability simultaneously.
The Group has balances of trade and other receivables and deposits that are
held within a business model whose objective is collecting contractual cash
flows. The contractual cash flows of these financial assets represent solely
payments of principal and interest that reflect consideration for the time
value of money and the credit risk. Accordingly, the group's financial assets
are measured at amortized cost.
These assets are subsequently measured at amortized cost using the effective
interest method. The amortized cost is reduced by impairment losses. Interest
income, foreign exchange gains and losses and impairment are recognized in
profit or loss. Any gain or loss on derecognition is recognized in profit or
loss.
c.
Financial instruments (cont.)
(ii) Non-derivative financial liabilities
Non-derivative financial liabilities include bank credit and borrowings from
banks and others, finance lease liabilities, and trade and other payables.
The Group initially recognizes debt securities issued on the date that they
originated. All other financial liabilities are recognized initially on the
trade date at which the Group becomes a party to the contractual provisions of
the instrument.
Financial liabilities (other than financial liabilities at fair value through
profit or loss) are recognized initially at fair value less any directly
attributable transaction costs. Subsequent to initial recognition these
financial liabilities are measured at amortized cost using the effective
interest method.
Financial liabilities are derecognized when the obligation of the Group, as
specified in the agreement, expires or when it is discharged or cancelled.
An exchange of debt instruments having substantially different terms, is
accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. Furthermore, a substantial
modification of the terms of an existing financial liability, or an exchange
of debt instruments having substantially different terms between an existing
borrower and lender, are accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability at fair
value.
In such cases the entire difference between the amortized cost of the original
financial liability and the fair value of the new financial liability is
recognized in profit or loss as financing income or expense.
The terms are substantially different if the discounted present value of the
cash flows according to the new terms, including any commissions paid, less
any commissions received and discounted using the original effective interest
rate, is different by at least ten percent from the discounted present value
of the remaining cash flows of the original financial liability
In a non-substantial modification in terms of debt instruments, the new cash
flows are discounted using the original effective interest rate, and the
difference between the present value of the new financial liability and the
present value of the original financial liability is recognized in profit or
loss.
(iii) Hybrid financial instruments
Liabilities that are convertible into shares denominated in foreign currency
or are linked foreign currency are a hybrid instrument (combined) that is
presented fully as a financial liability.
The instrument is split into two components for measurement purposes: A
liability component without a conversion feature that is measured at amortized
cost according to the effective interest method, and a conversion option that
is an embedded derivative and is measured at fair value at each reporting
date. Interest related to the financial liabilities is recognized in profit or
loss.
Any directly attributable transaction costs are allocated to the liabilities
and equity components in proportion to their initial carrying amounts.
(iv) Derivatives that are not serve hedging purposes
The changes in fair value of these derivatives are recognized in profit or
loss, as financing income or expense. Inter alia, the Group implements the
said accounting treatment to changes in the fair value of the conversion
component of convertible loans and warrants granted to lenders.
d.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with
maturities of three months or less from the acquisition date that are subject
to an insignificant risk of changes in their fair value and are used by the
Group in the management of its short-term commitments.
e.
Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares are recognized as a deduction
from equity, net of any tax effects.
The consideration received from the issuance of a parcel of securities is
attributed initially to financial liabilities that are measured each period at
fair value through profit or loss, and then to financial liabilities that are
measured only upon initial recognition at fair value. The remaining amount is
the value of the equity component.
Direct issuance costs are attributed to the specific securities in respect of
which they were incurred, whereas joint issuance costs are attributed to the
securities on a proportionate basis according to the allocation of the
consideration from the issuance of the parcel
f.
Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated
depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets, at the following annual rates:
%
Computers and software
33
Office furniture and equipment
7 - 15
Laboratory equipment
15
Leasehold improvements are depreciated by the straight-line method over the
term of the lease, ten-year period, (including option terms) or the estimated
useful lives of the improvements, unless it is reasonably certain that the
Group will obtain ownership by the end of the lease term.
At each balance sheet date, the Group examines the residual value, the useful
life and the depreciation method it uses. If the Group identifies material
changes in the expected residual value, the useful life or the future pattern
of consumption of future economic benefits in the asset that may indicate that
a change in the depreciation is required, such changes are treated as changes
in accounting estimates. In 2024, no material changes have taken place with
any material effect on the financial statements of the Group.
g.
Intangible assets: Research and development
Expenditure on research activities, undertaken with the prospect of gaining
new scientific or technical knowledge and understanding, is recognized in
profit or loss as incurred.
Development activities involve a plan or design for the production of new or
substantially improved products and processes. Development expenditure is
capitalized only if development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are
probable, and the Group intends and has sufficient resources to complete
development and to use or sell the asset.
The expenditure capitalized includes the cost of material and direct labor
that are directly attributable to preparing the asset for its intended use.
Other development expenditure is recognized in profit or loss as incurred.
g.
Intangible assets: Research and development (cont.)
Capitalized development expenditure is measured at cost less accumulated
amortization and accumulated impairment losses. Amortization is calculated
using the straight-line method over the estimated useful lives of the assets:
between five to ten years.
At each balance sheet date, the Group reviews whether any events have occurred
or changes in circumstances have taken place, which might indicate that there
has been an impairment of the intangible assets. When such indicators of
impairment are present, the Group evaluates whether the carrying value of the
intangible asset in the Group's accounts can be recovered from the cash flows
anticipated from that asset, and, if necessary, records an impairment
provision up to the amount needed to adjust the carrying amount to the
recoverable amount.
h.
Leases
On the inception date of the lease, the Group determines whether the
arrangement is a lease or contains a lease, while examining whether it conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. In its assessment of whether an arrangement
conveys the right to control the use of an identified asset, the Group
assesses whether it has the following two rights throughout the lease term:
(a) The right to obtain substantially all the economic benefits from use of
the identified asset;
(b) The right to direct the identified asset's use.
1. Lease assets and lease liabilities
Contracts that award the Group control over the use of a leased asset for a
period of time in exchange for consideration, are accounted for as leases.
Upon initial recognition, the Group recognizes a liability at the present
value of the balance of future lease payments (these payments do not include
certain variable lease payments) and concurrently recognizes a right-of-use
asset at the same amount of the lease liability, adjusted for any prepaid or
accrued lease payments, plus initial direct costs incurred in respect of the
lease.
Since the interest rate implicit in the Group's leases is not readily
determinable, the incremental borrowing rate of the Lessee is used. Subsequent
to initial recognition, the right-of-use asset is accounted for using the cost
model and depreciated over the shorter of the lease term or useful life of the
asset.
The Group has elected to apply the practical expedient by which short-term
leases of up to one year and/or leases in which the underlying asset has a low
value, are accounted for such that lease payments are recognized in profit or
loss on a straight-line basis, over the lease term, without recognizing an
asset and/or liability in the statement of financial position.
2. Lease term
The lease term is the non-cancellable period of the lease plus periods covered
by an extension or termination option if it is reasonably certain that the
lessee will or will not exercise the option, respectively
3. Variable lease payments
Variable lease payments that depend on an index or a rate are initially
measured using the index or rate existing at the commencement of the lease and
are included in the measurement of the lease liability. When the cash flows of
future lease payments change as the result of a change in an index or a rate,
the balance of the liability is adjusted against the right-of-use asset.
Other variable lease payments that are not included in the measurement of the
lease liability are recognized in profit or loss in the period in which the
event or condition that triggers payment occurs.
h.
Leases (cont.)
4. Depreciation of right-of-use assets
After lease commencement, a right-of-use asset is measured on a cost basis
less accumulated depreciation and accumulated impairment losses and is
adjusted for re-measurements of the lease liability. Depreciation is
calculated on a straight-line basis over the useful life or contractual lease
period, whichever earlier, as follows:
Offices - 10
years
Vehicles - 3 years
i.
Inventories
Inventories are measured at the lower of cost and net realizable value. The
cost of inventories is based on the moving average/first-in first-out (FIFO)
principle, and includes expenditure incurred in acquiring the inventories and
the costs incurred in bringing them to their existing location and condition.
In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
j.
Impairment
Financial assets
The Group recognizes a provision for expected credit losses (provision for
doubtful accounts) in respect of financial assets at amortized cost which are
mainly trade receivables.
The Group has elected to measure the provision for expected credit losses in
respect of trade receivables at an amount equal to the full lifetime credit
losses of the instrument.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition, and when estimating expected credit
losses, the Group considers reasonable and supportable information that is
relevant and available with no undue cost or effort. Such information includes
quantitative and qualitative information, and an analysis, based on the
Group's past experience and informed credit assessment, and it includes
forward-looking info.
The Group assumes that the credit risk of a financial asset has increased
significantly since initial recognition when contractual payments are past due
for more than 60 days.
The Group considers a financial asset to be in default when the borrower is
unlikely to pay its credit obligations to the Group in full or when the
payments of the financial assets are past due for more than 120 days.
Credit losses are measured as the present value of the difference between the
cash flows due to the Group in accordance with the contract and the cash flows
that the Group expects to receive. At each reporting date, the Group assesses
whether financial assets carried at amortized cost is credit-impaired. A
financial asset is 'credit-impaired' when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset
have occurred.
Evidence that a financial asset is credit-impaired includes the following
events: Significant financial difficulty of the borrower, payments being past
due, it is probable that the borrower will enter bankruptcy or other financial
reorganization.
Provisions for expected credit losses of financial assets measured at
amortized cost are deducted from the gross carrying amount of the financial
assets.
The gross carrying amount of a financial asset is written off when the Group
does not have reasonable expectations of recovering a financial asset at its
entirety or a portion thereof. This is usually the case when the Group
determines that the debtor does not have assets or sources of income that may
generate sufficient cash flows for paying the amounts being written off.
However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group's procedures for
recovery of amounts due
Non-financial assets
The carrying amounts of the Group's non-financial assets, other than
inventories are reviewed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use and its
fair value less costs of disposal. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects the assessments of market participants regarding
the time value of money and the risks specific to the asset for which the
estimated future cash flows from the asset were not adjusted.
An impairment loss is recognized if the carrying amount of an asset exceeds
its estimated recoverable amount. Impairment losses are recognized in profit
or loss.
k.
Revenues
The Group recognizes revenue when the customer obtains control over the
promised goods or services. The revenue is measured according to the amount of
the consideration to which the Group expects to be entitled in exchange for
the goods or services promised to the customer, other than amounts collected
for third parties.
When determining the transaction price the Group takes into account the
effects of all relevant elements like: discounts, refunds, credits and an
existence of a significant financing component.
In order to measure the transaction price, the Group adjusts the amount of the
promised consideration in respect of the effects of the time value of money if
the timing of the payments agreed between the parties provides the customer a
significant financing benefit.
k. Revenues (cont.)
When assessing whether a contract contains a significant financing component,
the Group examines, inter alia, the expected length of time between the date
the Group transfers the promised goods or services to the customer and the
date the customer pays for these goods or services, as well as the difference,
if any, between the amount of the consideration promised and the cash selling
price of the promised goods or services.
When the contract contains a significant financing component, the Group
recognizes the amount of the consideration using the discount rate that would
be reflected in a separate financing transaction between it and the customer
on the contract's inception date. The financing component is recognized as
interest income over the period, which are calculated according to the
effective interest method.
In cases where the difference between the time of receiving payment and the
time of transferring the goods or services to the customer is one year or
less, the Group applies the practical expedient included in the standard and
does not separate a significant financing component. During the year of 2024
the group recognized such interest income in the amount of 70K$.
In sales of hardware products (devices) customers obtain control over the
products when they are dispatched from the Group's warehouse and or when they
are provided to the client's warehouse (depending on the specific agreement
between client and the group), therefore the Group recognizes revenue at that
time.
For Saas services, which mainly include providing access to Group's platform
that allows control and monitoring of the use of the Group's products -
revenue is recognized over time in the reporting period in which the services
are provided, since the customer simultaneously receives and consumes the
benefits provided by the Group's performance when the Group provides such
services.
In certain contracts with customers the Group provides warranty services to
the customers according to the contract or as customary in the industry. The
warranty services are provided only in order to ensure the quality of the work
and compliance with the specifications agreed between the parties, and do not
constitute an additional service to the customer. Therefore, the Group does
not identify the warranty as a distinct performance obligation but rather
accounts for it in accordance with the guidance in IAS 37 and recognizes a
provision for warranty at the estimated cost of such services.
l. Provisions
Provisions are recognized when the Group has a current obligation (legal or
derived) as a result of a past occurrence that can be reliably measured, that
will in all probability result in the Group being required to provide
additional benefits in order to settle this obligation. Provisions are
determined by capitalization of projected cash flows at a rate prior to taxes
that reflects the current market preparation for the money duration and the
specific risks for the liability.
m. Finance income and expenses
Financing income comprises interest income on funds invested, gains on changes
in the fair value of financial derivatives at fair value through profit or
loss and foreign currency gains.
Financing expenses comprise interest expense on borrowings, charges and
changes in the fair value of financial derivatives at fair value through
profit or loss.
Borrowing costs, which are not capitalized to qualifying assets, are
recognized in profit or loss using the effective interest method.
Foreign currency gains and losses on financial assets and financial
liabilities are reported on a net basis as either financing income or
financing expenses depending on whether foreign currency movements are in a
net gain or net loss position.
Interest income or expense is recognized using the effective interest method.
Generally, in calculating interest income and expense, the effective interest
rate is applied to the gross carrying amount of the financial asset or to the
amortized cost of the financial liability, as applicable.
n. Employee benefits
1. Short-term employee benefits -
Short-term employee benefit obligations are measured on an undiscounted basis
and are expensed as the related service is provided or upon the actual absence
of the employee when the benefit is not accumulated (such as maternity leave).
Aliability is recognized for the amount expected to be paid under short-term
cash bonus if the Group has a present legal or constructive obligation to pay
this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
The employee benefits are classified, for measurement purposes, as short-term
benefits or as other long-term benefits depending on when the Group expects
the benefits to be wholly settled.
2. Benefits upon retirement -
The Group has a post-employment benefit plans. The plans are financed by
deposits with insurance companies, and they are classified as defined
contribution plans. A defined contribution plan is a post-employment benefit
plan under which an entity pays fixed contributions into a separate entity and
has no legal or constructive obligation to pay further amounts. Obligations
for contributions to defined contribution pension plans are recognized as an
expense in profit or loss in the periods during which related services are
rendered by employees. Contributions to a defined contribution plan that are
due more than 12 months after the end of the period in which the employees
render the service are discounted to their present value.
3. Shares based payments
The grant date fair value of share-based payment awards granted to employees
is recognized as a salary expense, with a corresponding increase in equity,
over the period that the employees become unconditionally entitled to the
awards. The amount recognized as an expense in respect of share-based payment
awards that are conditional upon meeting service is adjusted to reflect the
number of awards that are expected to vest.
Share-based payment arrangements in which equity instruments are granted by
the parent company to the employees of the Company are accounted for by the
Company as equity-settled share-based payment transactions.
-
o. Taxes
Income tax comprises current and deferred tax. Current tax and deferred tax
are recognized in profit or loss.
Current taxes
Current tax is the expected tax payable (or receivable) on the taxable income
for the year, using tax rates enacted or substantively enacted at the
reporting date. Current taxes also include taxes in respect of prior years and
any tax arising from dividends.
Deferred taxes
Deferred tax is recognized in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognized for
temporary differences related to the initial recognition of assets and
liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss.
The measurement of deferred tax reflects the tax consequences that would
follow the manner in which the Group expects, at the end of the reporting
period, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date.
A deferred tax asset is recognized for unused tax losses and deductible
temporary differences, to the extent that it is probable that future taxable
profits will be available against which they can be utilized. Deferred tax
assets are reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be realized.
Deferred tax assets that were not recognized are reevaluated at each reporting
date and recognized if it has become probable that future taxable profits will
be available against which they can be utilized.
Offset of deferred tax assets and liabilities
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their current tax assets and
liabilities will be realized simultaneously
p. Earnings per Share
The Group presents basic and diluted earnings per share (EPS) data for its
ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary
shareholders of the Company and the weighted average number of ordinary shares
outstanding, after adjustment for the effects of all dilutive potential
ordinary shares, which comprise convertible loans, warrants and share
options granted to employees.
NOTE 2D - CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
There were no new standards or amendments that are relevant for the Group
which are effective for annual periods beginning on or after 1 January 2024.
New significant relevant standards not yet adopted:
IFRS 18, Presentation and Disclosure in Financial Statements
This standard replaces IAS 1, Presentation of Financial Statements. The
purpose of the standard is to provide improved structure and content to the
financial statements, particularly the income statement. The standard includes
new disclosure and presentation requirements that were taken from IAS 1,
Presentation of Financial Statements, with small changes. As part of the new
disclosure requirements, companies will be required to present two subtotals
in the income statement: operating profit and profit before financing and
taxes. Furthermore, for most companies, the results in the income statements
will be classified into three categories: operating profit, profit from
investments and profit from financing. In addition to the changes in the
structure of the income statements, the standard also includes a requirement
to provide separate disclosure in the financial statements regarding the use
of management-defined performance measures (non-GAAP measures). Furthermore,
the standard adds specific guidance for aggregation and disaggregation of
items in the financial statements and in the notes. The standard will
encourage companies to avoid classifying items as 'other' (for example, other
expenses), and using this classification will lead to additional disclosure
requirements. The standard is effective from annual reporting periods
beginning on or after 1 January 2027 with earlier application being permitted.
The Group is examining the effects of the standard on its financial statements
with no plans for early adoption.
NOTE 3 - TRADE RECEIVABLES
December 31
2024 2023
Open accounts 439 560
Income to receive 460 353
899 913
Provision for doubtful accounts (credit loss) (23) (21)
876 892
Income to receive - long term (136) -
740 892
The movement in the provision for doubtful accounts respect of trade
receivables during the year was as follows:
2024 2023
Balance as at January 1 21 9
Change from write-off of financial assets (42) (9)
Allowance for doubtful accounts 44 21
Balance as of December 31 23 21
Presented hereunder is information about ages of trade receivables accounts:
December 31, 2024
Not past due 570
Past due 1-30 days 94
Past due 31-60 days 43
Past due 61-90 days 62
Past due more than 90 days (*) 130
Total 899
(*) The provision for doubtful accounts refers to debts overdue by more than
90 days.
NOTE 4 - INVENTORY
December 31
2024 2023
Raw materials 959 1,076
Finished goods 158 363
1,117 1,439
In 2024, the Group wrote down inventories to their net realizable value by the
amount of $33k.
NOTE 5 - BANK DEPOSIT
A bank deposit sums of $9 and $8 as of December 31, 2024 and 2023,
respectively, serves as a security deposit for repayment of a long-term bank
loan (see note 10). The deposit bears negligible interest.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
Computers and Software Furniture and Equipment Laboratory Equipment Leasehold Improvements
Total
Cost:
c Balance as of January 1, 2024 159 306 345 1,050
240
Additions during the year
4 - 4 2 10
Balance as of December 31, 2024 244 159 310 347 1,060
Accumulated Depreciation:
Balance as of January 1, 2024 221 117 220 70 628
Depreciation during the year
14 14 35 28 91
Balance as of December 31, 2024
235 131 255 98 719
Net book value December 31, 2024 9 28 55 249 341
Computers and Software Furniture and Equipment
Laboratory Equipment Leasehold Improvements
Vehicles Total
Cost:
c Balance as of January 1, 2023 240
156 299 340 156 1,191
Additions during the year
- 3 7 5 - 15
Disposal during the year
- - - - (156) (156)
Balance as of December 31, 2023 240 159 306 345 - 1,050
Accumulated Depreciation:
Balance as of January 1, 2023 203 109 181 31 121 645
Depreciation during the year
18 8 39 39 - 104
Disposal during the year
- - - - (121) (121)
Balance as of December 31, 2023 221 117 220 70 - 628
Net book value December 31, 2023 19 42 86 275 - 422
Net book value as of January 1, 2023
37 47 118 309 35 546
NOTE 7 - INTANGIBLE ASSETS
Total
Cost:
Balance as of January 1, 2024 2,018
Additions - capitalized development costs 142
Balance as of December 31, 2024 2,160
Accumulated Amortization and impairment loss:
Balance as of January 1 ,2024 (1,066)
Amortization during the year (213)
Impairment during the year (122)
Balance as of December 31, 2024 (1,401)
Net book value as of December 31, 2024 759
Total
Cost:
Balance as of January 1, 2023 1,884
Additions - capitalized development costs 134
Balance as of December 31, 2023 2,018
Accumulated Amortization:
Balance as of January 1, 2023 (863)
Amortization during the year (203)
Balance as of December 31, 2023 (1,066)
Net book value as of December 31, 2023 952
Amortization is calculated using the straight-line method over the estimated
useful lives of the assets, 5-10 years.
Recoverability of development costs
The carrying amount of certain intangible assets representing development
costs for a few products is $ 291,000. An impairment test was triggered during
the year because of changes in demand for certain versions of those products.
The recoverable amount of those products was estimated by the company based on
their value in use, determined by discounting the future cash flows generated
from the continuing use of those products using a discount rate of 16% and a
growth rate of 5%-15% in the years 2025-2026. The carrying amount of those
products was determined to be higher than their recoverable amount of
$122,000, and an impairment loss of $122,000 was recognized. The impairment
loss is included in other expenses.
NOTE 8 - TAXES ON INCOME
a. Israeli taxation
1. The Israeli corporate tax rate for 2024 and 2023 is 23%.
2. Tax Benefits from the Encouragement of Capital Investments Law, 1959 ("The
Encouragement Law")
t42 Israel was determined in the past as a company which is entitled to a
reduced tax rate.
However, the Group does not expect to pay taxes in Israel by t42 Israel in the
next coming years due to carryforward tax losses.
3. t42 Israel has carryforward operating tax losses of approximately NIS 49
million as of December 31, 2024 (NIS 43.8 million as of December 31, 2023).
Since there is a significant uncertainty regarding the existence of taxable
revenues in the near future, deferred tax assets were not recognized. The
company recognized deferred tax assets for carryforward tax losses up to the
amount of deferred tax liabilities.
t42 Israel has been assessed by the Income Tax Authorities up to and including
the year 2019.
b. Jersey taxation
Taxable income of the Company and Starcom Jersey is subject to tax at the rate
of zero percent for the years 2024 and 2023.
c. Reconciliation between the theoretical profit before taxes and the tax expense
The difference between the statutory tax rate (23%) and the effective tax rate
(0%) is primarily due to non-recognition of deferred tax assets and
liabilities on losses and other temporary differences.
NOTE 9 - OTHER ACCOUNTS PAYABLE
December 31
2024 2023
Employees benefit obligation 324 154
Advance payments from trade receivables 450 159
Deferred revenue 41 -
Vacation provision and other employees' accrual 100 77
Government institutions 44 -
Other 111 43
1,070 433
NOTE 10 - LONG-TERM BANK LOAN, NET OF CURRENT MATURITIES
1. Composition: December 31
2024 2023
Long-term liability 87 152
Less: current maturities (74) (64)
13 88
2. Aggregate maturities of long-term loans for years subsequent to December 31,
2024 are as follows:
First year 74
Second year 13
87
NOTE 10 -
LONG-TERM BANK LOAN, NET OF CURRENT MATURITIES
1.
Composition:
December 31
2024
2023
Long-term liability
87
152
Less: current maturities
(74)
(64)
13
88
2.
Aggregate maturities of long-term loans for years subsequent to December 31,
2024 are as follows:
First year
74
Second year
13
87
3. Additional information regarding long-term loans:
Original amount Received NIS (U. S. dollars)
In thousands Annual Interest Rate Interest Payment Terms
Loan Terms and
Date Received Maturity Dates
Dec 9, 2020 1,000 ($310) Prime + 1.5 48 equal monthly installments of principal and interest (once year grace for Monthly basis
principal) *
The loan is a state-guaranteed loan, received by t42 Israel as assistance due
to the spread of the Covid -19 virus. Per the loan's conditions, interest for
the first year was paid by the State of Israel.
As of December 31, 2024 the interest prime rate was 6%.
See also Note 13 regarding charges.
NOTE 11 - CONVERTIBLE LOANS AND FINANCIAL LIABILITIES IN FAIR VALUE
a. During July 2023 the Company received a convertible loan, total
amount of $1.3m provided by Ewave Mobile Ltd. The loan bears interest of 10%
per annum to be paid on a monthly basis. The Loan, together with accrued
interest at the time of conversion, may be converted, at the discretion of the
Lender, at any time prior to the Loan repayment date, into such number of
shares as corresponds to 29.5% of the Company's issued ordinary share capital
immediately following such conversion. The Loan may be converted in part, on a
pro rata basis to the above terms. On 30 September 2024 an addendum with the
lender was signed, to extend the original due date from 20 January 2025 to May
20, 2025.
The Company examined the discounted present value of the future cash flows of
the loan according to the new maturity date discounted at the original
effective interest rate (before the change in terms) and found that it was
different by more than 10% from the discounted present value of the remaining
cash flows of the loan before the change in terms. Therefore, the Company
treated the change in terms as a substantial modification in terms of debt and
accordingly derecognized the original loan components on the date of the
change and recognized the loan components under the new terms at their fair
values as of that date. The difference between the original loan components
that were derecognized and the fair value of the components on the date of the
change in terms amounted to approximately $ 191,000. It was recorded as
finance income in the profit and loss statement.
On the day of recognition, the loan amount ($1.3M) was divided into
components: a conversion component and anti-dilution component which are
measured at fair value, and a residual component of liability of the loan in
amortized cost.
As of December 31, 2024 the values of components are as follows:
· Conversion component of the convertible loan and anti-dilution
liability component at fair value - $107k.
· Amortized cost of a convertible loan $1,083K.
An effective interest rate was calculated for the liability component of the
loan, based on its amortization table. After deducting the conversion and
anti-dilution component it is 79.47% per annum.
b. During December 2021, The Company received third parties loans in
the total amount of $1,251 thousand (£925K) in the form of convertible loans
enabling the lenders to convert the loans at an exercise price of £0.15 per
share at any time, subject to compliance with the AIM Rules, Takeover Code and
MAR regulations, up to December 31, 2023.
The convertible loans bore interest at the rate of 8% per annum calculated by
reference to the principal amount of the convertible loans. If not converted,
the loans were supposed to be repayable on December 31, 2023. In addition, the
lenders received total amount of 3,083,334 warrants to subscribe further
shares at an exercise price of £0.19-0.17 per share. Any unexercised warrant
expires at the end of three-years from grant.
As of 31 December 2023, the loan was not repaid and in February 2024 the
company successfully negotiated the extension of the maturity date of the loan
(original principal of £925K and accrued interest of £71K) until 20 January
- 2025. The following terms have been agreed with the lenders as part of the
extension:
· The interest payable on the loan shall be 10% per annum to be
paid in a monthly basis, commencing from 1 January 2024.
· Conversion: the lenders will have the right to convert, at their
discretion, the amount of the loan into the number of company shares
("Conversion Shares") corresponding to 28.82% of the company issued ordinary
share capital immediately following the date of conversion, if the aggregate
loan amount is converted, and into a pro-rata number of Conversion Shares in
case of a partial conversion. The lenders shall not issue a conversion notice
if this would result in a breach of Rule 9 of the UK Takeover Code.
· Anti-dilution: the agreement includes anti-dilution provisions to
protect the equity interest percentage of the lenders, so that in the event of
the exercise or conversion of existing warrants, options, or other instruments
convertible into the company's ordinary shares (subject to certain
exceptions), the lenders will be issued for no additional consideration such
number of shares such that, together with the shares already held, each
lenders percentage shareholding shall remain the same.
· Security: security provided by way of parent guarantee, fixed,
and floating charges over the assets of t42. The floating charge ranks pari
passu with the floating charge provided to Ewave under the Ewave loan and the
fixed charge security over the intellectual property rights of t42 is second
ranking, subordinated only to the fixed charge in favor of Ewave under the
Ewave loan.
· Conversion/Repayment Event: In the event of a certain major
transaction or financing investment, the lender may elect for conversion or
repayment of the loan.
· Cancellation of warrant: 1,541,667 outstanding 3-year warrant
granted to the lenders in December 2021 have been cancelled.
In conjunction with the agreement, the company also entered into an addendum
with Ewave, pursuant to which Ewave consented to the loan extension and will
also have the same conversion rights in the event of a major transaction.
On 30 September 2024 an addendum with the lenders was signed, to extend the
due date from 20 January 2025 to May 20, 2025, with no other changes in the
loan's terms.
The Company examined the discounted present value of the future cash flows of
the loan based on the new maturity date discounted at the original effective
interest rate (before the change in terms) and found that it does not differ
by more than 10% from the discounted present value of the remaining cash flows
of the loan before the change in terms. Accordingly, the original loan
components were not derecognized and no new liability components were
recognized at fair value. A loss of $1,000 from the adjustment to the
present value was recognized as finance expenses in the profit and loss
statement.
On the day of recognition, the loan amount (£996K) was divided into
components: a conversion component and anti-dilution component which are
measured at fair value, and a residual component of liability of the loan
measured in amortized cost.
As of December 31, 2024, the values of components are as follows:
· Conversion component of the convertible loan and anti-dilution
liability component at fair value - $97k.
· Amortized cost of a convertible loan - $1,313K.
An effective interest rate was calculated for the liability component of the
loan, based on its amortization table. After deducting the conversion and
anti-dilution component it is 10.7% per annum.
c. During December 2022, the Israeli subsidiary entered into a loan
agreement with CSS Alpha Global Pte Ltd for the provision of a 12-month
secured US$500,000 debt facility. The Agreement provides, inter alia, for
interest at 2% per month, with 9 monthly repayments starting 3 months after
drawdown. Security is by way of a second charge on assets, a personal
guarantee from the Company's CEO, limited to 20 % of the loan, and a deposit
with CSS of 3,000,000 shares. In addition, warrants for a total of 2,976,185
company's shares have been issued to CSS, exercisable at 7p per share over 5
years. During the year 2024 the loan and accrued interest were fully paid. As
of December 31, 2024 the fair value of the warrants is $34k.
d. In December 2022, the Company issued a £265,000 convertible loan
note to a supplier, to be applied in lieu of settlement of a supplier debt,
assisting with the Company's cashflow
management. The loan bears interest at 3% per annum, payable quarterly, and is
repayable by 31 December 2024. The loan is convertible at 9p per share at the
discretion of the holder (In the event that the company does not comply with
the loan terms, the conversion price will be updated according to the
mechanism stipulated in the loan agreement).
In addition, the Company had the right to enforce conversion of £100,000 of
the loan in the event share price exceeds 12p and full loan balance if the
share price exceeds 15p. As of December 31, 2024 the loan was not paid and its
balance (including accrued interest) is $349k.
After the balance sheet date, a binding oral agreement was reached between the
Company and the supplier's representative, according to which the supplier
- will waive all remedies to which it is entitled in the case of the Company's
failure to repay the loan, as well as waiving the option to convert the loan
into shares, so that starting January 1, 2025, the loan will become a debt
bearing annual interest (3%) only and will be repaid in cash from time to time
in an agreement to be reached by the parties.
e. As of December 31, 2024, the fair values of the Warrants and the
components relative to the two convertible loans were measured by an
independent appraiser under the main assumptions as follows:
Stock Market Value
£0.0325
Expected
term
3.3 years
Expected average volatility 79.2%
Expected dividend yield 0%
Risk-free interest rate 4.19%
The Company also assumed the probability that the lenders will convert the
loans into shares on May 20, 2025 is approximately 60% and that in case that
the loans are not converted on this date, the Company will not agree to an
extension of the loan period (including granting the lenders the conversion
option) beyond December 31, 2025.
The level of the fair value hierarchy is level three.
The table hereunder presents a reconciliation from the opening balance to the
closing balance of financial liabilities carried at fair value level 3 of the
fair value hierarchy:
Anti-dilution and Conversion components
Warrants Total
Balance as of January 1, 2024 31 12 43
Additions during the year 350 - 350
Finance expenses, net 171 22 193
Settlements (348) - (348)
Conversions - - -
Balance as of December 31, 2024 204 34 238
NOTE 11 -
NOTE 12 - SHORT-TERM BANK CREDIT
December 31
2024 2023
Bank overdraft (bears an average annual interest rate of 10%) 13 42
Short-term bank loan (bears an annual interest rate of 9.5%) 55 103
68 145
NOTE 12 -
SHORT-TERM BANK CREDIT
December 31
2024
2023
Bank overdraft (bears an average annual interest rate of 10%)
13
42
Short-term bank loan (bears an annual interest rate of 9.5%)
55
103
68
145
NOTE 13 - CHARGES
In respect of bank credit and loans set out in Notes 12 and 10 above and
convertible loans set out in Note 11 above, charges were placed as follows:
1. A charge on the t42 Israel's IPs and Intangible assets,
2. A floating pledge on the assets of t42 Israel.
3. A guarantee of the company in accordance with certain t42 Israel's bank
liabilities up to $10M .
4. A pledge on a bank deposit of t42 Israel. See note 5.
5. A pledge on a certain bank account of t42 Israel up to 180K NIS (approx. $49k)
6. A Secondary fixed and floating pledge on t42 assets.
NOTE 14 - EQUITY
a. Common stock of no-par value, issued and outstanding:
As of December 31,
2024 2023
55,126,357 54,917,055
b. Company share grants to its holder voting rights, rights to receive dividends During December 2022, the Company raised £90 ($100) thousand before
and rights to net assets upon dissolution. expensesthrough a placing of 1,000,000 Ordinary Shares.
c. In October 2023, 530,233 ordinary shares of no-par value were issued following
the exercise of options by a director.
In January 2024, 209,302 ordinary shares of no-par value were issued following
the exercise of options by a director at nil cost.
d. Share-based payment
The following table lists the number of share options and warrants and the
exercise prices of such during the current and prior years:
2024 2023
Number of options Weighted average Number of options Weighted average
exercise price exercise
price
£ £
Share options & warrants outstanding at the beginning of year 10,876,650 0.166 12,545,222 0.177
Warrants granted during the year - -
Options & Warrants exercised during the year (See note 14C). (209,302) - (530,233) -
Options & Warrants expired during the (3,083,334) 0.18 (1,138,339) 0.37
year (See note 11B)
Share options & warrants outstanding at end of year 7,584,014 0.156 10,876,650 0.166
Share options & warrants exercisable at end of year (1), (2) 7,584,014 0.156 10,713,651 0.159
(1) The balances as of December 31 2024 and 2023 include 2,976,185 options
granted to CSS (see Note 11C).
(2) The remaining warrants, amounting to 4,607,829, are warrants granted
to employees, managers and directors of the Company as share-based
compensation in a number of grants in previous years, the most recent of which
was in 2021. The warrants vested over three years from the date of their grant
until May 2024 and are exerciseable for consideration of £0-£0.40 per
warrant over 10 years from their date of maturity (July 2026-May 2034).
NOTE 15 - COST OF REVENUES
Year Ended December 31,
2024 2023
Purchases and manufacturing 1,687 1,184
Communication Suppliers and Others 343 368
Amortization 213 187
Change in inventory 322 143
2,565 1,882
NOTE 16 - GENERAL AND ADMINISTRATIVE EXPENSES
a. Year Ended December 31,
2024 2023
Salaries and related expenses (2) 907 978
Professional services (1) 395 138
Doubtful accounts and bad debts 23 12
Amortization and Depreciation 310 267
Office maintenance 198 187
Car maintenance (2) 55 83
1,888 1,665
(1) (1) Including share-based payment to directors and senior management
in the amounts of $5k and $7k for the years ended December 31, 2024 and 2023,
respectively. See also Note 14d.
(2) (2) Including CEO's salaries and related expenses in the amount of
$216K (2023: $195K).
(1) The balances as of December 31 2024 and 2023 include 2,976,185 options
granted to CSS (see Note 11C).
(2) The remaining warrants, amounting to 4,607,829, are warrants granted
to employees, managers and directors of the Company as share-based
compensation in a number of grants in previous years, the most recent of which
was in 2021. The warrants vested over three years from the date of their grant
until May 2024 and are exerciseable for consideration of £0-£0.40 per
warrant over 10 years from their date of maturity (July 2026-May 2034).
NOTE 15 -
COST OF REVENUES
Year Ended December 31,
2024
2023
Purchases and manufacturing
1,687
1,184
Communication Suppliers and Others
343
368
Amortization
213
187
Change in inventory
322
143
2,565
1,882
NOTE 16 -
GENERAL AND ADMINISTRATIVE EXPENSES
a.
Year Ended December 31,
2024
2023
Salaries and related expenses (2)
907
978
Professional services (1)
395
138
Doubtful accounts and bad debts
23
12
Amortization and Depreciation
310
267
Office maintenance
198
187
Car maintenance (2)
55
83
1,888
1,665
(1) (1) Including share-based payment to directors and senior management
in the amounts of $5k and $7k for the years ended December 31, 2024 and 2023,
respectively. See also Note 14d.
(2) (2) Including CEO's salaries and related expenses in the amount of
$216K (2023: $195K).
b. Average Number of Staff Members by Category:
Year Ended December 31,
2024 2023
Sales and marketing 5 4
Research and development 3 3
General and administrative 11 11
19 18
NOTE 17 - FINANCE INCOME
Year Ended December 31,
2024 2023
Exchange rate differences, net 72 27
Gain from modification of debt terms (see note 11 A, B) 190 -
Changes in fair value of financial liabilities - 577
262 604
NOTE 18 - FINANCE EXPENSES
Loans interest (768) (749)
Bank charges (37) (73)
Interest to suppliers and institutions (71) (5)
Interest to a related party (10) (10)
Changes in the fair value of financial liabilities (See note 11E) (193) -
Others (47) (65)
(1,126) (902)
Net finance expenses (864) (298)
NOTE 19 - SALES AND MARKETING
Year Ended December 31,
2024 2023
Salaries and related expenses 232 390
Sales commissions 49 53
Travel expenses 34 14
Others 51 28
366 485
NOTE 20 - LOSS PER SHARE
Weighted average number of shares used in computing basic and diluted loss per
share:
Year Ended December 31,
2024 2023
55,117,182 54,064,060
In calculating the loss per share for 2024 and 2023 warrants granted to
employees, CSS option and convertible loans were not taken into account
because their effect was anti-dilutive.
NOTE 21 - RELATED PARTIES
a. The related parties that own shares of the company are:
Mr. Avraham Hartmann who serves as a director and CEO (8.40%) , Mr. Uri
Hartmann, a son of Mr. Avi Hartmann, who serves as CTO (5.57%) and Mr. Igor
Vatenmacher, who served as a CFO during the reported periods and director
(0.82%).
b. Current debit (credit) balances: December 31,
2024 2023
Current account
Avi Hartmann 36 52
Uri Hartmann (585) (570)
Total Credit Balance (549) (518)
Loans to (from)
Avi Hartmann - 6
Uri Hartmann (221) (227)
Total Loans (221) (221)
(770) (739)
c. Shareholders' current credit balances are mainly related to deferred salaries.
Loans from shareholders accrue 4% annual interest.
d. Transactions: Year Ended December 31,
2024 2023
Total salaries and related expenses for Mr. Avi Hartmann and Mr. Uri Hartmann,
including car maintenance (1)
426 339
Salaries and related expenses for Mr. Igor Vatenmacher, including car
maintenance
171 161
Non-executive directors' fees (2 persons), (2) 108 96
Total share-based payment (5 persons) 4 2
Interest to related parties 10 10
(1) Mr. Uri Hartman's salaries and related expenses are included
in R&D expenses (2024:
210K$), Regarding Mr. Avi Hartmann - see note 16(a)(2).
(2) As of 31December 2024 the company owes them 204K$.
e. Mr. Avi Hartmann and Mr. Uri Hartmann are each entitled to benefits, in
addition to a monthly salary of 12K$, that include inter alia a vehicle, a
cellular phone, a pension fund and a professional enrichment fund. In
addition, each of them is entitled to reimbursement for expenses incurred in
connection with their duties and 22 days of annual leave. Each of the Company
and the aforementioned may notify the other party of the termination by giving
6 months' notice. The Company has a right to offset any debt of the
aforementioned against any compensation due to them.
f. As of December 31, 2024 each of Mr. Uri Hartmann and Mr. Avi
Hartmann has approximately 1,165 thousand warrants convertible into the
Company's shares in a ratio of 1:1 in consideration of 0.15-0.4 £ per
warrant. Unexercised warrants will expire from July 2026 to May 2034. The two
non-executive directors together have approximately 1,178 thousand warrants
convertible into the Company's shares in a ratio of 1:1 in consideration of 0
- 0.4 £ per warrant. Unexercised warrants will expire from July 2026 to May
2029.
NOTE 22 - FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS
a. Financial Risk Factors:
The Group's operations expose it to a variety of financial risks , mainly
Currency, Credit and Liquidity risks. The comprehensive Group plan for risk
management focuses on the fact that it is not possible to predict financial
market behavior and an effort to minimize possible negative effects on Company
financial performance.
1) Exchange rate risk
The Group is exposed to currency risk on sales, purchases, receivables and
borrowings that are denominated in a currency other than the respective
functional currency of Group, the US dollar (USD). While most of the Group's
revenues, purchases, and manufacturing costs are denominated in dollar,
operating expenses (primarily salaries and overhead) are paid in NIS and some
of the headquarters' expenses are paid in GBP. Changes in the exchange rates
of the NIS and the GBP against the dollar can cause losses for the Company.
2) Credit risk
The Group's credit risk arises principally from the Group's receivables from
customers. The carrying amounts of financial assets and contract assets
represent the Group's maximum credit risk exposure.
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each customer. However, management also considers the
demographics of the Group's customer base, including the default risk of the
industry and region in which customers operate, as these factors may have an
influence on credit risk. See also note 24.
The Management has established a credit policy under which each new customer
is analyzed individually for creditworthiness before the Group's standard
payment and delivery terms and conditions are offered. Purchase limits are
established for each customer, and usually an advanced payment of 25-50% is
required before shipping.
The Group holds cash and cash equivalents mainly with big banks in Israel and
therefore believes its cash and cash equivalents have low credit risk.
3) Liquidity risks
Cash flow forecasts are determined on both an individual company basis and a
consolidated basis. The Company examines current forecasts of its liquidity
requirements so as to make certain that there is sufficient cash for its
operating needs, and it is careful at all times to have enough cash that the
Company does not exceed its credit limits. These forecasts take into
consideration matters such as the Company's plan to use a bank short term
credit for financing its activity and the group's liabilities.
The following are the contractual maturities of financial liabilities at
undiscounted amounts and based on the future rates forecasted at the reporting
date, including estimated interest payments.
December 31, 2024
U.S. Dollar
NIS GBP Euro Total
Variable Interest Unlinked
Unlinked
Financial Assets:
Cash and cash equivalents 35 - 108 - 4 147
Short-term deposit - 9 - - - 9
Trade receivables, net 91 - 721 - 64 876
Other accounts receivable (175) - 205 - - 30
Financial Liabilities:
Short-term bank credit - (68) - - - (68)
Long term bank Loan - (87) - - - (87)
Trade payables (702) - (84) (319) (1) (1,106)
Other accounts payable (435) - - - - (435)
Leasehold liabilities (972) - - - - (972)
Related parties (983) (245) 458 - - (770)
Amortized cost of other loans - - (1,082) (1,662) - (2,744)
Financial liabilities in fair value - - (141) (97) - (238)
(3,141) (391) 185 (2,078) 67 (5,358)
December 31, 2023
NIS U.S. Dollar GBP Euro Total
Variable
Unlinked Interest Unlinked
Financial Assets:
Cash and cash equivalents 10 - 172 - 4 186
Short-term deposit - 35 - - - 35
Trade receivables, net 45 - 812 - 35 892
Other accounts receivable 27 - - - - 27
Financial Liabilities:
Short-term bank credit - (42) - - - (42)
Short-term bank loan - (103) - - - (103)
Non-bank loans - - (1,395) - - (1,395)
Trade payables - (489) (200) (153) (2) (844)
Other accounts payable (433) - - - - (433)
Leasehold liabilities - (982) - - - (982)
Related parties - (739) - - - (739)
Long-term loans from banks - (152) - - - (152)
Financial liabilities of convertible loans - - (1,202) - - (1,202)
(351) (2,472) (1,813) (153) 37 (4,752)
c. Sensitivity:
Analysis of Sensitivity to Changes in the Exchange Rate of the U.S. Dollar
Against the NIS:
5% Increase in 5% Decrease in
Exchange Rate Exchange Rate
For the Year Ended December 31
2024 (141) 141
2023 (134) 134
Analysis of Sensitivity to Changes in the Exchange Rate of the U.S. Dollar
Against the Euro:
5% Increase in 5% Decrease in
Exchange Rate Exchange Rate
For the Year Ended December 31
2024 3 (3)
2023 2 (2)
Analysis of Sensitivity to Changes in the Exchange Rate of the U.S. Dollar
Against the GBP:
5% Increase in 5% Decrease in
Exchange Rate Exchange Rate
For the Year Ended December 31
2024 (104) 104
2023 (8) 8
d. The following are the contractual maturities of financial liabilities at
undiscounted amounts and based on the future rates forecasted at the reporting
date, including estimated interest payments:
As of 31 December 2024,
Up Total contractual cash flows
Carrying to six month 6-12 months
amount 1-2 years 3-4 years
Related parties 770 - 780 - - 780
Trade and other payables 1,541 540 1,001 - - 1,541
Long term bank loan (1) 87 39 38 13 91
Short term bank credit (1) 68 70 - - - 70
Other loans (2) 2,744 3,061 - - - 3,061
5,210 3,710 1,819 13 - 5,543
(1) The interest payments on variable interest rate loans may be different
from the amounts in the above table.
(2) Due to ongoing negotiations with lenders management believes that the
actual cash flows of these liabilities will differ materially from the above.
e. Fair value
As of December 31, 2024, there was no significant difference between the
carrying amounts and fair values of the Company's financial instruments that
are presented in the financial statements not at fair value.
See also note 11E regarding financial instruments measured in fair value.
NOTE 23 - LEASES
Group as a lessee
The Group has lease contracts for offices and 9 vehicles used in its
operations. The lease of the offices is for 5 years with an extension option
of another 5 years, while vehicles leases are for 3 years.
Below are the carrying amounts of right-of-use assets recognized and the
movements during the period:
Offices Vehicles Total
Balance at January 1, 2023 941 40 981
Additions - 231 231
Depreciation expenses (104) (64) (168)
Balance at December 31, 2023 837 207 1,044
Additions - 66 66
Effect of Index linkage 148 - 148
Depreciation expenses (122) (97) (219)
Balance at December 31, 2024 863 176 1,039
Below are the carrying amounts of lease liabilities and the activities during
the period:
2024 2023
As at January 1 (982) (902)
Additions (66) )231(
Effect of Index linkage (148) -
Exchange rate differences 4 24
Payments 191 127
Others 29 -
Balance at December 31 (972) (982)
Current liabilities (202) (168)
Non-Current liabilities (770) (814)
Maturity analysis - Contractual discounted cash flows (*)
One to Two years 361
Three to Five years 249
Six to Ten years 362
Total discounted lease liabilities on December 31, 2024 972
(*) including potential future payments related to the extension period.
The following are the amounts recognized in profit or loss:
(*) including potential future payments related to the extension period.
The following are the amounts recognized in profit or loss:
2024 2023
Depreciation expenses of right-of-use assets (219) (168)
Interest expenses on lease liabilities (54) (55)
Total amount recognized in profit or loss (273) (223)
The Group had total cash outflows for leases of $242 in 2024 ($127 in 2023).
The Group also had non-cash additions to right-of-use assets and lease
liabilities of $66 in 2024 ($231 in 2023)
a. Major customers' data as a percentage of total consolidated revenues to
unaffiliated customers:
NOTE 24 - CUSTOMERS AND GEOGRAPHIC INFORMATION
Year Ended December 31,
2024 2023
Customer A 34% 8%
Customer B 6% 5%
Customer C 6% 4%
b. Breakdown of consolidated revenues to unaffiliated customers according to
geographic regions
Year Ended December 31,
2024 2023
Latin America 13% 11%
Europe 8% 12%
Africa 20% 29%
Asia 3% 3%
Middle East 42% 27%
North America 14% 18%
Total 100% 100%
NOTE 25 - SEGMENTATION REPORTING
The Group has two reportable segments: Hardware and SaaS, which form the
Group's strategic business units.
The strategic business units offer different products and services and the
allocation of resources and evaluation of performance are managed separately
because they require different resources. For each of the strategic business
units, the Group's CEO reviews internal management reports on a quarterly
basis. The accounting policies of revenue recognition for each segment are
described in Note 2C(k).
There is no inter-segment transaction.
Performance is measured based on segment gross profit (loss) as included in
reports that are regularly reviewed by the CEO. Segment gross profit is used
to measure performance as management believes that such information is the
most relevant in evaluating the results of certain segments relative to other
entities that operate within these industries.
Information regarding the results of each segment is included below:
Hardware SaaS
Year Ended 31.12.2024:
Segment revenues 2,036 2,122
Cost of revenues (2,182) (383)
Gross profit (loss) (146) 1,739
Year Ended 31.12.2023:
Segment revenues 2,019 1,986
Cost of revenues (1,611) (271)
Gross profit 408 1,715
NOTE 26 - SIGNIFICANT EVENTS AFTER THE REPORTED PERIOD
a. Further to the details of Note 11 A and B in
connection with the convertible loans provided to the Company, the Company
defaulted on the loans on May 20, 2025. As of the date of approval of the
financial statements, the Company is negotiating with the lenders , and has
received non-binding proposals, regarding the extension of the loan period and
the manner of their repayment/conversion into shares.
b. In February 2025 the Company completed a capital
raising in a total (gross) amount of £262,500, in which the Company issued to
investors 10,500,000 shares of the Company and 10,500,000 warrants. The
warrants are convertible into shares of the Company in a ratio of 1:1 in
exchange for £0.05 per warrant for a period of 3 years from the date of their
issuance. The proceeds of the offering, net of issuance expenses, amounted to
approximately £253,375.
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. END FR EAPKXAEESEEARecent news on t42 IoT Tracking Solutions
See all newsREG - T42 IOT Tracking Sol - 2024 Final Results
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