REG - T42 IOT Tracking Sol - Interim Results
14/09/2022 07:00
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RNS Number : 3530Z T42 IOT Tracking Solutions PLC 14 September 2022
14 September 2022
t42 IoT Tracking Solutions Plc
("t42" or the "Company")
Interim Results
t42 IoT Tracking Solutions plc (AIM: TRAC) ("t42" or the "Company"), which
provides real-time tracking, security, and monitoring solutions for the global
supply chain, logistics, container and freight market, announces its results
for the six months ended 30 June 2022.
Business Overview Highlights
• Continued to refocus the legacy business to shipping containers
tracking services
• Over $55 million in shipping containers tracking solutions potential
sales for the next 5 years via signed agreements in Latin America now going
into execution stage
• First commercial orders received from DHL
• Pilot programme completed with the security division of Philip
Morris Israel Ltd
• Pilot programme agreed with DB Schenker, one of the world's
largest global logistics providers
• Signed agreement for shipping container tracking solutions with
Olimp Bulgaria Ltd.
• Post-period end, signed significant distribution agreement in
Argentina
H1 Financials Highlights
• Revenues decreased by 4% to $2.18m (H1 2021: $2.27m).
• Recurring SaaS revenues increased by 2% to $1.091m (H1 2021:
$1.071m).
• Adjusted EBITDA* loss of $247,000 (H1 2021: loss of $167,000).
• Gross margin for the period was 46% (H1 2021:40%).
• General expenses increased by 10% to $1.5m (H1 2021: $1.4m).
• Strong pipeline of potential new orders for fiscal year 2022 and
2023
Avi Hartmann, CEO of t42, commented:
"The strategy of t42 to focus on shipping containers tracking solutions is now
taking form. The Company is redefining itself and now beginning to execute its
new strategy. Our contract wins are starting to deliver first sales and we
believe the impact of our strategy change will begin to be felt in H2 of this
year. While the financials for this half are not yet representative of the new
business, as more contracts for advanced solutions convert into orders, we can
expect to see continued growth in revenues and a noticeable shift to higher
margin SaaS. The growing pipeline of potential orders underpins our confidence
in future growth."
*Adjusted EBITDA is earnings before interest, tax, depreciation, amortization
and share-based payment expense.
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) James Harris/ 020 7409 3494
Richard Johnson/ Robert Collins
Peterhouse Capital Limited (Joint Broker) 020 7469 0930
Lucy Williams/Charles Goodfellow/Eran Zucker
Yellow Jersey PR (Financial PR) 020 3004 9512
Tom Randell/Henry Wilkinson/Annabelle Wills T42@Yellowjerseypr.com (mailto:T42@Yellowjerseypr.com)
CHAIRMAN'S STATEMENT
During the first half of the year, as we transition from the legacy business
to the new shipping containers tracking business, our focus has been on
securing new opportunities with leaders at the forefront of the freight and
logistics industry around the world, which are expected to bear fruit starting
from H2 of this year.
It is pleasing to see contract wins begin to deliver revenues, with newly
signed contracts expected to grow revenues in the second half of 2022, and
with the knowledge that that our pipeline of opportunities and further
contract wins can be expected to lead to additional growth, albeit with some
time lag after contract signing.
The shortage in the supply of microchips continues to present challenges for
many industries. Although we are managing this problem with creative R&D
solutions, it inevitably impacts our short-term growth. In particular, the
demand pressures from other industries create additional cash requirements as
manufacturers have frequently been demanding significant up-front payments to
ensure timely delivery. We are confident we can address these issues, but they
present new management challenges and our future performance remains reliant
on our ability to do so.
The Company has continued its rapid technological development, and in August
this year a new version of Lokies 2.0 was released. It includes several
significant improvements: a new cellular module for improved remote wireless
coverage, a new universal charging port, an enhanced CPU (Central Processing
Unit) for better performance, and a new BLE (Bluetooth Low Energy) 5.2 for
improved energy consumption and future-proofing the product. These
improvements meet customer preferences in the market and are influenced by our
existing customers' feedback on their requirements. In addition, the Company
has upgraded its online portal and enabled different alerts across multiple
communication networks, such as Telegram, SMS, e-mail, Olympia Tracking App,
etc.
It is exciting to report the completion of the integration of the t42 system
with the Argentinian Customs systems in support of the commercial agreement
signed on 13 July 2022. This complex systems integration capability
demonstrates the deep technical and operational capacity within the t42 team
as well as the capabilities of the technology. It will be an important
demonstration of t42's ability to implement at scale for future contract
tenders.
FINANCIAL REVIEW
Group revenues for the 6 months to 30 June 2022 were $2.18m, compared with
$2.27m for the six months ended 30 June 2021, a decrease of 4%. SaaS revenues
showed a slight increase over the equivalent period last year. Hardware sales
were restricted by our ability to obtain some of the components required,
although we expect these orders to be fulfilled in the second half of the year
and hardware sales to show a corresponding increase.
Gross margin for the 6 months to 30 June 2022 increased to 46%, compared with
40% for the corresponding period in 2021.
Total operating expenses for the 6 months to 30 June 2022 were $1.5m (2021:
$1.4m). The increase is mainly due to additional re-branding expenses as the
Company continued to focus on the container and freight market.
Net loss after taxation for the six months to 30 June 2022 decreased to $0.2m
compared with the 2021 net loss of $0.53m.
The Group recorded an exchange rate profit of $0.4m (2021:$0.03m) resulting
from the strengthening of the US dollar relative to the Israeli Shekel.
The Group balance sheet showed a decrease in trade receivables to $0.65m,
compared with $0.73m as at 30 June 2021.
Inventories at the period end were $2.2m compared with $2.0m as at 30 June
2021 and $1.8m as at 31 December 2021, as the Company increased its holding of
critical components to better manage its supply chain.
Trade payables at the period end were stable at $1.61m, compared with $1.37m
and $1.55m as at 30 June 2021 and 31 December 2021, respectively.
Net cash used in operating activities for the 6 months to 30 June 2002 was
$0.76m, compared with net cash provided by operating activities for the 6
months to 30 June 2021 of $0.183m.
In fixed assets, one-off expenditures of $0.3m were incurred in relation to
the establishment of the Company's new office. The impact of the new office
lease is reflected in the increased Right of Use asset, increasing from $0.7m
as at 31 December 2021 to $1.06m as at 30 June 2022 ($0.26m as at 30 June
2021), offset by an increase in Leasehold Liabilities within non-current
liabilities from $0.56m as at 31 December 2021 to $0.89m as at 30 June 2022
($0.17m as at 30 June 2021).
OUTLOOK
At this crucial time, when global supply chains are being disrupted, it is
more critical than ever that authorities and companies rely on reliable and
actionable data. As we look ahead to the remainder of 2022 and 2023, we see
strong tailwinds and increased demand for IoT tracking and monitoring
solutions.
As a result of our strong and growing pipeline, we are confident about demand
robustness and our rationale for focusing the T42 business on the freight and
logistics markets. We offer the best-in-class solutions to one of the world's
most traditional industries, a multi-billion-dollar industry, with innovative
monitoring capabilities.
In particular, the new contract in Latin America has raised the awareness and
recognition of our container and freight solutions. We are currently
conducting reviews and pilots with several potential customers in new
geographies and markets. Over the next few months, we expect further
agreements to be reached.
We are focused on satisfying growing numbers of new orders, and we expect to
benefit as our focused activities and investments mature bringing results in
the near future. We anticipate solid performance and growth in 2022 and in
succeeding years.
Michael Rosenberg
Non-Executive Chairman
__________________
Jerusalem,
Review Report of Independent Auditors
to the Shareholders of
t42 IoT Tracking Solutions PLC (formerly: Starcom PLC)
Introduction
We have reviewed the accompanying condensed consolidated interim statements of
financial position of t42 IoT Tracking Solutions PLC (formerly: Starcom PLC)
and its consolidated subsidiaries (hereinafter - "the Group") as at June 30,
2022 and the related condensed consolidated interim statements of
comprehensive loss, changes in shareholders' equity and cash flows for the six
months to June 30, 2022. The preparation and presentation of these condensed
consolidated financial statements are in conformity with International
Accounting Standard No. 34 "Interim Financial Reporting" and are the
responsibility of the Group's board of directors and management. Our
responsibility is to express a conclusion on these interim consolidated
financial statements based on our review.
Scope of Review
We conducted our review in accordance with Review Standard (Israel) No. 2410
of the Israel Accounting Standards Board, "Review of Interim Financial
Information for Interim Periods Performed by the Auditor of an Entity". A
review consists principally of inquiries of Company personnel, analytical
procedures applied to the financial data and other review procedures. A review
is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, we are not aware of any material modifications that
should be made to these interim consolidated financial statements in order for
them to be in conformity with International Accounting Standard No. 34.
Without qualifying our conclusion, we draw attention to Note 10 in the
financial statements regarding the global uncertainties caused by the
COVID-19 pandemic and the invasion of Ukraine by Russia and its material
negative impact on the Group's activities.
Barzily & Co.
Certified Public Accountants.
A Member of MSI Worldwide
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. Dollars in thousands
June 30 December 31
Note 2022 2021 2021
Unaudited Unaudited Audited
ASSETS
NON-CURRENT ASSETS :
Property, plant and equipment, net 591 325 299
Rights of use assets, net 1,064 260 690
Intangible assets, net 3 1,028 1,811 1,034
Income Tax Authorities 58 56 57
Total Non-Current Assets 2,741 2,452 2,080
CURRENT ASSETS :
Inventories 2,234 2,030 1,790
Trade receivables (net of allowance for doubtful accounts of $462, $583 and 645 734 679
$497 thousand as of June 30, 2022 and 2021 and December 31,2021)
Other receivables 98 74 160
Short-term deposit 131 148 154
Cash and cash equivalents 311 328 1,534
Total Current Assets 3,419 3,314 4,317
6,124
TOTAL ASSETS 6,160 5,766 6,397
LIABILITIES AND EQUITY
EQUITY
93 1,641 193
NON-CURRENT LIABILITIES:
Long-term loans from banks, net of current maturities 178 265 239
Amortized cost of a convertible loan 5 824 287 857
Conversion component of a convertible loan at fair value 5 215 16 279
Leasehold liabilities 888 170 558
Warrants at fair value 5 87 - 115
Total Non-Current Liabilities 2,192 738 2,048
CURRENT LIABILITIES:
Short-term bank credit 61 1 24
Short-term loans and current maturities of long-term loans 927 958 998
Warrants at fair value 5 - 6 3
Trade payables 1,606 1,373 1,553
Shareholders and related parties 6 708 665 692
Other payables 442 254 738
Leasehold liabilities 131 130 148
Total Current Liabilities 3,875 3,387 4,156
TOTAL LIABILITIES AND EQUITY 6,160 5,766 6,397
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
13/09/2022 Igor Vatenmacher, CFO
Date of Approval of the Financial Statements Director
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
U.S. Dollars in thousands
Six Months Ended June 30 Year Ended December 31
Note 2022 2021 2021
Unaudited Unaudited Audited
Revenues 2,177 2,271 4,214
Cost of sales 7 (1,181) (1,356) (2,545)
Inventory write-down - - (381)
Gross profit 996 915 1,288
Operating expenses:
Research and development (60) (137) (223)
Selling and marketing (323) (294) (609)
General and administrative (1,098) (978) (2,388)
Other income (expenses) (40) 21 (756)
(1,521) (1,388) (3,976)
Operating loss (525) (473) (2,688)
Net finance Income (expenses) 8 303 (58) (271)
(222) (531) (2,959)
Total comprehensive loss for the year
Loss per share:
Basic and diluted loss per share (in dollars) 4 (0.004) (0.012) (0.064)
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
U.S. Dollars in thousands
Premium on Shares Capital Reserve Capital Reserve for Share-based payment Accumulated Loss
Share Total
Capital *
(Unaudited) - 13,351 89 1,151 (14,398) 193
Balance- January 1, 2022
Exercise of options, see Note 4 74 74
- - - -
Share based payment - Note 4 - - - 48 - 48
Comprehensive loss for the period - - - - (222) (222)
Balance - June 30, 2022 - 13,425 89 1,199 (14,620) 93
(Unaudited)
Balance- January 1, 2021 - 12,328 89 1,123 (11,439) 2,101
- 109 - - 109
Issuance of share capital, net of expenses -
Share based payment - - - (38) - (38)
Comprehensive loss for the period - - - - (531) (531)
Balance- June 30, 2021 - 12,437 89 1, 085 (11,970) 1,641
(Audited)
Balance- January 1, 2021 - 12,328 89 1,123 (11,439) 2,101
Issuance of shares to a related party in payment of a payable - 107 - - 107
-
Conversion of a convertible loan 295 - - - 295
Proceeds from issued share capital, net of expenses
- 621 - - - 621
Share based payment - - - 28 - 28
Comprehensive loss for the year - - - - (2,959) (2,959)
Balance- December 31, 2021 - 13,351 89 1,151 (14,398) 193
* An amount less than one thousand.
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. Dollars in thousands
Six Months Ended Year Ended December 31
June 30
2022 2021 2021
CASH FLOWS FROM (FOR) OPERATING ACTIVITIES: Unaudited Unaudited Audited
Comprehensive loss (222) (531) (2,959)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 211 366 549
Interest expense and exchange rate differences (221) 33 (24)
Share-based payment expense 48 (38) 28
Inventory write down - - 381
Intangible assets impairment - - 801
Changes in assets and liabilities:
Decrease (Increase) in inventories (444) 97 (44)
Decrease (Increase) in trade receivables 34 395 450
Decrease (Increase) in other receivables 62 7 (79)
Increase in Income Tax Authorities (1) - (1)
Increase (Decrease) in trade payables 72 (97) 81
Increase (Decrease) in other payables (297) (49) 435
Net cash provided by (used in) operating activities (758) 183 (382)
CASH FLOWS FOR INVESTING ACTIVITIES:
Purchases of property and equipment (333) (41) (49)
Proceeds from sales of property, plant and - - -
equipment
Decrease (Increase) in short-term deposits 23 2 (4)
Purchase of intangible assets (83) (173) (283)
Net cash used in investing activities (393) (212) (336)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term bank credit, net 37 (24) (1)
Receipt (Repayment) of Short-term loans from banks, net (65) 176 183
Receipt of long-term loans - - -
Receipt of convertible loans , net - - 1,251
Proceeds from (Repayment to) shareholders and related parties, net (4) 50 77
Repayment of Leasehold liability (80) (67) (137)
Repayment of long-term loans (34) (42) (6)
Proceeds from issue of shares, net 74 - 621
Net cash provided by (used in) financing activities (72) 93 1,988
Increase (Decrease) in cash and cash equivalents (1,223) 64 1,270
Cash and cash equivalents at the beginning of the period 1,534 264 264
Cash and cash equivalents at the end of the period 311 328 1,534
Appendix A - Additional Information
Interest paid during the period (73) (30) (49)
Appendix B - Non-cash financing activities
Issuance of shares to a related party in payment of debt - 109 402
Non-cash additions to right-of-use assets and lease liabilities 418 629 -
The accompanying notes are an integral part of the interim condensed
consolidated financial statements.
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 1 - GENERAL INFORMATION
a. The Reporting Entity
1. t42 IoT Tracking Solutions PLC (formerly: Starcom PLC) ("the
Company") was incorporated in Jersey on November 28, 2012.
The Group provides real-time tracking, security, and monitoring solutions for
the global supply chain, logistics, container and freight market.
The Company fully owns Starcom G.P.S. Systems Ltd., an Israeli company that
engages in the same field, and Starcom Systems Limited, a company in Jersey.
The Company's shares are admitted for trading on the London Stock Exchange's
AIM market.
Address of the official Company office in Israel of Starcom G.P.S. Systems
Ltd. is:
96 Derech Ramataim, Israel.
Address of the Company's registered office in Jersey of Starcom Systems
Limited is:
Forum 4, Grenville Street, St. Helier, Jersey, Channel Islands, JE4 8TQ
b. Definitions in these financial statements:
1. International Financial Reporting Standards (hereinafter: "IFRS") - Standards
and interpretations adopted by the International Accounting Standards Board
(hereafter: "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 (formerly: Starcom PLC)
3. The Subsidiaries - Starcom G.P.S. Systems Ltd. and Starcom Systems Limited.
4. Starcom Jersey - Starcom Systems Limited.
5. Starcom Israel - Starcom G.P.S. Systems Ltd.
6. The Group - t42 IoT Tracking Solutions PLC (formerly: Starcom PLC) and the
Subsidiaries.
7. Related party - As determined by International Accounting Standard No. 24 in
regard to related parties.
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 2 - BASIS OF PREPARATION AND CHANGE IN THE GROUP'S ACCOUNTING POLICIES
a. Basis of preparation
The interim consolidated financial statements have been prepared in accordance
with generally accepted accounting principles for the preparation of financial
statements for interim periods, as prescribed in International Accounting
Standard No. 34 ("Interim Financial Reporting").
The interim consolidated financial information should be read in conjunction
with the annual financial statements as of December 31, 2021 and for the year
ended on that date and with the notes thereto.
The significant accounting policies applied in the annual financial statements
of the Company as of December 31, 2021 are applied consistently in these
interim consolidated financial statements.
Use of estimates and judgments
b.
The preparation of financial statements in conformity with IFRS requires
management of the Company 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.
The judgment of management, when implementing the Group accounting policies
and the basic assumptions utilized in the estimates that are bound up in
uncertainties are consistent with those that were utilized to prepare the
annual financial statements.
Information about critical judgment in applying accounting policies that have
a significant effect on the amounts recognized in the consolidated financial
statements is included in the following Notes:
Note 5 - financial liabilities of convertible loans and warrants.
c. Exchange rates:
Year Ended December 31
Six Months Ended June 30
2022 2021 2021
Exchange rate of NIS in U.S. $ 0.286 0.306 0.322
Exchange rate of U.S. $ in GBP 0.83 0.72 0.74
Change of NIS in U.S. $ (11.27%) (3.53%) 3.4%
Change of U.S. $ in GBP 11.68% (1.64%) 1.37%
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 3 - INTANGIBLE ASSETS, NET
Total
Unaudited
Cost:
Balance as of January 1, 2022 1,718
Additions during the period 83
Balance as of June 30, 2022 1,801
Accumulated Depreciation:
Balance as of January 1, 2022 (684)
Amortization during the period (89)
Balance as of June 30, 2022 (773)
Impairment of assets -
Net book value as of June 30, 2022 1,028
Total
Unaudited
Cost:
Balance as of January 1, 2021 5,036
Additions during the period 173
Balance as of June 30, 2021 5,209
Accumulated Depreciation:
Balance as of January 1, 2021 (2,934)
Amortization during the period (262)
Balance as of June 30, 2021 (3,196)
Impairment of assets (202)
Net book value as of June 30, 2021 1,811
Total
Audited
Cost:
Balance as of January 1, 2021 5,036
Additions during the year 283
Impairment (3,601)
Balance as of December 31, 2021 1,718
Accumulated Amortization:
Balance as of January 1, 2021 (2,934)
Amortization during the year (348)
Impairment 2,598
Balance as of December 31, 2021 (684)
Net book value as of December 31, 2021 1,034
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 4 - SHARE CAPITAL
a. Composition - ordinary shares of no-par value, issued and outstanding -
53,026,822 shares and 52,526,822 shares as of June 30, 2022, and December
31, 2021, respectively.
b. A Company share grants to its holder voting rights, rights to receive
dividends and rights to net assets upon dissolution.
c. Weighted average number of shares used for calculation of basic and diluted
loss per share:
June 30 December 31
June 30*
2022 2021 2021
Unaudited Unaudited Audited
Number 52,833,452 44,030,728 46,294,205
* The number of shares adjusted according to the shares consolidation as
detailed in Note 4d below .
The following table lists the number of share options and warrants with the
exercise prices of share options during the reported period:
June 30, 2022 December 31, 2021
Unaudited Audited
Number of options and warrants Weighted average Number of options and warrants Weighted average
exercise price exercise price
£ £
Share options and warrants outstanding at beginning of period 10,122,112 0.206 6,244,243 0.22
Share options or warrants granted during the period - - 4,322,869 0.17
Warrants exercised during the period (500,000) 0.12 (445,000) -
Share options or warrants expired during the period (53,075( 0.12 - -
Share options and warrants outstanding at end of period 9,569,037 0.211 10,122,112 0.206
Share options and warrants exercisable at end of period 9,239,370 0.204 9,127,829 0.207
d. During November 2021 the Company held a general meeting which resulted with a
decision to consolidated shares by a ratio of 1:8 ("shares consolidation").
e. During March 2022 the Company's CEO, CFO, chairman and another employee
exercised 500,000 warrants granted to them under a convertible loan they
provided in March 2020. The warrants were exercised at a price of 12p per
share as set out in the loan agreement, generating proceeds of £60,000.
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 5 - FINANCIAL LIABILITIES OF CONVERTIBLE LOANS AND WARRANTS
a. During December 2021, The Company received loans from third parties totaling
$1,251 thousand (£925 thousand) 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, under the limitations of the AIM Rules, Takeover Code and MAR
regulations, up to December 31, 2023.
The convertible loans bear interest at the rate of 8% per annum calculated by
reference to the principal amount of the convertible loans. If not converted,
the loans will be repayable on December 31, 2023.
In addition, the lenders received fully vested warrants to subscribe a total
of 1,541,667 further shares at an exercise price of £0.17 per share. Any
unexercised warrants expire at the end of two-years from grant.
In addition, the lenders received fully vested warrants to subscribe a total
of 1,541,667 further shares at an exercise price of £0.19 per share. Any
unexercised warrants expire at the end of three-years from grant.
For the period ended June 30, 2022, the estimated fair values of the Warrants
and the Convertible component were measured by an independent appraiser as
follows,
The level of the fair value hierarchy is level two.
Common Stock Market Value measured in calculation
$0.15
Period ended
June 30,
2022
Expected term 1.5-2.5 years
Expected average volatility 40%
Expected dividend yield -
Risk-free interest rate 0.245%
The loan was evaluated and divided into different components by an independent
appraiser, the amounts as at June 30, 2022 are as follows:
Conversion component at fair value - $215 thousand
Warrants at fair value - $87 thousand
Amortized cost of a loan - $824 thousand
Transaction costs were allocated according to the component's fair value
ratio.
The part of the expenses that is attributed to the amortized cost of the loan
was reduced from its cost.
An effective interest rate was calculated for the liability of the loan, based
on its amortization table. The effective interest rate is 33% per annum.
Total revaluation expenses regarding these components in the statement of
comprehensive loss for the reported period are set out below:
The loan was evaluated and divided into different components by an independent
appraiser, the amounts as at June 30, 2022 are as follows:
Conversion component at fair value - $215 thousand
Warrants at fair value - $87 thousand
Amortized cost of a loan - $824 thousand
Transaction costs were allocated according to the component's fair value
ratio.
The part of the expenses that is attributed to the amortized cost of the loan
was reduced from its cost.
An effective interest rate was calculated for the liability of the loan, based
on its amortization table. The effective interest rate is 33% per annum.
Total revaluation expenses regarding these components in the statement of
comprehensive loss for the reported period are set out below:
Loan component Conversion component Warrant
Balance as of January 1, 2021 254 42 10
Additions during the year 857 279 115
Finance (income) expenses 56 (42) (7)
Payments (17) - -
Conversion (293) - -
Balance as of December 31, 2021 857 279 118
Finance (income) expenses (33) (64) (28)
Payments - - -
Conversion - - (3)
Balance as of June 30, 2022 824 215 87
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 6 - SHAREHOLDERS AND RELATED PARTIES
a. Related parties that own the controlling shares in the Group are:
Mr. Avraham Hartman (10.53%) and Mr. Uri Hartman (5.56%).
b. Short-term balances: June 30 December 31
2022 2021 2021
Unaudited Unaudited Audited
Credit balance (15)
(508)
Avi Hartmann
- (47) (38)
Uri Hartmann (446) (482)
Doron Kedem* (173) (173)
Total Credit balance (523) (666) (693)
Loans 53
(238)
Avi Hartmann
- 31 38
Uri Hartmann (237) (236)
Doron Kedem* 207 199
Total Loans (185) 1 1
Total Short-term balances (708) (665) (692)
* As of June 30, 2022, Mr. Doron Kedem is not considered a related party, and
his balances are not included for this date.
c. Transactions: Six Months Ended Year Ended
June 30 December 31
2022 2021 2021
Unaudited Unaudited Audited
Total salaries, services rendered and related expenses for shareholders
195 192 543
Total share-based payment expenses 2
2 22
Interest to related parties 5 5 10
NOTE 7 - COST OF SALES
Six Months Ended Year Ended December 31
June 30
2022 2021 2021
Unaudited Unaudited Audited
Purchases and other 1,536 997 2,241
Amortization 89 262 348
Increase in Inventory (444) 97 (44)
1,181 1,356 2,545
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 8 - NET FINANCE (INCOME) EXPENSES
Six Months Ended Year Ended December 31
June 30
2022 2021 2021
Unaudited Unaudited Audited
Exchange rate differences 292 63 (98)
Evaluation of Warrants and Convertible component of loan 96 (38) -
Bank charges (40) (31) (62)
Interest to banks and others (40) (43) (55)
Interest to suppliers - (4) (46)
Interest to related parties (5) (5) (10)
Interest income from deposits - - -
Net finance income (expenses) 303 (58) (271)
NOTE 9 - SEGMENTATION REPORTING
Differentiation policy for the segments:
The Company's management has defined its segmentation policy based on the
financial essence of the different segments. This refers to services versus
goods, delivery method and allocated resources per sector.
On this basis, the following segments were defined: Hardware and SaaS.
Segment information regarding the reported segments:
Hardware SaaS Total
Period Ended 30.06.2022: (Unaudited)
Segment revenues 1,086 1,091 2,177
Cost of sales (1,056) (125) (1,181)
Gross profit 30 966 996
Period Ended 30.06.2021: (Unaudited)
Segment revenues 1,197 1,074 2,271
Cost of sales (1,220) (136) (1,356)
Gross profit (23) 938 915
Year Ended 31.12.2021: (Audited)
Segment revenues 2,069 2,145 4,214
Cost of sales (2,291) (254) (2,545)
Gross profit (loss) (222) 1,891 1,669
T42 IOT TRACKING SOLUTIONS PLC (FORMERLY: STARCOM PLC)
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 10- SIGNIFICANT EVENTS DURING AND AFTER THE REPORTED PERIOD (GLOBAL UNCERTAINTIES
- COVID-19 AND UKRAINE WAR)
The impacts of the COVID-19 pandemic are still being felt. There was a global
component's shortage, increased purchasing costs and difficult shipping
conditions which created additional costs and delays impacting the Group's
ability to fully respond to the increased business demand. To meet this demand
the Group has sourced additional components which will enable it to deliver
additional products in H2 2022.
In addition, the Group also managed to take advantage of the opportunity of
COVID-19's impact on freight movement and was able to conclude 3 significant
distribution contracts which are expected to contribute significantly to
revenues in the coming years.
During February 2022, the geo-political situation between Russia and Ukraine
escalated, causing the shutdown of one of the Group's sub-contractor's
production site. The Company managed to shift quickly to other manufacturers,
but it did cause some short delays in the production process which resulted in
a slowdown in onward deliveries of finished goods to our customers. The
Company's general production abilities were unaffected.
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. END IR DGGDCSGBDGDXRecent news on t42 IoT Tracking Solutions
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