REG - Windward Ltd. - Final Results
27/03/2024 07:00
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RNS Number : 4226I Windward Ltd. 27 March 2024
27 March 2024
Windward Ltd.
("Windward", "the Company")
Final Results
Strong financial results and record customer wins alongside further
market-leading innovation
Windward (https://windward.ai/) (LON: WNWD), the leading Maritime AI
company, is pleased to announce audited results for the year ended 31
December 2023.
Financial Highlights
· Annual Contract Value (ACV(1)) up 35% to $34.5m (2022: $25.5m)
· Commercial ACV growth of 58% (2022: 42%), representing 30% of total ACV (31
December 2022: 26%)
· Revenue up 31% to $28.3m (2022: $21.6m)
· Gross margin increased 700 basis points to 79% (2022: 72%)
· R&D investment to support future growth of $11.1m (2022: $12.3m)
· 59% reduction in EBITDA loss to $(5)m (2022: ($12.1m)), with H2 EBITDA loss
of $(1.2)m (2022 $(6.7)m
· Cash and cash equivalents of $17.3m as at 31 December 2023 (31 December 2022:
$22.1m)
Operational Highlights
· Continued expansion of our blue-chip, global customer base, driven by
underlying market demand and the diversification of our offering
o Strong growth in customers to over 200 as at 31 December 2023 (31 December
2022: 132)
o Good levels of renewals and wins in Government segment, including significant
increase in ROW Government customers
o Progress in expanding our supply chain customer base, supporting strong ACV
growth in the commercial sector in line with our stated strategy
o Partnerships signed to further expand market reach, including a partnership
with the London Stock Exchange Group
· Continued innovation of our offering to provide customers with the most
advanced maritime AI
o New product launches include additional ETA insights and Reasons for Delay API
strengthening our supply chain solution in response to changing global events
· Confident outlook
o Strong trading momentum has continued in the new year
o Confident in achieving results for FY24 in line with market expectations
((1)) ACV, as of a given date, is the total of the value of each contract
divided by the total number of years of the contract.
((2)) EBITDA is earnings before interest, tax, depreciation and amortisation
Ami Daniel, CEO and Co-Founder of Windward said:
"I am pleased to have driven another year of significant progress for Windward
in line with our stated strategy, delivering record levels of ACV and revenue,
including substantial growth in our commercial segment.
Global trade faces an array of evolving challenges across security, sanctions,
and supply chains. In the face of these ongoing pressures, we have further
cemented our position across the industry as a trusted partner to governments
and businesses of all sizes to help them meet their ambitions.
Looking ahead, we are excited to scale the business further and meet the
growing need for the digitisation of the maritime market. We are supported in
these ambitions by our global and committed team of maritime experts, a strong
cash position, enabling continued investment into our solutions and people,
and high levels of recurring revenue."
For more information, please contact:
Windward Via Alma
Irit Singer, CMO
Canaccord Genuity (Nominated Adviser & Broker) +44(0)20 7523 8000
Simon Bridges / Andrew Potts
Alma Strategic Communications +44(0)20 3405 0205
Caroline Forde / Kieran Breheny
About Windward
Windward (https://windward.ai/) (LSE:WNWD), is the leading Maritime AI™
company, providing an all-in-one platform to accelerate global trade.
Windward's AI-powered decision support and exception management platform
offers a 360° view of the maritime ecosystem and enables stakeholders to make
real time, predictive intelligence-driven decisions to achieve business and
operational readiness.
Windward's Maritime AI supports companies across industries. The company's
clients range from oil supermajors, freight forwarders, and port authorities,
to banks, shippers, insurers, and governmental organizations.
For more information visit: https://windward.ai/ (https://windward.ai/) .
Chairman's statement
Overview
This was a year in which Windward has become firmly established on the world
stage, enabling efficiencies and supporting compliance across global trade,
through its data and AI capabilities.
For a range of maritime participants, including governments, agencies, freight
forwarders, traders and energy firms, Windward's AI platform represents a
vital tool to address their needs in an unpredictable and ever-changing
business environment. Windward is a trusted partner to these organisations,
becoming an integral element of their day-to-day decision making, providing
considerable scope for future growth as the Company's platform evolves.
Increasing complexity of Global trade
The regulatory and sanctions landscape continues to place increasing pressure
on organisations to ensure visibility of who they are dealing with and where
the goods they are trading have come from. Key events such as the EU's 11th
and 12th sanctions packages, a fourth round of US sanctions and, more
recently, the UK's General Trade Licence sanctions against Russian vessels
reflect the wide-reaching and enduring nature of these complexities within
global trade.
At the same time, freight forwarders and their customers demand the highest
levels of visibility across their supply chain, which has only been compounded
by the wider macro-economic and geopolitical environment, as evidenced by
issues observed in 2023 such as drought in the Panama Canal or attacks in the
Red Sea, which can significantly affect routes and estimated times of arrival.
The ever-shifting maritime environment extends also to Governments, as they
look to secure their borders and secure themselves against threats. We were
delighted to see strong growth in ROW Government ACV in the year, growing 34%,
and no churn in Government customers in 2023.
Amid this complex web of security concerns, regulation and sanctions, cost,
time and logistical pressures, Windward's proposition has emerged as a key
solution to ensure optimal performance for both commercial and government
actors.
Strong company performance
It has been a record year for Windward, with significant double-digit revenue
growth and a considerable acceleration in its path to profitability, through
disciplined cost control.
Windward has delivered ACV growth of 35% for 2023 to $34.5m, providing a solid
basis for further expansion into the new year. This growth underscores the
relevance and value of our proposition, particularly as businesses
increasingly rely on our solutions to navigate complex operational landscapes.
Revenue increased 31% to $28.3m (2022: $21.6m), with a significantly decreased
EBITDA loss of $5m (2022: $12.1m; H22023: -$1.2m) as a result of steps taken
to streamline operations and control costs, which provides a clear pathway to
achieving positive EBITDA. The Company remains well capitalised with net cash
of $17.3m at 31 December 2023.
A particular highlight has been the growth in customer numbers to over 200, up
from 132 at 31 December 2022. This milestone reflects the diversification of
the customer base and offering, with a particular success in growing
Windward's presence among the commercial sector through its supply chain
solution.
People and culture
Our continued success is driven by the hard work and talent across our teams.
Underpinning this is a strong culture of innovation and entrepreneurship which
binds our teams together in our vision.
In a year in which many of our colleagues have faced significant challenges,
particularly from October, our people have maintained a focus on delivery. I
would like to extend my deep gratitude for the hard work of our teams and
their continued excellence during this time.
Positive Outlook
For an increasing number of organisations, embracing technology is now an
imperative to ensure maximum compliance and efficiency in their operations.
Windward's expertise in maritime AI is over a decade in the making, and
remains second-to-none, placing us at the forefront of this growing
opportunity.
I'm extremely proud of the progress achieved to date, but as an organisation
we recognise there remains an untapped opportunity ahead to further transform
all spheres of the maritime industry.
Finally, I would like to extend my gratitude to our shareholders, customers,
and employees for their continued support. Together, we have achieved
significant steps forward for the business, and the Board remains confident in
the continued progress of Windward in the years ahead.
Edmund John Phillip Browne, The Lord Browne of Madingley
Non-Executive Chairman
Chief Executive Officer's statement
I am delighted to report on another year of significant progress for Windward.
We have executed against our stated strategy, delivering record results and
new customer wins alongside further market-leading innovation across our
service lines. We have deepened our relationship with customers through
product enhancements and updates in response to the ever-changing global
environment, strengthening our position as trusted partner in global trade.
Importantly, we advanced our plan for reducing costs to see the business
through more quickly to cash generation, with total operating expenses reduced
to $30.5m from $31.0m.We increased efficiencies and focus throughout the
business, while delivering strong top line growth, as evidenced by ACV growth
of 35% in the year to $34.5m and reduced EBITDA loss (-$1.2m) and cash burn in
H2 to ($0.3m).
We have maintained our investment into new solutions and product offerings,
and the success of our supply chain offering can be seen in the growth in the
proportion of ACV derived from the Commercial sector, now growing to 30% of
total ACV (2022: 26%), with a growth of 58% in commercial ACV in 2023. We have
learnt much about the requirements of our supply chain customers in the year
and see potential for further product development in 2024, to increase the
competitive differentiation and addressable market.
We saw a good level of renewals and wins across our Government segment,
including a significant increase of ROW customers and no churn. Looking ahead,
we anticipate this segment will provide a steady cash generative base allowing
us to continue to make investment into the Commercial segment.
With many of the world's largest participants in global trade as customers and
partners, providing a significant endorsement of the power of our maritime AI
insights, a growing base of high margin, recurring revenue, and a committed
and driven team, we have a fantastic basis on which to build in 2024. This is
supported by our strong net cash balance of $17.3m, positioning us well to
invest across our people and product as we scale.
Overview
Global shipping continues to confront multiple challenges, with all maritime
actors needing to adapt to the shifting operational and regulatory landscape
while effectively servicing global trade, whether this be achieving the
optimal routes for cargo transport, ensuring compliance with the raft of
regulations and sanctions in place, or securing territories against bad
actors.
Windward has firmly established itself at a critical juncture within the
maritime industry. Across the areas of security, supply chain and sanction
compliance, our customers see us as a trusted and essential technology partner
for their day-to-day activities, using the data, insights and analytics built
from our vast network of data and AI tools to provide them with greater
visibility and help them make the right decisions for their respective goals.
Our global team of maritime experts have their fingers on the pulse for all
matters related to maritime risk, and as more and more government departments
and businesses turn to our solution, we remain ready to react swiftly to the
changing trade, sanctions and security environments.
Performance against FY23 ambitions
We started the year with a set of key aims to further grow our presence across
all areas of maritime and uphold our competitive edge. These were to expand
our commercial customer base, with a focus on capturing enterprise-level
customers in the Commercial segment, build our supply chain business, while
maintaining our strong presence with US Government and ROW Government
customers.
We achieved a landmark of over 200 customers, representing the increasing
recognition of the significant benefits technology plays in supporting the
everyday maritime operations. However, this is only a fraction of the huge
available market for us to target. Whilst we are delighted with the number of
new customers, in no way did this affect the diligence with which we look
after our existing customers. This is reflected in our strong rate of
renewals.
Growing our supply chain business and capturing enterprise customers
In line with our stated ambitions for the year, we are seeing the further
adoption of our Ocean Freight Visibility solution (OFV).
Following OFV's launch in 2022, we reacted to our learnings around the
offering and the needs of the end market. Through this, we have identified
that the sophistication of the solution means it is most appropriate for the
largest freight forwarders, who require the deep insights and data points
provided by OFV. These learnings have enabled us to tailor the solution to
better meet the needs of freight forwarders, utilising the data sources we
already have available to make insights available to customers within the
platform, not only from port to port, but also warehouse to warehouse. Through
this narrowed focus, we have been able to grow customer numbers and average
deal size.
The feedback from this solution to date has been exceptional, and we were
delighted to receive recognition of the superiority of our offering through
the receipt for the award of The Supply Chain Innovation Award - Technology at
the 2023 Supply Chain Excellence awards. Customers signed using OFV include
Scan Global Logistics and Nowports.
Our direct sales have been complemented by key partnerships established during
the year, including our significant partnership with the London Stock Exchange
Group ("LSEG"). These partnerships, which embed Windward's capabilities into
third party platforms, extend the reach of our services to new users. This is
part of our strategy to expand our channel partnership as presented at the
time of our IPO.
Post-period, in February 2024, we were pleased to announce an extension to our
LSEG partnership through the integration of select LSEG's World-Check services
into our platform. This extension provides our customers with comprehensive
compliance and risk management solutions beyond the maritime domain,
reinforcing our capability to enable businesses to manage the complexities of
global trade risk.
Investing in our product
Our 14+ years of investment into AI and machine learning technologies and
unrivalled datasets sets us apart from our peers and presents a significant
barrier to entry for new entrants to the maritime space. Yet, as we broaden
our offering, and as the maritime space encounters new challenges, we continue
to focus on adapting and enhancing our product to deliver an unbeatable set of
market-leading products.
In view of the changing trade flows and increased risks prompted by
geopolitical and environmental dynamics, we launched two key enhancements in
H1, additional ETA insights and Reasons for Delay API, to broaden and deepen
the actionable insights and analytics for our customers.
Responding to recent events in the Red Sea region, in December, we also
launched our Route Deviation Exception for stakeholders in view of the
continually shifting situation in the region. This rapid responsiveness and
deployment reflects the robustness of our platform and technology and its
ability to swiftly adapt to clients' changing needs, whatever the
circumstances.
We also launched an advanced Business Intelligence solution to enable the vast
array of shipping stakeholders to elevate their tracking of shipments and gain
an AI-driven commercial and strategic edge. Post-period, we enhanced this
solution through the addition of 'Sequence Search', a first-of-its-kind
capability that allows users to conduct advanced analysis of vessels'
behavioural typologies and trade movements by searching for sequences of
activities. This enhancement is now being offered to both existing and new
customers as a new value package.
In keeping with our longstanding investment into AI, we are currently testing
the deployment of generative AI across our platform, with the intention of
formally launching this enhancement in 2024. This mirrors the pace of our
customers' progress which many of them are busy deploying generative AI across
their businesses. According to McKinsey, 94% of businesses will invest more in
2024 in AI based technology solutions vs. 2023.
These innovations ensure the highest levels of visibility and support for our
existing customers and help to expand our reach to new customers and market
segments.
We have continued to expand and strengthen our sales teams, the vast majority
of which are based outside of Israel, giving us close access to new enterprise
and government customers across the world.
For our teams in Israel, it has been a challenging time, however they have
continued to deliver for our customers. The hard work and continued dedication
to performance, day in and day out, has been exceptional, and I would like to
thank our staff in Israel and across the world for their vital contribution to
our success.
Cost management to optimise our profitability
A key focus for management through the year has been further optimising our
efficiency and managing costs in the business to enhance our pathway to
profitability. As set out last year, we are on track to reach EBITDA
break-even run rate exiting FY24.
Key focus areas for 2024
Our key focus areas for the current financial year are to:
1. Continue to grow our commercial presence, capturing the significant
opportunities across security, sanctions and compliance, and supply chain
pressures
2. Expand our range of partnerships to increase our revenue opportunities and
routes to market while deepening relationships with existing partners
3. Expand our customer base in the US Government market and deepen our reach into
the Defense space, aiming to sign multi year contracts.
4. Retain existing business in the RoW government and achieve modest growth in
this segment.
5. Further investment into our product roadmap to deliver AI solutions that
deliver tangible benefit for our customers
Current trading and outlook
The positive momentum of 2023 has continued into 2024. This underscores the
resilience and effectiveness of our solutions and positioning for
profitability in the near term.
In December I relocated to London with my family in a move which positions me
closer to many of our key customers and investors. To date, London has
represented a great environment for the business for accessing shareholders
and customers, and I look forward to the benefits of increased interaction
with our customers and wider stakeholders over the coming year.
As we continue to help our customers navigate the intricate nature of maritime
trade across regulatory requirements, logistics, and achieving cost
efficiencies, our R&D teams are continuing to innovate in line with the
shifting environment. We also plan to invest further into our sales and
marketing functions to accelerate our growing presence in our markets.
Looking ahead to 2024 and beyond, we are excited about the opportunities that
lie ahead, driven by the industry-wide expectation for greater actionable
insights and visibility and our own continued innovation to keep up with these
long-term trends. Whilst it is early in the year, we are confident in
achieving results for FY24 in line with market expectations.
We feel we have only scratched the surface with respect to the massive global
opportunity across maritime trade, and I look forward to updating shareholders
on our progress throughout the year.
Ami Daniel
Co-founder and CEO
Financial Review
Windward management and Board regularly review metrics, including the
following KPIs, to assess its performance, identify trends, develop financial
projections and make strategic decisions. For a review of the key financial
metrics, see below.
A KEY DRIVER OF FUTURE REVENUE IS ANNUAL CONTRACT VALUE (ACV)
ACV is a non-IFRS measure defined as the sum of all ACV for customers as of
the measurement date. The ACV for each customer is the annual committed
subscription value of each order booked for which Windward will be entitled to
recognise revenue. For example, a contract for $1m with a committed
contractual term of two years would have ACV of $0.5m, making the assumption
for any period that the customer renews under the same terms and conditions.
As at 31 December 2023, Windward increased its ACV by 35% over 31 December
2022, driven primarily by the increase in customers from 132 to 201 over the
same period, and to a lesser extent by an increase in upsells to existing
customers made possible by expansion of the number of users or the product
set. Growth in ACV has been in all segments of our markets.
KEY PERFORMANCE INDICATORS ("KPIS") ($ IN THOUSANDS)
ACV 2023 ($'000) 2022 ($'000) % change
ROW Gov 15,936 11,533 38.2%
USA Gov 8,135 7,381 10.2%
Commercial 10,457 6,622 57.9%
Total 34,528 25,536 35.2%
Revenues
ROW Gov 12,472 9,986 24.9%
USA Gov 7,355 6,041 21.8%
Commercial 8,500 5,616 51.4%
Total 28,327 21,643 30.9%
Number of Customers Count Count
ROW Gov 29 20 45.0%
USA Gov 16 15 6.7%
Commercial 156 97 60.8%
Total 201 132 52.3%
We separate our Government customers into two market segments: Government
outside USA (ROW) and USA Government. We do this as the buying cycle and
pricing for each segment is different. For Government ROW, in most cases
Windward is responding to a Request for Proposal ("RFP") process which can
take between 9 to 18 months to conclude. For the USA Government Windward
typically sells a subscription-based solution on a price per user basis.
Historically most of the annual awards from the U.S. Government agencies are
linked to the U.S. Federal budget cycle which typically concludes annually at
the end of September.
At the end of December 2023 our largest customer was at 8.3% (December
2022: 10.9%) of ACV and the next 5 biggest customers together were 20.4%
(December 2022: 26.9%) of ACV.
The annual ACV churn rate is defined as the value of contracts lost from the
existing customer base one year prior to the measurement date, as a proportion
of the total ACV value of that existing customer base. The churn rate reflects
customer losses and contractions but not any customer expansions of existing
contracts.
Churn in 2023 was 7.5% compared to 19.5% in 2022 when we had 32% churn in Gov
ROW. We target churn to be below 10%.
FINANCIAL OVERVIEW as of 31 December:
2023 ($'000) 2022 ($'000) Change %
Revenues 28,327 21,643 30.9%
Cost of revenues 5,825 6,146 -5.2%
Gross Profit 22,502 15,497 45.2%
Gross Margin 79% 72%
R&D 11,132 12,306 -9.5%
S&M 13,650 13,173 3.6%
G&A 5,697 5,528 3.0%
Total operating expenses 30,479 31,007 -1.7%
Operating loss (7,977) (15,510) -48.6%
EBITDA loss (5,024) (12,112) -58.5%
REVENUE
Revenue increased by 30.9% to $28.3m ( 2022: $21.6m). This increase was driven
by 24.9% growth in Gov ROW, 21.8% growth in our USA Government and 51.4% in
Commercial segments mostly from the additional 70 new customers adopting our
solution for the first time.
Gross margin
Gross margin increased to 79% in 2023 (72% in 2022), mostly as a result of
increase in revenue and cost saving actions taken earlier in the year. We
expect margins to improve to be above 80% over time.
R&D
Research and development decreased from $12.3m in 2022 to $11.1m in 2023
mainly due to lower number of employees and other cost control. All R&D
costs are expensed as they occur, we do not capitalise R&D costs.
S&M
Sales and marketing increased slightly from $13.2m in 2022 to $13.6m in 2023.
The main reason for the increase was hiring additional sales managers in
Europe and USA
G&A
General and administrative expenses increased slightly from $5.5m in 2022 to
$5.7m in 2023 reflecting the increased level of business activity, mainly
additional office space.
Taxes
The Company paid $146 thousands income tax in its subsidiaries.
CURRENCY EFFECT
Approximately 60% of the annual operating expenses are incurred in New Israeli
Shekels (NIS). While most of the revenue is invoiced in USD and consequently,
the Company reports in USD. The average exchange rate between NIS and $
increased by 10% in 2023 versus 2022.
EBITDA
We define EBITDA as profit before depreciation, amortisation, interest, tax
and share-based payment charges and associated employer tax charges.
Statement of financial position
CASH AND CASH EQUIVALENTS
Windward had cash, cash equivalents and short term deposits on 31
December 2023 of $17.3m, (70% held in USD), a decrease of $4.8m from
31 December 2022.
CASH FLOW
Windward used $3.3m to finance operating activities in 2023, a 76% decrease
from the $13.8m used in 2022. The decrease was mainly the result of reduced
operating losses and increase in deferred revenue of $3.1m.
Ofer Segev
Chief Financial Officer
Windward Ltd.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Year ended December 31
Note 2023 2022
U.S. dollars in thousands (except share and per share data)
REVENUES 13 28,327 21,643
COST OF REVENUES 14 5,825 6,146
GROSS PROFIT 22,502 15,497
OPERATING EXPENSES:
Research and development, net 14 11,132 12,306
Sales and marketing 14 13,650 13,173
General and administration 14 5,697 5,528
TOTAL OPERATING EXPENSES 30,479 31,007
OPERATING LOSS (7,977) (15,510)
FINANCIAL EXPENSES (INCOME)
Financial expenses 14 1,316 3,937
Financial income 14 (448) (248)
LOSS FOR THE YEAR (8,845) (19,199)
Tax Expenses 146 -
NET LOSS FOR THE YEAR (8,991) (19,199)
Loss per share attributable to the ordinary equity holders of the Company:
Basic and diluted Loss per share 17 (0.10) (0.22)
The accompanying notes are an integral part of the financial statements.
Windward Ltd.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
December 31
Note 2023 2022
U.S. dollars in thousands
Assets
CURRENT ASSETS:
Cash and cash equivalents 4 17,317 22,141
Trade receivables 5 2,502 2,448
Other receivables 5 4,254 2,861
TOTAL CURRENT ASSETS 24,073 27,450
NON-CURRENT ASSETS:
Restricted deposit 12 1,558 1,143
Property and equipment, net 6 646 796
Intangible asset 2j 495 -
Right-of-Use asset 7 1,619 1,956
TOTAL NON-CURRENT ASSETS 4,318 3,895
TOTAL ASSETS 28,391 31,345
Liabilities and shareholders' equity
CURRENT LIABILITIES:
Trade payable 969 878
Current maturities of lease liabilities 7 330 320
Other payable 8a 4,364 3,637
Deferred revenues 13 12,734 8,315
TOTAL CURRENT LIABILITIES 18,397 13,150
NON-CURRENT LIABILITIES:
Liability for employee rights upon retirement, net 55 57
Deferred revenues 2,791 4,078
Lease liability 7 1,392 1,725
TOTAL NON-CURRENT LIABILITIES 4,238 5,860
TOTAL LIABILITIES 22,635 19,010
COMMITMENTS 12
SHAREHOLDERS' EQUITY:
Ordinary Shares (See note 9) 9 - 27
Additional paid-in capital 9,10 83,297 80,858
Accumulated deficit (77,541) (68,550)
TOTAL SHAREHOLDERS' EQUITY 5,756 12,335
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 28,391 31,345
Ami Daniel Ofer Segev
Chief Executive Officer Chief Financial Officer
Date of approval of the consolidated financial statements by the Company's
Board of Directors: March 25, 2024.
The accompanying notes are an integral part of the financial statements.
Windward Ltd.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
Ordinary shares Additional Accumulated Total
paid-in
deficit
capital
U.S. dollars in thousands
BALANCE AS OF DECEMBER 31, 2021 27 77,486 (49,351) 28,162
CHANGES DURING 2022:
Exercise of options by employees (*) 536 - 536
Share based compensation - 2,836 - 2,836
Loss for the year - - (19,199) (19,199)
BALANCE AS OF DECEMBER 31, 2022 27 80,858 (68,550) 12,335
CHANGES DURING 2023:
Exercise of options and RSUs by employees (*) 118 - 118
Share based compensation - 2,294 - 2,294
Change in the shares nominal value (27) 27 -
(See note 9)
Loss for the year - (8,991) (8,991)
BALANCE AS OF DECEMBER 31, 2023 - 83,297 (77,541) 5,756
* Represents an amount lower than 1 thousand U.S dollar
The accompanying notes are an integral part of the financial statements.
Windward Ltd.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
2023 2022
U.S. dollars in thousands
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the year (8,991) (19,199)
Adjustments to reconcile loss for the year to net cash used in
operating activities:
Depreciation 659 562
Share based compensation expenses 2,294 2,836
Effect of exchange rate 123 3,127
Finance expenses of lease liabilities 122 79
Changes in asset and liability items:
Increase in trade receivables (53) (802)
Increase in other receivables (1,393) (1,430)
Increase in trade payables 91 385
Increase (decrease) in other payables and accruals 727 (681)
Increase in deferred revenues 3,132 531
Decrease in accrued severance pay, net (2) (7)
Net cash used in operating activities (3,291) (14,599)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (112) (182)
Investments in intangible assets (495) -
(Increase) decrease in restricted deposit (401) 17
Interest received 448 -
Net cash used in investing activities (560) (165)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options 118 536
Funds received (paid) in respect of the sale of shares by
shareholders and consultants in connection with the Initial
Public Offering - (3,730)
Principal elements of lease payments (313) (411)
Interest paid (194) (71)
Net cash used in financing activities (389) (3,676)
DECREASE IN CASH AND CASH
EQUIVALENTS (4,240) (18,440)
BALANCE OF CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 22,141 43,688
EFFECTS OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS (584) (3,107)
BALANCE OF CASH AND CASH EQUIVALENTS AT
END OF YEAR 17,317 22,141
The accompanying notes are an integral part of the financial statements.
Windward Ltd.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
a. Windward Ltd. (the "Company" or and its subsidiaries the "Group") was
incorporated in Israel and commenced its operations in January 2010. The
registered office of the Company is Ha-Shlosha St 2, Tel Aviv-Yafo, Israel.
Windward is a leading maritime AI company, providing an all-in-one platform
for risk management and maritime domain awareness needs. The Company has
established two wholly owned subsidiaries in the United Kingdom and one in the
United States, that provide sales and marketing services to the Company.
b. On December 6, 2021, the Company completed a process of listing its
existing shares and issuing new shares on the AIM market of the London Stock
Exchange (the IPO).
c. In October 2023, in response to Hamas' attack on Israel from the Gaza
Strip, Israel declared war on Hamas. Despite the ongoing war, the Company has
continued to operate its business and serve its customers around the world
and, to date, its ability to support customers has not been materially
impacted. At this time, less than 10% of the Company's Israeli workforce have
been called to military reserve duty and the Company has contingencies in
place to cover impacted roles and responsibilities.
The situation in the region remains highly uncertain and there is the
possibility that the conflict could worsen or expand which could, in turn,
further impact economic conditions in Israel and in the broader region. At of
this report, it is difficult to assess the impact the war may have on the
Company's results of operations. Any further escalation, expansion, or
prolonged continuation of the ongoing conflict has the potential to impact the
Company's operations locally as well as the broader global economy and may
have a material effect on the Company's results of operations.
d. Since the establishment of the company, the company has accumulated
continuous losses from its business activities, and it had negative cash
flows. As of December 31, 2023, the company had cash and cash equivalents in
the amount of approximately $17.3 million. The continuation of the company's
activity in the coming year is supported by its cash balances as well as the
realization of the management's plans for growth and an increase in the
revenues. These funding sources allow the company's management to assess its
continued activity for a period of more than 12 months starting from the date
of approval of these financial statements.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a. Basis of presentation of the consolidated financial statements
The consolidated historical financial information presents the financial track
record of the Group for the two years ended December 31, 2023 and have been
prepared in accordance with International Financial Reporting Standards (IFRS)
and interpretations issued by the IFRS Interpretations Committee (IFRS IC)
applicable to companies reporting under IFRS. The financial statements comply
with IFRS as issued by the International Accounting Standards Board (IASB).
The significant accounting policies described below have been applied
consistently in relation to all the reporting periods, unless otherwise
stated.
In determining and applying accounting policies, the management are required
to make judgements and estimates in respect of items where the choice of
specific policy, accounting judgement, estimate or assumption to be followed
could materially affect the Group 's reported financial position, results or
cash flows and disclosure of contingent assets or liabilities during the
reporting period; it may later be determined that a different choice may have
been more appropriate. The Group 's critical accounting judgements and key
sources of estimation uncertainty are detailed in note 3. Actual outcomes
could differ from those estimates. The estimates and underlying assumptions
are reviewed on an ongoing basis. Revisions to accounting estimates are
recognized in the period in which the estimate is revised if the revision
affects only that period; they are recognized in the period of the revision
and future periods if the revision affects both current and future periods.
b. Functional and presentation currency
Items included in the financial statements of each of the Group's entities are
measured using the currency of the primary economic environment in which the
entity operates is U.S. dollar ("$" or "dollar"). The consolidated
financial statements are presented in in U.S. dollar ("$" or "dollar")
currency units, which is the Company and its subsidiaries functional currency
and the group presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions, and from
the translation of monetary assets and liabilities denominated in foreign
currencies at year end exchange rates, are generally recognized in profit or
loss. All other foreign exchange gains and losses are presented in the
statement of profit or loss on a net basis within financial expenses/income.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated.
c. Principals of consolidation
Inter-Company transactions, balances and unrealized gains on transactions
between Group companies are eliminated. Unrealized losses are also eliminated
unless the transaction provides evidence of an impairment of the transferred
asset. Accounting policies of subsidiaries have been changed where necessary
to ensure consistency with the policies adopted by the Group.
d. Cash and cash equivalents
All highly liquid investments, which include short-term bank deposits, that
are not restricted as to withdrawal or use, and short-term debentures, the
period to maturity of which do not exceed three months at the time of
investment, are considered to be cash equivalents. Cash and cash equivalents
exclude restricted cash.
e. Restricted deposit
Restricted deposits consist of cash deposits for office lease, credit card
guarantee, guarantees required under a customer agreement. These deposits
serve a collateral for bank guarantees.
f. Revenue recognition
The Company derives its revenue from subscription fees from customers
accessing the Company's enterprise cloud computing services (Software as a
Service). The Company's agreements do not provide customers with the right to
take possession of the software supporting the applications and, as a result,
are accounted for as service contracts.
Revenue from rendering of services is recognized over time, during the period
the customer simultaneously receives and consumes the benefits provided by the
Company's performance. The Company charges its customers based on payment
terms agreed upon in specific agreements. When payments are made before or
after the service is performed, the Company recognizes the resulting contract
asset or liability.
Transactions with financing:
The Company has elected to apply the practical expedient allowed by IFRS 15
according to which the Company does not separate the financing component in
transactions for which the period of financing is one year or less and
recognizes revenue in the amount of the consideration stated in the contract
even if the customer pays for the goods or services before or subsequent to
their receipt.
In order to obtain certain contracts with customers, the Company incurs
incremental costs in obtaining the contract (such as sales commissions which
are contingent on making binding sales). Costs incurred in obtaining the
contract with the customer which would not have been incurred if the contract
had not been obtained and which the Company expects to recover are recognized
as an asset and amortized on a systematic basis that is consistent with the
provision of the services under the specific contract.
Revenues are primarily recognized ratably as the service is provided to the
customer and consist of fees paid for secured network connectivity services.
g. Employee benefit liabilities
1. Short-term employee benefits:
Liabilities for wages and salaries, including non-monetary benefits, annual
leave and accumulating sick leave that are expected to be settled wholly
within 12 months after the end of the period in which the employees render the
related service are recognized in respect of employees' services up to the end
of the reporting period and are measured at the amounts expected to be paid
when the liabilities are settled. The liabilities are presented as current
employee benefit obligations in the balance sheet.
2. Post-employment benefits:
The group operates defined benefit plans and defined contribution plans.
For defined contribution plans, the Group pays contributions to publicly or
privately administered pension insurance plans on a mandatory, contractual or
voluntary basis. The Group has no further payment obligations once the
contributions have been paid. The contributions are recognized as employee
benefit expense when they are due. Prepaid contributions are recognized as an
asset to the extent that a cash refund or a reduction in the future payments
is available.
Israeli labor law generally requires payment of severance pay upon dismissal
of an employee or upon termination of employment in certain other
circumstances. Company's pension and severance pay liability to certain
employees is covered mainly by purchase of insurance policies. Pursuant to
section 14 of the Severance Compensation Act, 1963 ("section 14"), some of the
Company's employees are entitled to monthly deposits, at a rate of 8.33% of
their monthly salary, made in their name with insurance companies. Payments in
accordance with section 14 relieve the Company from any future severance
payments in respect of those employees and as such the Company may only
utilize the insurance policies for the purpose of disbursement of severance
pay.
h. Share based compensation
The Company's employees are entitled to remuneration in the form of
equity-settled share-based payment transactions.
The cost of equity-settled transactions with employees is measured at the fair
value of the equity instruments granted at grant date. The fair value is
determined using an acceptable option pricing model.
As for other service providers, the cost of the transactions is measured at
the fair value of the goods or services received as consideration for equity
instruments granted. The cost of equity-settled transactions is recognized in
profit or loss together with a corresponding increase in equity during the
period which the performance and/or service conditions are to be satisfied
ending on the date on which the relevant employees become entitled to the
award ("the vesting period"). The cumulative expense recognized for
equity-settled transactions at the end of each reporting period until the
vesting date reflects the extent to which the vesting period has expired and
the Group's best estimate of the number of equity instruments that will
ultimately vest.
No expense is recognized for awards that do not ultimately vest, except for
awards where vesting is conditional upon a market condition, which are treated
as vesting irrespective of whether the market condition is satisfied, provided
that all other vesting conditions (service and/or performance) are satisfied.
i. Income taxes
Deferred tax assets are recognized only if it is probable that future taxable
amounts will be available to utilize those temporary differences and losses.
j. Research and development costs
Costs associated with maintaining software programmers are recognized as an
expense as incurred. Development costs that are directly attributable to the
design and testing of identifiable and unique software products controlled by
the Group are recognized as intangible assets where the following criteria are
met:
· it is technically feasible to complete the software so that it will
be available for use.
· management intends to complete the software and use or sell it.
· there is an ability to use or sell the software.
· it can be demonstrated how the software will generate probable future
economic
benefits.
· adequate technical, financial and other resources to complete the
development and to
use or sell the software are available, and
· the expenditure attributable to the software during its development
can be reliably
measured.
When an internally developed intangible asset cannot be recognized, the
development costs are recognized as an expense in profit or loss as incurred.
Development costs previously recognized as an expense are not recognized as an
asset in a subsequent period.
In 2023, the company started a project to create a vessel ownership database.
This will be used for providing its services to customers as part of the
company platform. The company recorded the development costs of this database
as an intangible asset. The Company expects to recognize income from this
intangible asset in the future.
k. Leases
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
· fixed payments (including in-substance fixed payments),
· variable lease payment that are based on an index or a rate,
initially measured using the index or rate as at the commencement date
Lease payments to be made under reasonably certain extension options are also
included in the measurement of the liability.
The lease payments are discounted using the lessee's incremental borrowing
rate, being the rate that the individual lessee would have to pay to borrow
the funds necessary to obtain an asset of similar value to the right-of-use
asset in a similar economic environment with similar terms, security and
conditions.
The Group is exposed to potential future increases in variable lease payments
based on an index or rate, which are not included in the lease liability until
they take effect. When adjustments to lease payments based on an index or rate
take effect, the lease liability is reassessed and adjusted against the
right-of-use asset.
Lease payments are allocated between principal and finance cost. The finance
cost is charged to profit or loss over the lease period so as to produce a
constant periodic rate of interest on the remaining balance of the liability
for each period. The Company has not elected to apply the practical expedient
in the Standard and separate the lease components from the non-lease
components.
Right-of-use assets are measured at cost comprising the following:
· the amount of the initial measurement of lease liability
Right-of-use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset's useful life.
l. Financial instruments
1. Financial assets:
Financial assets are measured upon initial recognition at fair value (except
trade receivables) plus transaction costs that are directly attributable to
the acquisition of the financial assets, except for financial assets measured
at fair value through profit or loss in respect of which transaction costs are
recorded in profit or loss.
Trade receivables are recognized initially at the amount of consideration that
is unconditional, unless they contain significant financing components they
are subsequently measured at amortized cost using the effective interest
method, less expected credit loss allowance.
2. Impairment of financial assets:
The Company evaluates at the end of each reporting period the loss allowance
for financial debt instruments which are not measured at fair value through
profit or loss.
The Company has short-term financial assets in respect of which the Company
applies a simplified approach and measures the loss allowance in an amount
equal to the lifetime expected credit losses.
An impairment loss on debt instruments measured at amortized cost is
recognized in profit or loss with a corresponding loss allowance that is
offset from the carrying amount of the financial asset.
3. Hedging:
During the year 2023, the company entered into forward contracts for cash flow
hedging of salary expenses denominated in NIS in the amount of approximately
NIS 24 million ($6.9 million) between the months May to October 2023. The
company recorded the forward contract influence of approximately $560
thousands as a finance expenses. No hedge accounting was applied for these
forward contracts.
4. Financial liabilities:
a) Financial liabilities measured at amortized cost:
Financial liabilities are initially recognized at fair value less transaction
costs that are directly attributable to the issue of the financial liability.
After initial recognition, the Company measures all financial liabilities at
amortized cost using the effective interest rate method.
5. Derecognition of financial liabilities:
A financial liability is derecognized only when it is extinguished, that is
when the obligation specified in the contract is discharged or canceled or
expires. A financial liability is extinguished when the debtor discharges the
liability by paying in cash, other financial assets, goods or services; or is
legally released from the liability.
m. Fair value measurement
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date.
Fair value measurement is based on the assumption that the transaction will
take place in the asset's or the liability's principal market, or in the
absence of a principal market, in the most advantageous market.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
Fair value measurement of a non-financial asset takes into account a market
participant's ability to generate economic benefits by using the asset in its
highest and best use or by selling it to another market participant that would
use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximizing
the use of relevant observable inputs and minimizing the use of unobservable
inputs.
All assets and liabilities measured at fair value or for which fair value is
disclosed are categorized into levels within the fair value hierarchy based on
the lowest level input that is significant to the entire fair value
measurement:
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
directly or indirectly.
Level 3 - inputs that are not based on observable market data (valuation techniques
which use inputs that are not based on observable market data).
n. Loss per share
(i) Basic loss per share
Basic loss per share is calculated by dividing:
· the loss attributable to owners of the Company, excluding any costs
of servicing equity other than ordinary shares.
· by the weighted average number of ordinary shares outstanding during
the financial year.
(ii) Diluted earnings per share
Diluted earnings per share adjusts the figures used in the determination of
basic earnings per share to take into account:
· the after-income tax effect of interest and other financing costs
associated with dilutive potential ordinary shares, and
· the weighted average number of additional ordinary shares that would
have been outstanding assuming the conversion of all dilutive potential
ordinary shares.
o. Segment reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker, who is responsible
for allocating resources and assessing performance of the operating segments.
The Group operates in one operating segment.
p. New International Financial Reporting Standards, Amendments to Standards
and New
Interpretations
1. New International Financial Reporting Standards, Amendments to
Standards and New interpretations that have been adopted:
a. Amendment to International Accounting Standard 1 Presentation of
financial statements, regarding disclosure of accounting policies (below in
this section - the amendment to IAS 1)
The amendment to IAS 1 requires companies to disclose material information
about their accounting policies. According to the amendment, information about
the accounting policies is material if, when taken into account together with
other information provided in the financial statements, it can reasonably be
expected that it will influence decisions that the primary users of the
financial statements make on the basis of these financial statements.
The amendment to IAS 1 even clarifies that information about the accounting
policy is expected to be material if, without it, the users of the financial
statements are prevented from understanding other material information in the
financial statements. In addition, the amendment to IAS 1 clarifies that there
is no need to disclose immaterial information about accounting policies.
However, to the extent that such information is given, it must be ensured that
it does not mask material information about accounting policies.
In accordance with the provisions of the amendment to IAS 1, the amendment was
implemented by the Company within these consolidated reports, starting on
January 1, 2023, and it led to the reduction and focus of the information
provided regarding its accounting policy in relation to previous reports.
In addition, within these consolidated reports, the Company updated the
information regarding the accounting policy.
b. Amendment to International Accounting Standard 8 Accounting Policy,
Changes in Accounting Estimates and Errors, regarding the definition of
accounting estimates (hereinafter - the amendment to IAS 8)
The amendment to IAS 8 clarifies how entities should distinguish between
changes in accounting policies and changes in accounting estimates. This
distinction is essential, since changes in accounting estimates are applied
prospectively, for transactions and other events in the future, while that
changes in accounting policy, as a rule, are applied retrospectively to
transactions and other events in the past, as well as to events and
transactions in the current period.
In accordance with the provisions of the amendment to IAS 8, the amendment
will be implemented by the Company as of January 1, 2023, prospectively. The
adoption of the amendment to IAS 8 did not have a material impact on the
Company's consolidated statements.
2. New International Financial Reporting Standards, Amendments to
Standards and New interpretations not yet adopted:
a. Amendments to International Accounting Standard 1 Presentation of
financial statements, on the subject of classifying liabilities as current or
non-current liabilities and on the subject of non-current liabilities with
financial standards (below in this section - the amendments to IAS 1)
The amendments to IAS 1 clarify the guidelines regarding the classification of
liabilities as current or non-current in the statement of financial position.
The amendments clarify, among other things, that:
· A liability will be classified as a non-current liability if
the entity has a substantial right, at the end of the reporting period, to
postpone the settlement of the liability for at least 12 months after the end
of the reporting period.
· The right to postpone settlement of an obligation in respect
of a loan agreement for at least 12 months after the end of the reporting
period is sometimes subject to the entity's compliance with the conditions
stipulated in the loan agreement (hereinafter - financial standards). The
classification of an obligation in respect of such a loan agreement as a
current obligation or as a non-current obligation will be determined only on
the basis of the financial standards which the entity is required to meet on
or before the end of the reporting period. Financial benchmarks that the
entity is required to meet after the end of the reporting period will not be
taken into account in this determination.
· To the extent that an obligation in respect of a loan
agreement for which the entity is required to meet financial standards during
the 12 months after the end of the reporting period is classified as a
non-current obligation, a disclosure will be made in the notes that allows
users of the financial statements to understand the risk that the obligation
may meet repayment during the 12 months after the end of the reporting period.
In this rule, a disclosure will be made regarding the nature of the conditions
the entity is required to meet, the date of their examination, the book value
of the related liabilities as well as facts and circumstances indicating that
the entity may have difficulty meeting these conditions. This disclosure may
refer to certain actions taken by the entity in order to prevent a potential
violation of the terms as well as the fact that the entity is not complying
with the terms based on the circumstances existing at the end of the reporting
period.
· The entity's intention regarding the exercise of an existing
right to postpone the settlement of the obligation for at least 12 months
after the end of the reporting period is not relevant for the purpose of
classifying the obligation.
· Settlement of an obligation can be done by way of transfer
of cash, other economic resources or capital instruments of the entity.
Classification of an obligation as a current obligation or as a non-current
obligation will not be affected by the existing right of the other party to
demand the settlement of the obligation by transferring capital instruments of
the entity, if this right has been classified by the entity as part of the
capital.
The amendments to IAS 1 will be applied by the Company retrospectively for
annual periods beginning on or after January 1, 2024. The adoption of the
amendments to IAS 1 is not expected to have a material impact on the Company's
consolidated statements.
NOTE 3 - SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN
THE PREPARATION OF THE FINANCIAL STATEMENTS:
In the process of applying the significant accounting policies, the Group has
made the following judgments which have the most significant effect on the
amounts recognized in the financial statements:
a) Judgments:
- Development costs:
In 2023, the company started a project to create a vessel ownership database.
This will be used for providing its services to customers as part of the
company platform/
The company recorded the development costs of this database as an intangible
asset. The Company expects to recognize income from this intangible asset in
the future.
- Deferred tax assets:
Deferred tax assets are recognized for unused carryforward tax losses and
deductible temporary differences to the extent that it is probable that
taxable profit will be available against which the losses can be utilized.
Significant management judgment is required to determine the amount of
deferred tax assets that can be recognized, based upon the timing and level of
future taxable profits, its source and the tax planning strategy. The Company
didn't recognize deferred tax assets in all the reporting periods.
b) Estimates and assumptions:
The preparation of the financial statements requires management to make
estimates and assumptions that have an effect on the application of the
accounting policies and on the reported amounts of assets, liabilities,
revenues and expenses. Changes in accounting estimates are reported in the
period of the change in estimate.
The key assumptions made in the financial statements concerning uncertainties
at the reporting date and the critical estimates computed by the Group that
may result in a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
- Determining the fair value of share-based payment transactions:
The fair value of share-based payment transactions is determined upon initial
recognition by an acceptable option pricing model. The inputs to the model
include share price, exercise price and assumptions regarding expected
volatility, expected life of share option and expected dividend yield.
NOTE 4 - CASH AND CASH EQUIVALENT:
December 31
2023 2022
U.S dollars in Thousands
Cash for immediate withdrawal - ILS 2,860 1,354
Cash for immediate withdrawal - USD 12,080 17,132
Cash for immediate withdrawal - EUR 1,201 947
Cash for immediate withdrawal - GBP 1,176 2,706
Cash for immediate withdrawal - OTHER - 2
17,317 22,141
NOTE 5 - TRADE AND OTHER RECEIVABLES:
a) Trade receivables, net
December 31
2023 2022
U.S dollars in Thousands
Trade receivables from contracts with customers 2,502 2,448
2,502 2,448
a. At each reporting date the majority of the trade receivables have not
yet reached their due date.
b. The majority of the trade receivables were repaid after the reporting
date.
c. As of December 31, 2023, the trade receivable balance includes an
allowance for expected credit losses in the amounts of $283 thousands.
b) Other receivables
December 31
2023 2022
U.S dollars in Thousands
Institutions 304 128
Prepaid expenses 2,057 2,330
Unbilled receivable 1,619 365
Other 274 38
4,254 2,861
NOTE 6 - PROPERTY AND EQUIPMENT:
As of December 31, 2022:
December 31
Leasehold improvements Office furniture and equipment
Computers
Total
U.S dollars in thousands
Cost:
Balance as of January 1, 2022 708 1,272 202 2,182
Purchases 120 30 32 182
Balance as of December 31, 2022 828 1,302 234 2,364
Less - accumulated depreciation
Balance as of January 1, 2022 (580) (710) (90) (1,380)
Depreciation (44) (130) (14) (188)
Balance as of December 31, 2022 (624) (840) (104) (1,568)
Depreciated cost as of December 31, 2022 204 462 130 796
As of December 31, 2023:
December 31
Leasehold improvements Office furniture and equipment
Total
Computers
U.S dollars in thousands
Cost:
Balance as of January 1, 2023 828 1,302 234 2,364
Purchases 74 20 17 111
Balance as of December 31, 2023 902 1,322 251 2,475
Less - accumulated depreciation
Balance as of January 1, 2023 (624) (840) (104) (1,568)
Depreciation (111) (133) (17) (261)
Balance as of December 31, 2023 (735) (973) (121) (1,829)
Depreciated cost as of December 31, 2023 167 349 130 646
NOTE 7 - LEASES:
1. The Company has entered into an office lease agreement for its
headquarters in Tel Aviv.
According to the lease agreement, from January 1, 2016, which is valid until
December 31, 2022, for an area of approximately 1,119 square meters. The
quarterly lease payment is NIS 403 thousands ($112 thousands).
As of December 31, 2021, The Company had an option to extend the lease period
for an additional five years. as part of the calculation of the lease
obligation, the option to extend the said lease period was not taken into
account, since it is not reasonably certain that it will be exercised.
In June 2022 the Company exercised its option to extend the office lease
period for additional five years starting on January 1, 2023. The lease
quarterly payments during the option period will be approximately NIS 423
thousand (approximately $121 thousand). As a result of the above, the company
recognized an amount of approximately $1,797 thousand as increase of the lease
liability against a corresponding increase in the right-of-use asset regarding
the re measurement of the lease liability.
Disclosures for right of use asset:
U.S dollars
in
Thousands
Balance as of December 31, 2021 386
Additions 1,797
CPI additions 147
Depreciation charge 374
Balance as of December 31, 2022 1,956
CPI additions 61
Depreciation charge 398
Balance as of December 31, 2023 1,619
Disclosures for lease liability:
U.S dollars
in
Thousands
Balance of December 31, 2021 503
Additions 1,797
Lease payments (482)
Interest 71
CPI additions 147
Exchange rate differences 9
Balance of December 31, 2022 2,045
Lease payments (507)
Interest 194
CPI additions 61
Exchange rate differences (71)
Balance of December 31, 2023 1,722
Current maturities of lease liabilities 330
Lease liability 1,392
Details regarding lease transactions
December 31,
2023 2022
U.S dollars in Thousands
Interest expenses in respect of lease obligations 194 71
Total cash flow for leases 507 482
NOTE 8 - OTHER PAYABLE
a. Other payable
December 31
2023 2022
U.S dollars in Thousands
Accrued vacation 1,104 991
Employees and institutions- December salaries 2,575 2,469
Accrued expenses 624 177
Other 61 -
4,364 3,637
NOTE 9 - EQUITY
a. Issuance of share capital
` Number of shares*
December 31, 2023 December 31, 2022
Ordinary shares Ordinary shares
Ordinary Shares** 85,654,304 85,654,304
*As of December 31, 2023 and 2022 the ordinary shares include un allocated
options pull of 1,473,763 and 2,000,000, respectively against future exercised
of allocated options.
**In February 2023 the Company change the nominal value from NIS 0.002 to no
nominal
value.
b. Rights attached to shares:
Ordinary shares ("Ordinary Shares") confer upon their holder's rights to
receive notices of general meetings of the shareholders of the Company, to
vote at such meetings (each share equals one vote) and to participate in any
distribution of dividends, bonus shares or any other distribution of the
property of the Company.
All the Ordinary Shares rank pari passu in relation to the amounts of capital
paid or credited as paid on their nominal value, in connection with dividend,
the distribution of bonus shares and any other distribution, return of capital
and participation in a distribution of the Company's surplus assets on winding
up.
NOTE 10 - share based compensation
In 2011 and 2021, the Company's Board of Directors approved a share option and
RSUs plan (the "Plan") to grant certain employees and consultants of the
Company options to purchase Ordinary shares of the Company, 0.01 NIS par value
each before the Initial Public Offering and 0.002 NIS after it and RSU's with
no nominal value since February 2024, See note 9.
Options:
As of February 2021, August 2021, and November 2021, the Company granted in
total 4,151,625 share options to its employees. The total fair value of the
4,151,625 share options is approximately $4,411 thousand.
Most of the share options vest over four years period: 25% will vest at the
first anniversary of the grant date and 6.25% will vest at the end of each
quarter during the second, third and fourth years from the date of grant.
Following is a summary of the status of the option plan as of December 31,
2023 and 2022, and the changes during the years ended on these dates:
Year ended December 31
2023 2022
Weighted average exercise Weighted average of the remaining contractual life (Years) Number Weighted average exercise price Weighted average of the remaining contractual life (Years)
price
Number
Options outstanding at beginning of year 7,086,003 0.29 9,840,108 0.3
Changes during the year:
Options granted - - - -
Options Exercised (322,116) 0.36 (1,688,421) 0.3
Options forfeited (622,581) 0.33 (1,065,684) 0.36
Options outstanding at end of year 6,141,306 0.28 6.12 7,086,003 0.28 7.12
Options exercisable at year-end 5,213,776 0.29 5.89 4,901,675 0.29 6.63
The weighted average of the share price in the years 2023 and 2022 was $0.69
per share and $1.35 per share, respectively. The options exercised in the said
years resulted in the issuance of 322,116 shares, 1,688,421 and shares,
respectively, in exchange for $0.36 per share and, $0.3 per share,
respectively. As of 31 December 2023, the shares issued for the exercised
options were satisfied by the IBI pool shares.
RSUs:
a) As of December 2021, the Company granted in total 125,807 RSUs to its
Chairman and Non-Executive Directors. The total fair value of the 125,807 RSUs
is approximately $284 thousand.
As of December 31, 2022 those RSUs are fully vested.
In addition, the Chairman, receive warrants to purchase Ordinary Shares, in
the event that the Company achieves certain performance milestones related to
the company market value during the period of his service as Chairman. The
total fair value is approximately $42 thousand.
b) As of May 2022, the Company granted in total 599,000 RSUs to its
employees. The total fair value of the 599,000 RSU's is approximately $997
thousand.
The RSU's vest over four years period: 25% will vest at the first anniversary
of the grant date and 6.25% will vest at the end of each quarter during the
second, third and fourth years from the date of grant. the 599,000 RSU's is
approximately $997 thousand.
c) As of May 2022, the Company granted in total 630,000 RSU's to its
Management. The total fair value of the 630,000 RSU's is approximately $965
thousand.
50% of the RSU's vest over four years period: 25% will vest at the first
anniversary of the grant date and 6.25% will vest at the end of each quarter
during the second, third and fourth years from the date of grant.
50% of the RSU's will vest once a target for revenue is achieved.
The company anticipates the performance goals will be achieved by the end of
2025.
d) As of May 2022, the Company granted in total 170,000 RSUs to the CEO,
Co-Founder & Head of US business, the total fair value of the 170,000 RSUs
is approximately $263 thousand. Vesting of these RSUs are in accordance with
the company performance.
The CEO and Co-Founder & Head of US business did not meet the performance
requirements.
e) As of June 2022, the Company granted in total 274,000 RSU's to its
employees. The total fair value of the 274,000 RSUs is approximately $384
thousand.
the RSUs vest over four years period: 25% will vest at the first anniversary
of the grant date and 6.25% will vest at the end of each quarter during the
second, third and fourth years from the date of grant.
f) As of December 2022, the Company granted in total 170,000 RSU's to its
employees. The total fair
value of the 170,000 RSUs is approximately $135 thousand.
the RSU's vest over four years period: 25% will vest at the first anniversary
of the grant date and 6.25% will vest at the end of each quarter during the
second, third and fourth years from the date of grant.
g) During February 2023, the Company granted in total 1,490,235 RSUs
to its employees. The total fair value of the 1,490,235 RSUs is approximately
$945 thousand. 1,011,125 of the RSUs vest over four years period: 25% will
vest at the first anniversary of the vesting commencement date and 6.25% will
vest at the end of each quarter during the second, third and fourth years from
the vesting commencement date. The rest of the RSUs will vest at the end of
March 2024 if the performance condition that stipulated in the RSUs grants are
met. The company estimates that the performance condition will be met.
h) During March 2023, the Company granted in total 602,373 RSUs to
its employees. The total fair value of the 602,373 RSUs is approximately $298
thousand. 81,500 of the RSUs vest over four years period: 25% will vest at the
first anniversary of the vesting commencement date and 6.25% will vest at the
end of each quarter during the second, third and fourth years from the vesting
commencement date. The rest of the RSUs will vest at the end of March 2024 if
the performance condonation that stipulated in the RSUs grants are met.
i) During May 2023, the Company granted in total 354,543 RSUs to
its chairman and non-executive directors. The total fair value of the 354,543
RSUs is approximately $201 thousand. 354,543 of the RSUs vest at the end of
2023.
j) During May 2023, the Company granted in total 376,485 RSUs to
its CEO and CFO. The total fair value of the 376,485 RSUs is approximately
$214 thousand. 130,000 of the RSUs vest over four years period: 25% will vest
at the first anniversary of the grant date and 6.25% will vest at the end of
each quarter during the second, third and fourth years from the date of grant.
246,485 vest at the end of March 2024 if the performance condonation that
stipulated in the RSUs grants are met.
k) During September 2023, the Company granted in total 368,000 RSUs
to its employees. The total fair value of the 368,000 RSUs is approximately
$273 thousand. 368,000 of the RSUs vest over four years period: 25% will vest
at the first anniversary of the vesting commencement date and 6.25% will vest
at the end of each quarter during the second, third and fourth years from the
vesting commencement date.
Following is a summary of the status of the RSU's plan as of December 31,
2023, and 2022, and the changes during the years ended on these dates:
Year ended December 31
2023 2022
Number
RSUs outstanding at beginning of year 1,762,807 -
Changes during the year: 3,191,636 1,968,807
RSUs granted
RSUs Vested (973,617) -
RSUs Forfeited (326,452) (206,000)
RSUs outstanding at end of year 3,654,374 1,762,807
The assumptions used to value options granted during 2022 and 2023 were as
follows:
Year ended December 31
2023 2022
Ordinary share fair value 0.49-0.74 0.535-1.064
Risk-free interest rate - -
Expected term (in years) - -
Dividend yield - -
Volatility - -
NOTE 10 - SHARE BASED COMPENSATION (continued):
Total share-based compensation expenses recognized, were approximately:
December 31
2023 2022
U.S dollars in Thousands
Research and development 736 800
Sales and marketing 826 1,028
General and administration 732 1,008
2,294 2,836
1. The Group holds the following financial instruments:
December 31
2023 2022
U.S. dollars in thousands
Financial assets:
Financial assets at amortized cost:
Cash and cash equivalents 17,317 22,141
Trade receivables 2,502 2,448
Restricted deposit 1,558 1,143
21,377 25,732
December 31
2023 2022
U.S. dollars in thousands
Financial liabilities:
Liabilities at amortized cost:
Trade payables 969 878
Lease liability 1,772 2,045
Other payable 4,364 3,637
7,105 6,560
2. Fair value:
The management believes that the carrying amount of cash, short-term deposits,
trade receivables, restricted deposits trade payables and other current
liabilities approximate their fair value due to the short-term maturities of
these instruments.
3. Financial risk management objectives and policies:
The Company's principal financial liabilities are comprised of trade and other
payables. The main purpose of these financial liabilities is to finance the
Company's operations and to provide guarantees to support its operations. The
Company's principal financial assets include trade and other receivables, cash
and short-term deposits that derive directly from its operations.
The Company is exposed to market risk, credit risk and liquidity risk. The
Company's senior management oversees the management of these risks. The
financial risk is managed by appropriate policies and procedures and that
financial risks are identified, measured and managed in accordance with the
Company's policies and objectives. The Board reviews and approves the policies
for each of the risks summarized below:
a. Market risk:
Market risk is the risk that the fair value of future cash flows of a
financial instrument will fluctuate because of changes in market prices.
Market risk comprises three types of risk: interest rate risk, currency risk
and other price risks, such as share price risk and commodity risk.
b. Foreign currency risk:
Foreign currency risk is the risk that the fair value or future cash flows of
a financial instrument will fluctuate as a result of changes in foreign
currency exchange rates.
The Company's exposure to foreign currency risk relates primarily to the
Company's continuing operation (when revenue or expense is recognized in a
different currency from the Company's functional currency).
As of December 31, 2023, the Company has excess financial assets over
financial liabilities in NIS currency totaling approximately $1,379 thousand.
c. Credit risk:
Credit risk is the risk that a counterparty will not meet its obligations as a
customer or under a financial instrument leading to a loss to the Group. The
Group is exposed to credit risk from its operating activity (primarily trade
receivables) and from its financing activity, including deposits with banks
and other financial institutions.
d. Liquidity risk:
The Group's senior management monitors the risk to a shortage of funds on
continuing basis.
The tables below analyze the Company financial liabilities into relevant
maturity Groupings based on their contractual maturities. The amounts
disclosed in the table are the contractual undiscounted cash flows.
December 31, 2023:
Less than one year 1-2 years 2-3 years 4-5 years 5-6 years Total
Trade payables 969 - - - - 969
Other payables 624 - - - - 624
Lease liability 481 481 481 481 481 2,405
2,074 481 481 481 481 3,998
December 31, 2022:
Less than one year 1-2 years 2-3 years 4-5 years 5-6 years Total
Trade payables 878 - - - - 878
Other payables 177 - - - - 177
Lease liability 481 481 481 481 481 2,405
1,536 481 481 481 481 3,460
note 12 - coMMITMENTS:
a. As of December 31, 2023 and 2022, the Company pledged bank deposit in a
total amount of approximately $324, and $328 thousand, in consideration of a
lease agreement.
b. As of December 31, 2023, and 2022, the Company pledged bank deposit in a
total amount of approximately $88, and $70 thousand, in consideration of
credit card guarantees.
c. As of December 31, 2023 and 2022, the Company pledged bank deposit in a
total amount of approximately $1,147, and $745 thousand, in consideration of
guarantees required under a customer agreement.
NOTE 13 - REVENUES FROM CONTRACT WITH CUSTOMERS
Year ended December 31
2023 2022
U.S. dollars in thousands
a. Customer types:
Governments 19,827 16,027
Commercial 8,500 5,616
28,327 21,643
Year ended December 31
2023 2022
U.S. dollars in thousands
b. Geographical regions:
Israel* 555 351
US 8,953 6,546
APAC 3,069 3,354
Europe 10,577 8,711
Gulf Cooperation Council (GCC) & Africa 4,096 2,189
South/Latin America 1,077 492
28,327 21,643
*Substantially all of the non-current asset in the consolidated financial
statement are located in Israel.
NOTE 13 - REVENUES FROM CONTRACT WITH CUSTOMERS (Continued)
Revenues from major customers which each account for 10% or more of total
revenues reported in the financial statements:
Year ended December 31
2023
U.S. dollars in thousands
Customer A 2,813
Deferred revenues
U.S. dollars in thousands
Balance as of December 31, 2021 11,862
Revenue recognized that was included in the contract liability balance at the (11,862)
beginning of the year
Consideration received during the year in respect to performance 12,393
obligation that will be satisfied in the next years
Balance as of December 31, 2022 12,393
Revenue recognized that was included in the contract liability balance at the (8,033)
beginning of the year
Consideration received during the year in respect to performance obligation
that will be satisfied in the next years
11,165
Balance as of December 31, 2023 15,525
Movement in deferred revenues, net:
U.S. dollars in thousands
December 31
2023 2022
Short term Deferred Revenues 12,734 8,315
Long term Deferred Revenues 2,791 4,078
Deferred Revenues 15,525 12,393
NOTE 14 - SUPPLEMENTARY OPERATIONAL INFORMATION
Year ended December 31
2023 2022
Cost of Revenues: U.S dollars in thousands
Payroll and related expenses 1,995 1,855
Hosting services and data 3,154 3,865
Other 676 426
5,825 6,146
Research and development, net:
Payroll and related expenses 8,892 9,719
Share based compensation expenses 736 800
Depreciation and building maintenance 854 1,134
Other 650 653
11,132 12,306
Sales and marketing:
Payroll and related expenses 8,571 7,854
Consultants 1,561 1,368
Travel expenses 821 624
Share based compensation expenses 826 1,028
Depreciation and building maintenance 389 463
Other 1,482 1,836
13,650 13,173
General and administration:
Payroll and related expenses 2,564 2,664
Professional services 997 1,220
Depreciation and building maintenance 430 235
Share based compensation expenses 732 1,008
Other 974 401
5,697 5,528
Finance expenses
Bank commissions 49 46
Exchange rates differences 368 2,929
Interest and finance charges for lease liabilities 194 79
Interest expenses 705 635
Interest income (448) -
868 3,689
NOTE 15 - TAXES ON INCOME:
a. Tax rates
The Company and its subsidiaries are taxed under the domestic tax laws of the
jurisdiction of incorporation of each entity.
The corporate tax rate under Israeli law is 23% in 2018 and thereafter.
The corporate tax rate under US law is 21% in 2018 and thereafter.
The corporate tax rate under UK law is 19% in 2018 and thereafter.
b. Carry forward losses
Carry forward tax losses of the Company as of December 31, 2023, aggregate
approximately $59,500 thousand. The Company did not recognize a deferred tax
asset in respect of those losses as no taxable income is probable in the
foreseeable future.
c. Tax assessment
The Company's tax assessments up until the year 2018 are considered final.
d. Current taxes
In 2023, the company recognized current tax expenses from the subsidiary in
the amount of $146 thousand resulting from adjustments for previous years.
e. Reconciliation of income tax expense to prima facie tax payable
In 2023 and 2022, the main reconciling item of the statutory tax rate of the
Company (19% to 23%) to the effective tax rate (0%) is tax loss carryforward
and R&D credit carryforward.
NOTE 16 - BALANCES AND TRANSACTIONS WITH RELATED PARTIES
a. The related parties:
The Company's related parties are Ami Daniel and Matan Peled who founded
Winward in 2010.
Ami serves as the CEO and director, Matan is the Co-Founder & Head of US
business and director.
In addition, The Right, Honorable, The Lord Browne of Madingley ("The Lord
Browne of Madingley") the chairman of the board of directors of the Company.
b. Balances with related parties:
December 31
2023 2022
U.S dollars in thousands
Other accounts payable 267 327
c. Transactions with related parties:
December 31
2023 2022
U.S dollars in thousands
1,351 1,168
Payroll 246 284
Shared based compensation (*) 1,597 1,452
(*) As of 2019, the Company granted in total 589,470 share options to chairman
of the board of directors.
The total fair value of 589,470 share options is approximately $198 thousand.
The share options have granted in 2019 vest quarterly over three years. As of
December 31,2023, the options are fully vested. See additional grants for
related parties in note 10 above.
NOTE 17 - EARNING PER SHARE
a. Details of the number of shares and loss used in the
computation of loss per share:
Year ended December 31,
2023 2022
Weighted number of shares (*) Loss attributable to equity holders of the Company Weighted number of shares (*) Loss attributable to equity holders of the Company
In In thousands In In thousands
thousands thousands
Number of shares and loss
Loss of the year 88,168 (8,991) 87,087 (19,199)
Adjustment for cumulative preference shares - - - -
For the computation of basic loss 88,168 (8,991) 87,087 (19,199)
(*) The amount of ordinary shares used in calculating the loss per share
includes potential ordinary shares resulting from a potential conversion of
vested RSUs with a negligible exercise price.
To compute diluted net loss per share, convertible securities (dilutive
potential Ordinary shares options to employees under share-based payment
plans), have not been taken into account since their conversion decreases the
loss per share.
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