TRAC T42 Iot Tracking Solutions Plc

CHAIRMAN'S STATEMENT

 

We are pleased to report T42's unaudited results for the half year ended 30 June 2024 ("H1 2024"). Total revenues reached $2.0 million, up from $1.7 million in H1 2023. We expect to fulfill orders under the agreements announced earlier this year during the remainder of the second half. The gross margin for the period remained stable at 45%, compared to 48% last year. We continue to deliver on these agreements, along with additional long-term and ad-hoc orders, with a strong focus on the shipping container market.

 

A few years ago, we made a significant strategic shift within the Company, transitioning our focus from vehicle tracking systems to container tracking and monitoring solutions. This transformation not only led to the rebranding of the Company to t42 but also marked a fundamental change in our core business. We successfully retained our excellent team, while at the same time, we developed new products, identified new customers, and built innovative revenue models.

 

In a short period, we have demonstrated that we are on the right track, and the upward trend is clearly reflected in our results. In the container market segment we experienced significant growth in H1 2024, with new supply agreements, for orders in 2024 and the following two years, surpassing the total sales achieved in 2023. This remarkable momentum is a clear reflection of the exceptional quality of our Lokies smart locks, and the enthusiastic reception received in the market. Demand continues to grow, positioning us for even greater success by year-end.

 

We have invested considerable effort in the development and performance improvement of our products, and we have successfully reduced the energy consumption of the locks by a significant amount. This enhancement means customers need to charge the locks less frequently, providing significant logistical benefits and added value to our clients.

 

This positive trend continues to strengthen. More and more customers are being introduced to our monitoring solutions, additional pilots are underway, and the existing market potential is converting into tangible business deals. Moreover, we remain committed to investing in our complementary product, Tetis, where we have also focused on improving energy efficiency.

A significant part of this growth can be seen in the new supply agreement that have been signed during H1 2024. We anticipate that actual orders will exceed the initial estimates set out by the clients in the contracts. With one of our clients, we are already in advanced discussions to finalise next year's order forecast, which we hope will significantly exceed the initial contract amounts and we will provide updates on this in due course.

 

There is no doubt that t42's investments are shaping the future of container monitoring technology. The increase in anticipated orders for 2024 is a significant step towards achieving the Company's potential and its ambition to lead the market in the coming years, in line with our renewed strategy.

 

R&D

Over the past six months, t42 IoT Solutions has achieved significant advancements in its technology and product offerings, reinforcing our commitment to innovation and excellence in the IoT sector. Our efforts have been focused on enhancing road safety solutions, improving client experiences, and expanding our global reach into new markets.

 

In a first-of-its-kind project in Mexico, we have developed an interface within our Helios product line to connect to an external display monitor and provide significant safety improvements to our Mexican client's transportation fleet. This addition facilitates safer driver identification and introduces smart alerts in both visual display and human voice regarding speed, adjusted according to location and direction of travel. The project began as a pilot with several hundred units and will be progressing during H2 2024 to hardware orders under the agreement. After a 12-month trial period the client reported a significant outcome with zero accidents and a 100% success rate in preventing incidents that would have previously led to significant losses and insurance claims. Additionally, customers in other countries have already expressed interest in this solution, and we anticipate that during 2024-2025 it will enable us to reach even more clients.

 

On our t42 online web application, we have added an interface for creating thousands of zones based on speed and direction of travel, and for communicating with end equipment to monitor these zones. This enhancement allows for more precise and efficient fleet management, providing our clients with greater control and oversight of their operations.

In our continuous effort to improve customer experience, we have upgraded our onboarding tools. Clients can now initialize our units more quickly and with greater accuracy, enabling seamless scaling of installations and shipments. This enhancement not only streamlines deployment but also reduces operational downtime for our clients.

 

Our Lokies product line has been expanded with the introduction of a smaller shackle, offering greater flexibility and security options without compromising on durability or reliability. This development provides our clients with more versatile solutions to meet their specific needs.

 

 

FINANCIAL REVIEW

 

Group revenues for H1 2024 were $2.0m, compared with $1.7m for the six-month ended 30 June 2023.

 

Gross margin for the 6 months to 30 June 2024 was stable at 45%, compared with 48% for the corresponding period in 2023.

 

Total operating expenses for the 6 months to 30 June 2024 were $1.2m (H1 2023: $1.3m).

 

For the six months ended 30 June 2024 the Group recorded an exchange rate income of $0.36 million (H1 2023: $0.03 million), driven by the strengthening of the US dollar against the Israeli Shekel. However, this was offset by a significant loss of $0.98 million due to changes in fair value of the CLNs and warrants associated with the loans.

 

The Group balance sheet showed an increase in trade receivables to $1.0m (including long term trade receivables), compared with $0.9m as of 31 December 2023.

 

Group inventories at the period end were $1.3m compared to $1.4m as of 31 December 2023.

 

Trade payables at the period end were stable at $0.9m, compared with $1.3m and $0.8m as of 30 June 2023 and 31 December 2023, respectively.

Net cash from operating activities for the 6 months to 30 June 2024 was $0.3m, compared with net cash used by operating activities for the 6 months to 30 June 2023 of $0.1m.

CLN Update

 

Following the reporting period, on 30 September 2024 t42 extended the Group's two CLNs (total principal of $2.5m) for an additional four months to May 2025, under unchanged terms and conditions.

 

OUTLOOK

 

After years of overcoming challenges in penetrating the container market and proving the strength of our technology, we made the strategic decision to rebrand the Company implementing a strategic shift  from vehicle tracking systems to container tracking and monitoring solutions. This move sends a clear and powerful message to the industry-we are here to establish ourselves as a dominant force. This year, we have achieved over 100% growth in sales for the container market compared to the previous year. We are already engaged in discussions with clients to enhance existing supply contracts. It's now clear that we are not just participating in this market-we are a key player.

 

However, we are not content with simply being significant. Our ambition is to lead the next revolution in this sector. This will require pioneering technological solutions, a forward-thinking business strategy, and partnerships with major players who share our vision. We are taking the first steps on this journey-a long, challenging, and occasionally turbulent path, but one filled with excitement and potential. The opportunities ahead for T42 are vast and look forward to sharing our progress as we reach each major milestone.

 

 

Michael Rosenberg OBE

 

 

 

 

 

 

T42 IOT TRACKING SOLUTIONS PLC

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

JUNE 30, 2024

 

 

 

 

 

 

T42 IOT TRACKING SOLUTIONS PLC

 

 

 

UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL

STATEMENTS

 

JUNE 30, 2024

 

 

 

INDEX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

                        

Review Report of Independent Auditors

 

 

T42 IOT TRACKING SOLUTIONS PLC

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

U.S. Dollars in thousands

      The accompanying notes are an integral part of the interim condensed consolidated financial statements.

 

September 27, 2024
Date of Approval of the Financial Statements		Avi Hartmann, CEO

T42 IOT TRACKING SOLUTIONS PLC

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

U.S. Dollars in thousands

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

 

 

T42 IOT TRACKING SOLUTIONS PLC

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

U.S. Dollars in thousands

 

 

              * 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

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. Dollars in thousands

 

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

 

As of June 30, 2024 the Group has accumulated losses of $17.2 million from operations since inception and has a deficit in working capital of $3.8 million including loans in amount of $3.1 million to be repaid or converted during the next 12 months. These factors indicate that there may be an uncertainty as the Company's ability to continue as a going concern.

The management continues to focus its efforts to raise additional funds required to continue the Group's operations and negotiating with lenders in order to find an overall solution for the Group's debt structure in which loans will be converted to equity. The management believes that due to the growth in the Group's activity and other efficiency measures taken, the Company will have a sufficient cashflow to continue in its activities and meets its liabilities. See also note 10.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

 

 

 

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

 

 

 

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

 

 

 

(*) Capitalization of development costs

 

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

 

 

 

The following table lists the number of share options and warrants with the exercise prices of share options during the reported period:

 

(*) Expired and cancelled as part of the CLN extension agreement signed during the reported period. See notes 11 (b) and 1 (e) in the annual financial statements.

 

(**) In addition, the Group also has convertible loans, which can be converted as of June 30, 2024, to a total amount of 47.1 M shares.

 

For the six months ended June 30, 2024 and 2023 the Company recognized share based payment expenses, in the amount of $4,000 and $4,000 respectively.

 

 

 

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

b.  As of

June 30, 2024, the estimated fair values of the Warrants and the Convertible component were measured by an independent appraiser under main assumptions as follows:

 

                    

                      Fair value of one unit at the end of the period                      £0-0.0266

 

        The level of the fair value hierarchy is level 3.

     

 

 

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

 

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

 

 

 

 

 

 

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands