TIDMENET
RNS Number : 0794J
Ethernity Networks Ltd
19 August 2021
19 August 2021
ETHERNITY NETWORKS LTD
("Ethernity" or the "Company" or the "Group")
Interim results for the six months ended 30 June 2021 and
Update
Ethernity Networks Ltd (AIM: ENET.L), a leading supplier of
programable networking solutions utilising patented and innovative
network processing technology ported on FPGA (field programmable
gate array) for virtualised networking appliances, today announces
its interim results for the six months ended 30 June 2021 and
provides the following Company update.
Ethernity provides innovative, comprehensive networking and
security solutions on programmable hardware for accelerating
telco/cloud networks. Ethernity's programmable networking solutions
that utilise FPGAs, offer complete Carrier Ethernet Switch Router
data plane processing and control software with a rich set of
networking features, robust security, and a wide range of virtual
function accelerations to optimise telecommunications networks.
Ethernity's complete solutions quickly adapt to customers' changing
needs, improving time-to-market and facilitating the deployment of
5G, edge computing, and NFV (network functions virtualisation).
Financial summary
-- Revenues increased by 165.8% to $955,371 over the comparable period (H1 2020: $359,375)
-- Gross margin increased by 91.1% to $605,852 over the comparable period (H1 2020: $316,982)
-- Gross margin percentage declined to 63.42% (H1 2020: 88.20%)
due to increased revenues from product sales with lower margins as
opposed to the 100% margins from licensing and royalties
revenues
-- Research and Development, General and Administrative, and
Marketing expenses increased by 6.8% over previous period due
mainly to return to normal operations from the COVID-19 cut
backs
-- EBITDA loss remained consistent with the previous period,
increasing by 2.1% to $2,473,686 (H1 2020 comparable adjusted
EBITDA loss: $2,422,574)
-- Operating loss increased by 1.0% over the comparable period
-- The cash resources during the period under review were
further bolstered following additional investment of GBP1.8m
($2.5m) from the Share Subscription Agreement and GBP1.0m ($1.46m),
including support from the Directors, from the exercise of the 30p
Warrants originally issued as part of the placing in July 2020.
Company Strategy
The Company is operating in the competitive Telecom industry and
is focused on innovative, differentiated offerings related to the
5G router appliance, so as to allow Ethernity to stand out from
other standard offerings available in the market. The Directors
believe that the current signed contracts and orders received and
expected, along with the many other ongoing customer discussions,
show that our differentiated, unique and value-added system
solutions can capture significant interest in this open RAN market.
With our main goal of becoming a supplier of customised and
differentiated system solutions as compared to the legacy model of
FPGA code licensing, which we have achieved by offering not just
the FPGA code, but also the software application and complete
system solution, we have elevated our offerings in the value chain.
This focused and comprehensive strategy allows us to capture
multiple times more revenue per unit as compared to that which can
be derived from only selling FPGA code.
Whilst historically most of the Company's principal revenues
have been generated from licensing and royalties, in H1 2021, and
as evidenced in the results, we saw a change in the mix towards
recurrent product revenue streams and the related margin
percentages.
With this strategy and our goals of being a solutions provider
in mind, the Company intends to focus most of its R&D resources
toward delivering complete system solutions as opposed to FPGA code
licensing deals, which consume R&D resources but produce only
short term revenues and jeopardise our ability to focus on
completing the system solutions that are the core of our growth
plan.
As we move towards becoming a supplier of system solutions that
include FPGA, FPGA routing firmware, add-on differentiated features
and complete software applications, during 2021, the Company has
not progressed certain FPGA licensing opportunities that are not in
line with our system solutions focus. We will continue to focus on
opportunities that are aligned with our 5G router activities and
its variants, to preserve the R&D resources for future growth
versus short-term FPGA code licensing deals.
Operational highlights
During H1 2021 our activities have progressed in multiple
domains:
-- With Xilinx, who supply the FPGA device used by Ethernity
along with procurement from other sources, we have succeeded in
securing supply for the majority of FPGAs required for 2021 so as
to fulfill our FPGA SoC orders.
-- $400,000 order received for our ENET FPGA SoC for point to
multi-point fixed wireless platforms. Further to this order the
Company has received further orders resulting in total orders
received to-date of $2.0m. We are hopeful these orders will
increase with further engagements through the customer's product
deployment and introduction.
-- $2.0m in orders from a Fixed Wireless Access provider to supply the Company's ENET FPGA SoC.
5G and DU Router
The Company is now fully focused on supporting the systems
contracts signed for our 5G Router offering including our growing
demand for our DU with vRouter offload, that are anticipated to
generate the change to being a system solutions provider from 2022
onwards as further detailed below and therefore differentiate this
from other licensing activities.
-- 5G Router solution:
Ethernity's 5G router offers a unique proposal to the market as
it is populated on a programmable platform (FPGA-based) that allows
us not only to provide basic routing, but further proposes a
differentiated function that provides answers to the ever-changing
market requirements without the need to fabricate new hardware
based on the same device. This is in alignment with the trend
towards virtualisation that utilises programmable CPUs instead of
rigid hardware.
By following this strategy the Company has succeeded in
capturing significant momentum for its standalone FPGA-based
Universal Edge Platform (UEP) as well as for the ACE-NIC for both
DU Router-on-NIC and for UPF.
The significant contract signed with an Indian OEM during Q4
2020 was the first system-level contract that included delivery of
the complete offering of system ingredients including hardware,
FPGA and application software. The Customer has completed
fabrication of the first product (UEP-60), and there is growing
interest from large service providers for this product. This
product will include the same FPGA code and software application
save for minor changes in hardware configuration, that is
applicable for two larger customer contracts we have, including the
new UEP-60 contract of $930,000 signed on 30 July 2021, which
includes integrated wireless bonding and more importantly the DU
Router-on-NIC. As detailed below, this is the same system offering
as in the UEPs, but runs on a standard network adapter server card,
allowing the Company to focus its R&D efforts on a singular
goal.
-- DU's Router-on-NIC:
o Ethernity nominated for a GSM GLOMO award, demonstrating our
leading technology innovation and differentiated system offerings
for the open RAN market and further proving our leadership and
positioning in this market.
o Gained traction from large service providers as the product
offers greater savings in both operational expenses and capital
expenses. Once used on a DU, it can eliminate the need for an
external switch/router required at the DU location for aggregation
of other DUs and for network connectivity. Further details can be
found in our blog post
https://ethernitynet.com/ethernitys-unique-du-proposition/ .
o The Company believes that its vRouter offload for DU that was
initially introduced to the market by Ethernity, has the potential
to become a standard requirement for large DU open RAN-based
deployment.
-- 5G router with integrated wireless bonding:
o The Company was granted a patent for a new wireless bonding
technology. On a practical level this patent enables Ethernity to
overcome operator issues with wireless transmission that is
interrupted or slowed due to inclement weather. The primary
applications for this patent are SD-WAN and wireless backhaul
deployments.
o Furthermore, as highlighted above, the Company announced on 30
July 2021 that it had secured a contract with a customer of $930k
for a customised UEP-60 solution incorporating the integrated
wireless bonding. The majority of the revenues will be recognised
in 2022.
o Following the introduction of the UEP-20 based bonding
solution the Company went through different testing and
interoperability with radio equipment vendors, and dependent on the
vendors' success in selling their radio equipment with our UEP-20
bonding solution for currently deployed radio installations, we
currently expect to obtain orders over the next 12 months for our
UEP-20 to connect thousands of links, with expected revenues in the
range of $800k to $1.0m.
o We are also in ongoing discussions relating to various other
UEP customised offerings and further licensing for our software and
firmware with other wireless connectivity vendors.
Post-period events
On 30 July 2021 the Company announced a new contract of $930k
with an international wireless connectivity vendor to supply its
UEP-60 product. Over and above this initial order, there is
potential for significant follow-on orders and wider product
offerings. This is the second major 5G system contract, following
the successful contract with the Indian OEM in Q3 2020, in
Ethernity's progression of its transition to a system solutions
provider.
Following a delay due to the COVID-19 outbreak in India,
fabrication of the UEP-60 product has now been completed by the
Indian OEM and was delivered by them to our lab for integration
during August 2021. The customer has multiple engagements with
operators and government agencies, and subsequent to our delivery
and testing of the working product, expects significant deployment
from 2022 onwards.
2021 Update and Outlook
The Board remains confident that, on the basis of the current
contracts, continued increased customer engagements, focus on
delivery of solutions and the anticipated customer deployments now
being realised, Ethernity will meet its long-term objectives and is
well positioned to become one of the key solutions providers in its
marketplace. The Company continues to experience an increase in the
outreach by OEMs and operators interested in Ethernity's solutions
where these solutions are proving increasingly aligned with
operators strategy with their customers in their marketplaces.
Network service providers are requiring more flexible solutions to
their technology and network needs for offloading support of new
data appliances introduced by the market. Ethernity believes it has
the best-in-class system solutions to address these needs.
We are pleased to note that the interest for our products is
growing, including current discussions with strategic Tier-1 cloud
infrastructure suppliers. However, even with orders in place, due
to component shortages and the ongoing impact of COVID-19 in the
areas where our contracted customers operate (specifically, in
India) resulting in significantly late deliveries by our customers
of their fabricated product for integration with our UEP software,
which product has now finally been fabricated and delivered to the
Company by the customer for integration. In light of these delays,
we now expect a delayed deployment from our customers from 2021 to
the first half of 2022. As a result of these delays, and the
worldwide components shortages, we now expect that approximately
$1.0m to $1.5m of anticipated revenues may be pushed from H2 2021
into H1 2022. Furthermore, as we focus on systems solutions in
preference to licensing deals not aligned with our product
deliveries, we are no longer pursuing certain licensing deals so as
to focus our resources on delivering the product solutions, our
main growth engine in terms of our contracts and the future product
solutions business-based roadmap.
In summary, the business and engagements remain positive and
intact, being primarily affected by customer and component delays.
With the refocused strategy on product sales, the Board now expects
2021 full year revenues to be in a range of $3.5m to $4.5m,
displaying continued significant growth over the previously
reported periods.
During 2022 and beyond, the Company anticipates generating
revenues from its DU Router-on-NIC and UPF, with significant
year-on-year revenue growth anticipated from product orders and
contracts already signed, in particular our long-term contracts for
Fixed Wireless Access, UEP-60 (with further potential upside from
UEP-20) and our Indian OEM contract, demonstrating positive
momentum and growth from product sales. Resulting from the new
contracts and orders, and notwithstanding the delays as mentioned
above, the Company is satisfied that is has sufficient financial
resources to meet its ongoing obligations and operating
requirements for 2022.
David Levi, Chief Executive Officer of Ethernity Networks Ltd,
commented:
"The first half results were in-line with our expectations, with
a positive mix of product, royalties and licensing revenues. It
appears that most of our engaged customers are now returning to
more normalised levels of business operations and are finalising
their development of new products and architecture. This is
expected to lead to demand for our programmable products, and the
deal flow forecasts for engagements this year remain intact. We are
hopeful that these will continue to be concluded during H2
2021.
We are pleased to be continuing the evolution of the Company,
with our strategy to focus on product and system revenue business
versus short term licensing deals that are not in line with our
system solutions. We do however foresee that delays in roll-out and
deployment in India due to the COVID-19 situation along with the
component shortage situation in general required for our UEPs and
ACE-NIC product will defer planned Q3 and Q4 2021 revenues into the
latter portions of Q1 and Q2 2022.
The product contracts already signed, the product orders
received (which are expected to grow), and the good progress with
our Indian OEM will all fuel our revenue growth to position us not
just as a technology company, but as a validated system product
supplier with differentiated offerings, resulting in growing
revenue streams that will allow us to be considered for larger
scale deployments."
For further information, please contact:
Ethernity Networks Ltd Tel: +972 8 915 0392
David Levi, Chief Executive Officer
Mark Reichenberg, Chief Financial Officer
Arden Partners plc (NOMAD and Joint Broker) Tel: +44 207 614 5900
Richard Johnson / Oscair McGrath
Peterhouse Capital Limited (Joint Broker) Tel: +44 20 7562 0930
Eran Zucker / Lucy Williams / Duncan Vasey
MARKET ABUSE REGULATION
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014 (as implemented into
English Law). Upon the publication of this announcement via a
Regulatory Information Service, this inside information is now
considered to be in the public domain.
OPERATIONAL and financial REVIEW
Over the past six month reporting period we continued with our
goals and to progress our strategic transition towards diversifying
the Company's offerings to include systems solutions in addition to
IP licensing and services, and this has been evidenced in the
accomplishments and engagements attained over the past year.
During the period under review, the Company delivered revenues
of $955,371 (H1 2020: $359,375) and a gross profit of $605,852 (H1
2020 $316,982). Revenues were significantly higher than the
comparable period.
The gross profit percentage decline to 63.42%, as opposed to H1
2020 of 88.2%, is as anticipated due to the different product mix
within the revenue. In the past design wins and royalty revenue
contributed proportionately significantly more to revenues, however
the focus on being a solutions provider has resulted in the mix of
revenues trending toward the supply of product with lower margins
albeit higher unit sales values.
EBITDA
EBITDA, albeit it not a recognised reportable accounting
measure, provides a meaningful insight into the operations of a
business when removing the non-cash or intangible elements from
trading results along with recognising actual costs versus some
IFRS adjustments, in this case being the amortisation and non-cash
items charges in operating income and the effects of IFRS 16
treatment of operational leases.
The EBITDA for the period under review for the 6 months ended 30
June 2021 is presented as follows:
EBITDA US Dollars
For the 6 months ended 31 December
30 June
------------------------- ------------
2021 2020 2020
------------ ----------- ------------
Revenues 955,371 359,375 1,853,732
------------ ----------- ------------
Gross Margin as presented 605,852 316,982 1,582,279
------------ ----------- ------------
Gross Margin % 63.42% 88.20% 85.36%
------------ ----------- ------------
Operating (Loss) Profit as presented -3,097,078 -3,065,377 -5,088,929
------------ ----------- ------------
Adjusted for:
------------ ----------- ------------
Add back Amortisation of Intangible
Assets 480,690 471,917 952,606
------------ ----------- ------------
Add back Share based compensation
charges 36,969 -15,556 18,209
------------ ----------- ------------
Add back vacation accrual charges -18,154 30,313 81,732
------------ ----------- ------------
Add back depreciation charges on
fixed assets 48,793 78,198 156,011
------------ ----------- ------------
Add IFRS operating leases depreciation 75,094 77,931 155,862
------------ ----------- ------------
EBITDA -2,473,686 -2,422,574 -3,724,509
------------ ----------- ------------
EBITDA loss in the first six months of the year was $2,473,686
(H1 2020 loss: $2,422,574), which has remained consistent with the
previously reported comparable period. This loss is impacted by the
reduced margin percentage. As previously stated, the margin
percentage is a direct result of the revenues mix and it is
anticipated that the current margin percentage levels will
continue.
Operating Costs
Operating expenses (before amortisation and depreciation),
increased by 6.7% in the current period against the same period in
2020 from $2,739,556 to $3,100,340 mainly within the R&D
division as operating levels normalised to the pre COVID-19 levels
and staff attendance returned to 100%.
General and Administration costs have also returned to normal
levels as staff returned from furlough, one off COVID-19 cost
reductions were no longer applicable and employee salaries returned
to 100% levels.
The decline in the Marketing expenses are a direct result of the
reduction in physical marketing activities and attendance at
worldwide conferences and exhibitions.
After adjusting for the capitalised Research and Development
Costs, amortisation costs of the Development Intangible asset,
Depreciation and Share Based Compensation adjustments, the
resultant increases (decreases) in Operating costs, as adjusted
would have been:
Operating Costs US Dollars Increase %
(Decrease)
June
For the 6 months 31 December
ended 30 June
---------------------- ------------
2021 2020 2020
---------- ---------- ------------
Research & Development Costs,
including capitalised costs,
net of amortisation, Share
Based Compensation and Vacation
accruals 1,982,075 1,664,772 3,049,659 317,303 10.40%
---------- ---------- ------------ ------------ -------
General and Administrative
Expenses, net of depreciation,
Share Based Compensation,
Vacation accruals, impairments. 642,685 520,012 1,245,082 122,673 9.85%
---------- ---------- ------------ ------------ -------
Marketing Expenses, net of
Share Based Compensation
and Vacation accruals. 475,580 554,772 1,052,382 -79,192 -7.53%
---------- ---------- ------------ ------------ -------
Total 3,100,340 2,739,556 5,347,123 360,784 6.75%
---------- ---------- ------------ ------------ -------
Summarised trading results
Net comprehensive loss for the period US Dollars
For the 6 months ended 31 December
30 June
-------------------------- ------------
2021 2020 2020
------------ ------------ ------------
Revenues 955,371 359,375 1,853,732
------------ ------------ ------------
Gross Margin 605,852 316,982 1,582,279
------------ ------------ ------------
Gross Margin % 63.42% 88.20% 85.36%
------------ ------------ ------------
Operating (Loss) Profit (3,097,078) (3,065,377) (5,088,929)
------------ ------------ ------------
Financing costs (1,419,468) (22,136) (1,462,740)
------------ ------------ ------------
Financing income (expenses) 116,597 177,916 298,016
------------ ------------ ------------
(Loss) Profit before tax (4,399,949) (2,909,597) (6,253,653)
------------ ------------ ------------
Tax benefit (reversal of previous
deferred tax benefit) 0 0 0
------------ ------------ ------------
Net comprehensive (loss) income for
the period (4,399,949) (2,909,597) (6,253,653)
------------ ------------ ------------
Basic and Diluted earnings per ordinary
share -0.09 -0.09 -0.17
------------ ------------ ------------
Weighted average number of ordinary
shares for basic earnings per share 51,347,822 32,673,455 36,590,988
------------ ------------ ------------
Revenue Analysis
Revenues for the 6 months ended 30 June 2021 increased by 165.8%
to $955,371 (2020: $359,375). This result is a positive reflection
of the upward trend anticipated due to the increased customer
engagements and contacted demand and deployment of the Company's
solutions.
The revenue mix will continue to evolve as the Company
progresses in achieving the desired mix of the revenue streams from
network solutions in addition to IP licenses and services.
Segment Reporting
The geographic mix is represented by the makeup of the products
supplied, where in the first half of the current financial year the
revenues were weighted towards foreign design wins while royalty
revenues were earned in Israel. The trend is expected to continue
during the second half of the year as design wins and product
supply focussing on the Tier-1 OEMs outside of Israel continues to
grow.
SEGMENT REPORT SECTOR ANALYSIS
Region Six months ended Six months ended Year ended 31
30 June 2021 30 June 2020 December 2020
---------------- ------------------- ------------------- -------------------
US$ % US$ % US$ %
---------------- ---------- ------- ---------- ------- ---------- -------
United States 765,075 80.1% 227,520 63.3% 1,256,613 67.8%
Israel 161,796 16.9% 121,855 33.9% 262,119 14.1%
Asia 28,500 3.0% 10,000 2.8% 335,000 18.1%
Total 955,371 100.0% 359,375 100.0% 1,853,732 100.0%
---------- ---------- ----------
Margins
Gross margins were line with Company expectations based on the
product sales strategy focus, with the 2021 gross margin for the
period being 63.4% as compared to 88.2% in the same period for
2020. As always, the gross margin will vary according to the
revenue mix.
As the revenue mix as noted above evolves, this will have a
downward pressure on gross margin percentages as revenues from 100%
margin sources become less prominent in the mix, being replaced by
cost active product sales.
Financing Costs
As noted in the Annual Results for the year ended 31 December
2020, the significant increase in financing costs has come about
due to the two equity events referred to below and under the
section "Balance Sheet".
It is to be noted that these two equity events, albeit in
essence based on raising funds via equity issues, are nonstandard
equity arrangements and have been dealt with in terms of the
guidance in IFRS9-Financial Instruments. This guidance, albeit that
it is not based on the actual cash cost of the financing
arrangements to the Company, is significantly complex in its
application, forces the recognition of the fair value of the equity
issues, and essentially creates a recognition in differences
between the market price of the shares issued at time of issue
versus the actual price at which the equity is allotted. It is not
a reflection of the cash inflows and outflows of the transactions.
It is this differential or "derivative style instrument" that needs
to be subject to a fair value analysis, and the instruments, the
values received and outstanding values due being separated into
equity, assets, finance income and finance charges in terms of the
IFRS-9 guidance.
Referring to the two fundraise deals the Company completed
during the year of 2020 being;
a. Issuance of the Share and Warrants bundle (Peterhouse Capital Limited)
b. Share Subscription Agreement (5G Innovation Leaders Fund)
It has been determined that in terms of IFRS-9, both
transactions are to be recognised as equity and a liability of the
Company and all adjustments to the liability value are to be
recognised through the Income Statement. In both cases the equity
differential based on allotment price and fair value at time of
allotment charges to the income statement.
The liability in respect of deal a. above represents the
outstanding 30p Warrants which had not been exercised as of 31
December 2020 and were finalised and closed by the end of May
2021.
The liability in respect of deal b. represents the cash advances
the Company has received during 2020 and to 30 June 2021 and as of
30 June 2021 still has not allotted shares against the advances in
settlement of the debt.
The above outlined treatment results in a significant finance
expense charged to the Income Statement, however it should be noted
that the expense is not an actual cash expense, rather an expense
due to the accounting treatment and recognition of an expense
instead of an asset in terms of IFRS guidance.
The Finance income is the mirror image to the above and relates
to the 880,000 "Allotment Shares" the Company issued in advance as
part of the Share Subscription Agreement, the cash payment for
which the Company received in April of 2021 being GBP256,766
($356,443). The increase in value of the asset, being the increase
in the value of the Allotment Shares at the time of allotment
versus the value at settlement date is recognised as finance income
in the Income Statement.
The Financing Expenses and Finance Income in the Income
Statement are thus summarised as follows:
Financing expenses for period ending June 30 2021
5G Innovation Leaders Fund
The Company has received three additional tranches during the period
from 1 January 2021 to 30 Jun 2021, being GBP400K (3rd tranche), GBP400K
(4th tranche) and GBP750K (5th tranche). The below expenses are split
between the tranches as well as general expenses which relate to the
entire funding deal and allotment of shares.
3rd Tranche $52,627 Face value premium of GBP38,000 for third
tranche (GBP400K)
----------- ----------------------------------------------------
4th Tranche $52,926 Face value premium of GBP38,000 for fourth
tranche (GBP400K)
----------- ----------------------------------------------------
$9,885 Remaining liability from 4th tranche as of
June 30 2021 has been adjusted to Fair Value,
the adjustment is recognised as finance expenses.
----------- ----------------------------------------------------
5th Tranche $102,191 Face value premium of GBP73,500 for 5th tranche
(GBP750K)
----------- ----------------------------------------------------
$25,360 Liability from 5th tranche as of June 30
2021 has been adjusted to Fair Value, the
adjustment is recognised as finance expenses.
----------- ----------------------------------------------------
General expenses $182,795 Upon share allotment of 1,805,054 shares,
the Company adjusted liability which was
extinguished to Fair Value right before allotment.
The adjustment portion is recognised as finance
expenses.
----------- ----------------------------------------------------
$648,972 Upon share allotment of 2,033,898 shares,
the Company adjusted liability which was
extinguished to Fair Value right before allotment.
The adjustment portion is recognised as finance
expenses.
----------- ----------------------------------------------------
$58,236 Initial finance fees for entire deal of $90K
are being amortizing throughout the entire
deal term. During the first 6 months of 2021
the Company expensed 64.7% of the $90K Prepaid
Finance Expenses to finance expenses
----------- ----------------------------------------------------
Total 5G Fund $1,132,992
----------- ----------------------------------------------------
Peterhouse Capital $262,035 The liability in respect of the 30p Warrants
was adjusted to Fair Value right before the
exercise which took place during the period.
This adjustment portion is recognised as
a finance expense.
----------- ----------------------------------------------------
Financing Income for the period ending June 30 2021
5G Innovation $49,723 Recording adjustment to cash due for the
Leaders Fund 880,000 "Initial Shares", valued at 29.20p
per share which is the conversion price at
settlement date. Asset is worth more at date
of payment then it was on allotment, and
therefore the increase in value is recorded
as finance income.
-------- ----------------------------------------------
The cash resources during the period under review were further
bolstered following further investment from the Share Subscription
Agreement of GBP1.8m (approximately $2.5m) and the successful
completion and closing from the July 2020 Placing of the 30p
Warrants in May 2021 raising GBP1.05m (approximately $1.45m)
including support from the Directors
COVID-19 Impact and Going Concern
Currently, with the impact of COVID-19 in Israel having been
reduced significantly the Company has resumed its planned
strategies including the enhancement of the development resources.
We remain acutely aware of COVID-19 showing not only increases in
Israel but the situation in the geographies that we trade and have
development engagements, specifically in India and Taiwan, and as
such realise the risk of an impact in delays in the timing of
revenues as well as delays in supplies not only to the Company but
its customers, whose product deployment could be materially
impacted. Without modifying their opinion of the Company remaining
a going concern, the Directors, following good practice reporting
from the previously audited financial statements, make reference to
the existence of a material uncertainty in relation to going
concern, drawing attention to Note 3 of the Interim Unaudited
Financial Statements enclosed in this announcement.
Other than the points outlined above, there are no items on the
Balance Sheet that warrant further discussion outside of the
disclosures made in the Interim Unaudited Financial Statements
presented below.
FORWARD LOOKING STATEMENTS
This announcement includes statements that are, or may be deemed
to be, "forward-looking statements". By their nature,
forward-looking statements involve risk and uncertainty since they
relate to future events and circumstances. Actual results may, and
often do, differ materially from any forward-looking statements.
Any forward-looking statements in this announcement reflect
Ethernity's view with respect to future events as at the date of
this announcement. Save as required by law or by the AIM Rules for
Companies, Ethernity undertakes no obligation to publicly revise
any forward-looking statements in this announcement, following any
change in its expectations or to reflect events or circumstances
after the date of this announcement.
By order of the Board
Mark Reichenberg
Company Secretary
19 August 2021
Interim Unaudited Financial Statements
as at 30 June 20 2 1
STATEMENTS OF FINANCIAL POSITION
US dollars
----------------------------------------------
30 June 31 December
2021 2020 2020
------------ ------------ ------------------
Unaudited Audited
-------------------------- ------------------
ASSETS
Current
Cash and cash equivalents 3,442,309 547,104 2,180,726
Trade receivables 769,919 284,688 778 ,061
Inventories 255,269 169,033 173,494
Other current assets 290,103 176,924 626 , 690
Current assets 4,757,600 1,177,749 3,758,971
Non-Current
Property and equipment 516,611 459,767 552,112
Deferred tax assets 186,772 186,772 186,772
Intangible asset 6,904,870 7,866,249 7,385,560
Right-of-use asset 199,160 370,150 292,219
Other long term assets 10,338 7,507 7,507
Non-current assets 7,817,751 8,890,445 8,424,170
Total assets 12,575,351 10,068,194 12, 183 , 141
============ ============ ==================
LIABILITIES AND EQUITY
Current
Short Term Borrowings 253,988 50,923 411,726
Trade payables 508,434 148,471 290,175
Liability related to share subscription agreement 1,619,509 - 841 , 944
Warrants liability - - 286 ,253
Other current liabilities 1,002,185 1,192,324 1, 275 ,849
Current liabilities 3,384,116 1,391,718 3, 105 , 947
Non-Current
Lease liability 59,403 227,259 146,130
------------ ------------ ------------------
Non-current liabilities 59,403 227,259 146,130
Total liabilities 3,443,519 1,618,977 3, 252 , 077
Equity
Share capital 14,910 8,079 12,495
Share premium 31,759,125 23,410,070 27,197,792
Other components of equity 850,225 779,491 813,256
Accumulated deficit (23,492,428) (15,748,423) ( 19 , 092 , 479 )
------------ ------------ ------------------
Total equity 9,131,832 8,449,217 8 , 931 , 064
Total liabilities and equity 12,575,351 10,068,194 12, 183 , 141
============ ============ ==================
The accompanying notes are an integral part of the interim
financial statements.
STATEMENTS OF COMPREHENSIVE LOSS
US dollars
--------------------------------------
Six months ended For the
30 June year ended
31 December
20 21 2020 2020
----------- ----------- ------------
Note Unaudited Audited
------------------------ ------------
Revenue 7 955,371 359,375 1,853,732
Cost of sales 349,519 42,393 271 ,453
----------- ----------- ------------
Gross profit 605,852 316,982 1, 582 ,279
4, 037 ,
Research and development expenses 2,496,084 2,136,215 904
1, 5 91,
General and administrative expenses 779,149 685,590 079
1,082 ,
Marketing expenses 448,499 560,554 560
Other income (20,802) - (40,335)
----------- ----------- ------------
( 5 , 088
Operating loss (3,097,078) (3,065,377) , 929 )
(1, 462
Financing costs 5 (1,419,468) (22,136) , 740 )
Financing income 6 116,597 177,916 298 , 016
----------- ----------- ------------
(6, 253
Loss before tax (4,399,949) (2,909,597) , 653 )
Tax expense - - -
----------- ----------- ------------
(6, 253
Net comprehensive loss for the period (4,399,949) (2,909,597) , 653 )
=========== =========== ============
Basic and diluted loss per ordinary
share (0.09) (0.09) (0.17)
=========== =========== ============
Weighted average number of ordinary
shares for basic and diluted loss
per share 51,347,740 32,673,455 36,590,988
=========== =========== ============
The accompanying notes are an integral part of the interim
financial statements.
STATEMENTS OF CHANGES IN EQUITY
Amounts in US dollars (except number of shares)
----------------------------------------------------------------------------
Number Share Share Other components Accumulated Total
of shares Capital premium of equity deficit equity
---------- ------- ---------- ---------------- ------------ -----------
Balance at 1 January 20 2 1
(Audited) 47,468,497 12,495 27,197,792 813,256 (19,092,479) 8,931,064
Employee share-based
compensation - - - 36,969 - 36,969
Exercise of employee options 226,667 71 23,041 - - 23,112
Exercise of options 3,500,010 1,072 2,007,606 - - 2,008,678
Shares issued pursuant to
share subscription
agreement 3,838,952 1,176 2,447,346 - - 2,448,522
Expenses paid in shares 305,000 96 83,340 - - 83,436
Net comprehensive loss for the
period - - - - (4,399,949) (4,399,949)
---------- ------- ---------- ---------------- ------------ -----------
Balance at 30 June 20 2 1
(Unaudited) 55,339,126 14,910 31,759,125 850,225 (23,492,428) 9,131,832
========== ======= ========== ================ ============ ===========
Balance at 1 January 20 20 11,4 5
(Audited) 32,556,686 8,039 23,396,310 892,891 (12,838,826) 8 ,4 14
Employee share-based
compensation - - - 16,593 - 16,593
Cancellation of employee
share-based
compensation - - - (129,993) - (129,993)
Exercise of employee options 138,000 40 13,760 - - 13,800
Net comprehensive loss for the
period - - - - (2,909,597) (2,909,597)
---------- ------- ---------- ---------------- ------------ -----------
Balance at 30 June 20 20
(Unaudited) 32,694,686 8,079 23,410,070 779,491 (15,748,423) 8,449,217
========== ======= ========== ================ ============ ===========
Balance at 1 January 2020 11,4 5
(Audited) 32,556,686 8,039 23,396,310 892,891 (12,838,826) 8 ,4 14
Employee share-based (7 9 , ( 79 ,
compensation - - - 635 ) - 635 )
Exercise of employee options 338,000 99 33,701 - - 33,800
Net proceeds allocated to the
issuance
of ordinary shares 7,333,334 2,140 914,595 - - 916 , 735
1,633 ,
Exercise of warrants 3,744,426 1,165 1,632,220 - - 385
Shares issued pursuant to
share subscription
agreement 2,466,051 750 984 , 732 - - 985 , 482
Shares issued, not yet paid
for * 880,000 258 196,259 - - 196 , 517
Expenses paid in shares and
warrants 150,000 4 4 39, 975 - - 40,019
Net comprehensive loss for the (6, 253 (6, 253
year - - - - , 653 ) , 653 )
---------- ------- ---------- ---------------- ------------ -----------
( 19 ,
Balance at 31 December 2020 12,49 27 , 197 092 , 479 8 , 931
(Audited) 47,468,497 5 , 792 813,256 ) , 064
The accompanying notes are an integral part of the interim
financial statements.
STATEMENTS OF CASH FLOWS
US dollars
-------------------------------------------------
Six months ended Year ended
30 June 31 December
20 2 1 2020 2020
------------- --------------- -----------------
Unaudited Audited
------------------------------ -----------------
Operating activities
Net comprehensive loss for the period (4,399,949) (2,909,597) ( 6 , 253 , 653 )
Non-cash adjustments
Depreciation of property and equipment 48,531 78,198 156,012
Depreciation of operating lease right of use asset 75,094 77,931 155,862
Share-based compensation 36,969 (15,556) 18,209
Amortisation of intangible assets 480,690 471 , 917 952,606
Amortisation of liabilities (5,717) - -
Foreign exchange (gains) losses on cash balances 50,733 (79,804) 145,258
Capital loss - 612 5,275
Income from change of lease terms (442)
Revaluation of financial instruments, net 1,279,477 - 1,335 , 172
Expenses paid in shares and options 83,436 - 40,019
Net changes in working capital
Decrease (increase) in trade receivables 8,142 142,474 ( 350 ,899)
Decrease (increase) in inventories (81,775) (2,128) (6,589)
Decrease in other current assets 34,929 185,867 104,468
Increase in other long-term assets (2,831) (2,340) (2,340)
Increase (decrease) in trade payables 218,260 (176,769) (35,064)
Increase (decrease) in other liabilities ( 101 , 184 ) 61,735 140 ,837
Net cash used in operating activities (2,275,637) (2, 167 , 460 ) (3, 594 , 827 )
Investing activities
Proceeds from other short-term financial assets - 2,553,823 2,553,823
Purchase of property and equipment (13,030) (13,035) (187,857)
Net cash provided by (used in) investing activities (13,030) 2,540,788 2,365,966
Financing activities
Proceeds from share subscription agreement 2,153,856 - 1,164,190
Proceeds allocated to ordinary shares, net 356,443 - 916 , 993
Proceeds allocated to warrants - - 82,251
Proceeds from exercise of warrants and options 1,319,387 13,800 1,027,142
Proceeds from short term borrowings 398,656 - 636,993
Repayment of short-term borrowings (550,676) (961,808) (1,237,998)
Repayment of lease liability (76,683) (74,942) (151,648)
Net cash provided by (used in) financing activities 3,600,983 (1,022,950) 2, 437 , 923
Net change in cash and cash equivalents 1,312,316 (649,622) 1,209,062
Cash and cash equivalents, beginning of year 2,180,726 1,116,922 1,116,922
Exchange differences on cash and cash equivalents (50,733) 79,804 (145,258)
Cash and cash equivalents, end of period 3,442,309 547,104 2,180,726
============= =============== =================
Supplementary information:
Interest paid during the period 8,376 15,912 9,764
============= =============== =================
Interest received during the period - 13,859 63,059
============= =============== =================
Supplementary information on non-cash activities:
Share-based compensation capitalised to intangible assets - ( 97,84 4) (97,844)
============= =============== =================
Shares issued, not yet paid for - - 196,259
============= =============== =================
Shares issued pursuant to share subscription agreement 2,448,522 - 985,482
============= =============== =================
Expenses paid in shares and warrants 83,436 - 40,019
============= =============== =================
The accompanying notes are an integral part of the interim
financial statements.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
ETHERNITY NETWORKS LTD. (hereinafter: the "Company"), was
incorporated in Israel on the 15th of December 2003 as Neracore
Ltd. The Company changed its name to ETHERNITY NETWORKS LTD. on the
10th of August 2004.
The Company provides innovative, comprehensive networking and
security solutions on programmable hardware for accelerating
telco/cloud networks performance. Ethernity's FPGA logic offers
complete Carrier Ethernet Switch Router data plane processing and
control software with a rich set of networking features, robust
security, and a wide range of virtual function accelerations to
optimise telecommunications networks. Ethernity's complete
solutions quickly adapt to customers' changing needs, improving
time-to-market and facilitating the deployment of 5G, edge
computing, and different NFV appliances including 5G UPF, SD-WAN,
vCMTS and vBNG with the current focus on 5G emerging appliances.
The Company's customers are situated worldwide.
NOTE 2 - SUMMARY OF ACCOUNTING POLICIES
Basis of presentation of the financial statements and statement
of compliance with IFRS
The interim condensed financial statements for the six months
ended 30 June 2021 have been prepared in accordance with IAS 34,
Interim Financial Reporting. The interim condensed financial
statements do not include all the information and disclosures
required in the annual financial statements in accordance with IFRS
and should be read in conjunction with the Company's annual
financial statements as at 31 December 2020 . The accounting
policies applied in the preparation of the interim condensed
financial statements are consistent with those followed in the
preparation of the Company's annual financial statements for the
year ended 31 December 2020 .
The interim condensed financial statements for the half-year
ended 30 June 2021 (including comparative amounts) were approved
and authorized for issue by the board of directors on 18 August
2021 .
NOTE 3 - GOING CONCERN
The Interim Financial Statements have been prepared assuming
that the Company will continue as a going concern. Under this
assumption, an entity is ordinarily viewed as continuing in
business for the foreseeable future unless management intends or
has no realistic alternative other than to liquidate the entity or
to stop trading for at least, but not limited to 12 months from the
reporting date. Whilst the assessment which was made on 24 June
2021 in the publication of the Annual Results for the year ended 31
December 2020 still remains relevant, due to the positive changes
in circumstances subsequent to the publication of the last
financial results, the Company believes that the going assumption
of a going concern stands. The assessment has been made of the
Company's prospects, considering all available information about
the future, which have been included in the financial budget, from
managing working capital and among other factors such as debt
repayment schedules. Consideration has been given inter alia, to
the current stage of the Company's life cycle, the certainty on
contracts signed with customers and with respect to the development
of the Company's products, the expected timing and amounts of
future revenues, its losses and cash outflows.
Subsequent to the report of 24 June 2021 and based on the
current contracts commitments and the expected revenues to be
derived therefrom, in conjunction with the available resources in
hand, the Company believes it has adequate resources to continue as
a going concern to meet trading requirements. This is reinforced by
the fact that finally after a long delays due to COVID-19 spread in
India, the Indian OEM completed fabrication of the UEP-60 product
that has generated significant demand in the Indian market, and the
new contract signed with a wireless connectivity vendor for
customised UEP-60 with bonding which deliverables in terms of the
contracts are now reliant upon the Company delivering and not the
customer. To the best knowledge of the Company there is sufficient
demand for the products to meet the Company revenue targets for
2022.
In the event of circumstances beyond the control of the Company
such as a further significant impact of COVID which may result in
component delays or customer deployment delays into their
marketplaces, management believes that the proven success and
ability of the Directors to raise further funds either through
debt, equity or deferral of liabilities would secure additional
resources required to meet trading commitments into the future.
Cogniscance is given to the Directors current assessment of
financial and operational risk and their best estimate of the
potential impact of COVID-19 and the availability of components on
operations and the continued possible material uncertainties
arising therefrom.
As of 30 June 2021, the Company incurred an accumulated deficit
of $23.5 million and reported net comprehensive loss of $4.4
million and negative cash flows from operating activities of $2.3
million during the 6 months ended June 30, 2021 (31 December 2020,
accumulated deficit $19.1 million, net comprehensive loss of $6.3
million and negative cash flows from operating activities of $3.6
million during the year ended December 31, 2020). That being noted,
given the view of the contracts signed, the progress of our
customers including the FPGA SoC orders towards the fixed wireless
business, the Company and directors anticipate that with current
cash available and the anticipated revenues from these contracts,
existing engagements and anticipated further engagements, the
Company can fund its operations for the foreseeable future without
the need for further external sources of funds, excluding
circumstances beyond the control of the Company that may then
require external sources of financing.
In January 2020, the Company's forecast for the financial year
showed a movement into positive operational cash flow from the end
of the first half of 2021, having taken into account the effects of
the cash flow enhancement measures announced. However, in the
market update published on 24 June 2021 with the Annual Results for
the year ended 31 December 2020, it announced that in light of the
developments in connection with COVID -19, there remains elements
of uncertainty over the timing of near-term events due to the
challenges faced by our customers regarding both timing of
component supply and the meeting of their own plans. This may
result in the Company encountering customer driven delays in
deliverables dates and revenue recognition during the 2021 which
could subsequently result in the deferral of revenues from 2021 to
2022.
The Company has raised in aggregate GBP2.66 million ($3.55
million) via the July 2020 Placing and Warrant issue, all of which
closed on 12 May 2021. Funds were received from the initial issue
of shares and the exercise of the related Warrants, which included
GBP616,667 from the Directors. As of 31 December 2020, the Company
had raised a total of GBP2.51m ($3.23m) from the Placing and Share
Subscription noted above, with a further GBP2.86m ($3.97m) to date
in 2021, bringing the total funds raised as of the date of these
Interim Financial Statements announcement of GBP5.37m ($7.26m).
During the six month period ended 30 June 2021, the Company
announced further customer engagements or orders from existing
customers. These included on 6 April 2021 the initial order from
the existing Wireless Broadband Solution customer of $400k,
followed by the announcement of the annual results on 24 June 2021
of additional orders totaling $740k for 2021 delivery and $1.26m
for delivery in 2022. The Company further announced on 30 July 2021
a new customer contract of $930k that will be earned in 2021 and
2022 along with anticipated additional revenues from this contract
of at least $1m for 2022 and subsequent further growth.
In the light of enquiries made by the Directors as to the
current liquidity position of the Company, the recent increases in
contracted future revenues, as well as bearing in mind the ability
and success of the Company to raise funds previously, the Directors
have a reasonable expectation that the Company will have access to
adequate resources to continue in operational existence for the
foreseeable future and therefore have adopted the going concern
basis of preparation in the financial statements.
Notwithstanding as described above, there is still material
uncertainty that may cast doubt on the Company's ability to
continue as a going concern and fulfil its obligations and
liabilities in the normal course of business in the near future.
The financial statements do not include any adjustments relating to
the recoverability and classification of recorded asset amounts and
classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
NOTE 4 - SIGNIFICANT EVENTS
COVID-19
The Company had previously stated that in light of the continued
uncertainty on the potential impact and duration of the COVID-19
pandemic, the Board had taken certain steps to both safeguard the
well-being of staff and to position the Company for the future.
This included that , in common with many other companies, it may
need to seek alternative sources of funding. These steps were
successfully undertaken, with t otal funds raised by the Company
from July 2020 to date from the placing, warrants and the Share
Subscription Agreement of GBP5.4m ($7.3m), and the Company managed
to maintain its operational capacity and deliverables during the
extremely difficult time the world endured due to COVID-19.
Currently, with the impact of COVID-19 in Israel having been
reduced significantly, the Company has resumed its planned
strategies including the enhancement of the development
resources.
Considering the worldwide components shortage issue that albeit
has been currently resolved for the Company, along with the
residual COVID-19 disruptions worldwide and the current exponential
outbreak of COVID-19 in India and Taiwan, there remains elements of
uncertainty over the timing of near-term events due to the
challenges faced by our customers regarding both timing of
component supply and the meeting of their own plans.
EQUITY TRANSACTIONS DURING THE ACCOUNTING PERIOD
During the 6 month period ended 30 June 2021, ordinary shares of
the Company were issued, as follows:
Number of
Note ordinary shares
------ -----------------
Exercise of warrants [1] 3,500,010
Shares issued pursuant to share subscription
agreement [2] 3,838,952
Expenses paid for in shares 305,000
Exercise of employee options 226,667
-----------------
7,870,629
=================
[1] In July 2020 the Company issued 7,333,334 shares attached to
7,333,334 warrants. Every 2 shares and the attached 2 warrants were
issued for GBP 0.24 (GBP 0.12 per share and attached warrant).
Every 2 warrants were comprised of 1 warrant exercisable at GBP
0.20 ("GBP 0.20 warrants") and 1 warrant exercisable at GBP 0.30
("GBP 0.30 warrants"), both of which, were not transferable, were
not traded on an exchange and had a life term of 12 months. All the
GBP 0.20 warrants were either exercised or cancelled during 2020.
The GBP 0.30 warrants had an accelerator clause, whereby the
warrants would be callable by the Company if the closing mid-market
share price of the Company exceeded GBP 0.40 over a 5-consecutive
day period, which was triggered in May 2021. Accordingly, the
Company served notice on the remaining GBP 0.30 warrant holders to
exercise their warrants within 7 calendar days, failing which, such
remaining unexercised warrants would be cancelled. Between January
2021 and May 2021, a total of 3,500,010 warrants were exercised
(including 833,334 by the directors of the Company) and 166,657
warrants were cancelled.
These warrants represent a derivative financial liability
required to be accounted for at fair value through the profit or
loss category, under financing costs or financing income, as
applicable. The fair value of the derivative warrant liability
related to these GBP 0.30 warrants as at 31 December 2020 was
approximately $0.29m. The fair value of these warrants as at the
time of their exercises between January 2021 to May 2021 was
approximately $0.55m, with the difference of $0.26m expensed to
financing costs. Upon the exercise of these options the Company
received exercise proceeds of approximately $1.45m, which together
with the fair value of these warrants at the time of their
exercise, were recorded in share capital and share premium.
[2] On 24 September 2020 the Company entered into a share
subscription deed / agreement ("SSD") with an institutional
investor ("Investor"), to raise up to GBP 3,200,000 (Approx.
$4,100,000) as follows:
Amount Date that
Closing Subscription receivable amount was
tranche amount by Company received
1(st) 25 Sep.
GBP 547,000 GBP 500,000 2020
2(nd) 31 Dec.
GBP 438,000 GBP 400,000 2020
-------------- --------------
Total amounts received
until
31 December 2020 GBP 985,000 GBP 900,000
3(rd) GBP 438,000 GBP 400,000 4 Mar. 2021
4(th) 16 Apr.
GBP 438,000 GBP 400,000 2021
5 (th) 30 Apr.
GBP 823,500 GBP 750,000 2021
-------------- --------------
Total amounts received
until
30 June 2021 GBP 2,684,500 GBP 2,450,000
6 (th) GBP 823,500 GBP 750,000 *
GBP 3,508,000 GBP 3,200,000
============== ==============
* This amount has not yet been received and is to be funded by
mutual agreement.
In March and April 2021, the Investor subscribed for $1 950,
,000 (GBP 1,550,000), being the 3(rd) , 4(th) and 5(th) closings,
with a total face value of $ 2,138,289 (GBP 1,699,500), with the
difference of $0.19m being expensed to financing costs.
Pursuant to the share subscription agreement, the Investor has
the right, at its sole discretion to require the Company to issue
shares in relation to the subscription amount outstanding (or a
part of it), under which, the number of shares to be issued for
such settlement, shall be determined using an average five daily
VWAP share price of the Company's shares as selected by the
Investor, during the 20 trading days prior to such settlement
notice ("Conversion Price"). However, the company has certain
rights to make cash payments in lieu of the above share settlement,
while the Investor is entitled to exclude from such cash payment,
up to 30% of the cash settlement amount.
The Company's obligation under the share subscription agreement
with respect for each subscription amount received by the Company,
is designated as a financial "liability related to share
subscription agreement" at fair value, with changes in the fair
value for the period carried through to profit or loss under
financing costs or financing income, as applicable. The fair value
of the liability related to the share subscription agreement as at
30 June 2021 was approximately $1.62m (as at 31 December 2020:
approximately $0.84m).
Upon settlement or a partial settlement of such liability, such
as when the Investor calls for the settlement of the subscription
amount outstanding (or any part of it) for a fixed number of
shares, the fair value of the liability, related to the settled
portion is carried to share equity and share premium.
During the 6 month period ended 30 June 2021, the Investor
called for the settlement of subscription amounts in exchange for
shares, as follows:
Amount converted
-------------------- ---------------------- ----------
Shares
Date of conversion GBP USD Issued
-------------------- ---------- ---------- ----------
16 April
Conversion 2021 500,000 689,250 1,805,054
28 April
Conversion 2021 600,000 834,240 2,033,898
---------- ---------- ----------
1,100,000 1,523,490 3,838,952
========== ========== ==========
[3] Concurrent with the initial investment by the Investor in
September 2020, the Company issued 880,000 shares to the Investor
for the par value of the shares, being $258. The Investor at its
discretion, may choose to pay for these 880,000 shares, calculated
at the then current Conversion Price. Upon issuance of the shares,
the company recognised an amount of $0.2m, representing the fair
value of the investor's obligation to payment for the shares under
the Other Current Assets caption "proceeds due on account of shares
issued" which is a financial asset measured at fair value through
profit or loss. As at 31 December 2020 the fair value of this asset
was estimated at $0.30m. In April 2021 the Investor chose to pay
for these shares for total proceeds of $0.35m, with the $50,000
increase from the value at 31 December 2020, being carried to
profit or loss as financing income.
NOTE 5 - FINANCING COSTS
US dollars
--------------------------------
Six months ended Year ended
30 June 31 December
202 1 2020 2020
---------- ------ ------------
Unaudited Audited
------------------ ------------
Bank fees and interest 19,092 13,563 23,253
Lease liability financial expenses 5,349 8,573 15,634
Revaluation of liability related
to share subscription agreement
measured at FVTPL 1,132,992 - 571 , 423
Revaluation of warrant derivative
liability 262,035 - 852,430
Total financing costs 1,419,468 22,136 1,462,740
========== ====== ============
NOTE 6 - FINANCING INCOME
US dollars
------------------------------------
Six months ended Year ended
30 June 31 December
2021 2020 2020
---------- ---------- ------------
Unaudited Audited
---------------------- ------------
Revaluation of proceeds due on
account of shares (financial
asset measured at FVTPL) 49,723 - 105,399
Interest received - 13,859 63,059
Exchange rate differences 66,874 164,057 129,558
---------- ---------- ------------
Total financing income 116,597 177,916 298,016
========== ========== ============
NOTE 7 - SEGMENT REPORTING
The Company has implemented the principles of IFRS 8, in respect
of reporting segmented activities. In terms of IFRS 8, the
management has determined that the Company has a single area of
business, being the development and delivery of high-end network
processing technology.
The Company's revenues are divided into the following
geographical areas:
US dollars
--------------------------------
Six months ended Year ended
30 June 31 December
2021 2020 2020
-------- -------- ------------
Unaudited Audited
------------------ ------------
United States 765,075 227,520 1,256,613
Israel 161,796 121,855 262,119
Asia 28,500 10,000 335,000
-------- -------- ------------
955,371 359,375 1,853,732
======== ======== ============
The Company's revenues are divided into the following
geographical areas:
%
--------------------------------
Six months ended Year ended
30 June 31 December
2021 2020 2020
-------- -------- ------------
Unaudited Audited
------------------ ------------
United States 80.1% 63.3% 67.8%
Israel 16.9% 33.9% 14.1%
Asia 3.0% 2.8% 18.1%
-------- -------- ------------
100.0% 100.0% 100.0%
======== ======== ============
Revenue from customers in the company's domicile, Israel, as
well as its major market, the United States and Asia, have been
identified on the basis of the customer's geographical
locations.
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(END) Dow Jones Newswires
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