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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Albert Technologies Ltd | LSE:ALB | London | Ordinary Share | IL0011354904 | ORD NIS0.01 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 8.00 | 6.50 | 9.25 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMALB
RNS Number : 3326H
Albert Technologies Ltd
12 March 2018
12 March 2018
Albert Technologies Ltd
("Albert Technologies", the "Company" or the "Group")
Full Year Results for the year ended 31 December 2017
"A year of transition and industry recognition"
Albert Technologies (AIM: ALB.L) today announces its audited results for the year ended 31 December 2017. The Company is pleased to announce significant progress in deploying Albert, its Artificial Intelligence marketing platform, as a SaaS product for brands and agencies, underlining the value of this ground-breaking technology, which benefits from 7 years of proprietary research and development. Supported by a strong pipeline and major contract wins announced in the past month, the Company expects continued rapid progress in the coming year.
Financial Highlights, continuing operations (SaaS):
-- Revenues increased 8x to $1.7m (2016: $0.2m)
-- Monthly recurring revenues (MRR) increased 9x to $0.3m in December 2017 (December 2016: $0.03m)
-- 6x increase in average monthly revenue per customer during the period December 2016 to December 2017
-- Adjusted EBITDA* loss from continuing operations of $11.4m (2016: $8.4m) -- Operating loss from continuing operations of $11.8m (2016: $9.3m) -- Net cash of $11.1m at year end (2016: $22.6m)
* Non-IFRS and unaudited, excludes share based compensation expenses of $361K (R&D-$197K, S&M-$109K and G&A-$55K) and $874K (R&D-$349K, S&M-$366K and G&A-$159K) in 2017 and 2016, respectively, depreciation expenses of $80K (Cost of revenues-$1K, R&D-$66K, S&M-$5K and G&A-$8K) and $62K (Cost of revenues-$1K, R&D-$45K, S&M-$9K and G&A-$7K) in 2017 and 2016, respectively, and relocation bonus to the CTO, included in R&D expenses, in the amount of $50K in 2016.
Operational Highlights, continuing operations (SaaS):
-- Significant progress deploying SaaS artificial intelligence marketing platform in the period:
o 2.5x increase in number of paying customers
o Signed a 12-month rolling contract with a leading global nutrition company
o Entered into strategic partnership with leading business services group in Australia and NZ
o Expansion of sales, marketing and R&D activity to support current business opportunities and future growth
o Industry recognition for Albert technology - Gartner names Albert as "2017 Cool Vendor" in advertising
Financial and Operational Highlights, discontinued operations (Indirect):
-- Ceased Indirect business activity at the end of 2017
o Net loss from discontinued operations of $1.2m in 2017 (2016: $0.2m net profit)
Current trading:
-- 2018 trading has begun positively and in line with expectations
-- Continued momentum in deploying Albert and increased traction from global media agencies post period-end
-- Signed pilot agreement with one of the top 5 global advertising agencies
-- Secured a 12-month contract with one of the top 25 independent advertising agencies in North America
-- Started a pilot project with one of the world's biggest insurance companies -- Started a pilot project with one of Europe's leading telecommunications companies
Or Shani, Chief Executive Officer of Albert Technologies, said:
"2017 was an important year of transition for Albert Technologies. Albert - our unique proprietary technology benefitting from 7 years of R&D - is gaining industry recognition for its transformative ability to drive performance and efficiencies throughout the marketing chain. During 2017 we signed important contracts with global brands and agencies and we have started 2018 with a strong pipeline of new business activity.
"Our focus for 2018 is on increasing both our client roster and revenues per existing customer as we mature and move towards larger clients and increased activity, consistent with our "land and expand" strategy. I also expect 2018 to be a significant year for the development of our partnerships and agencies channel. Earlier this year we announced a multi-territory pilot project with a top 5 global agency, and today we are also announcing a 12-month contract with one of the top 25 independent advertising agencies in North America. The latter is a good example of our "land and expand" strategy, as we began by working with one of the agency's brands, and following dramatic initial success, we are broadening our work with them to cover additional brands".
"AI plays a critical role in delivering peak performance, higher returns on marketing spend, and ground-breaking efficiencies. Albert is a recognized industry leader in AI at a time when utilizing the very best marketing technologies for global brands and agencies is more essential than ever. We continue to invest in the development and enhancement of Albert to ensure the platform retains its market leadership position and delivers an optimal customer experience from onboarding through to successful delivery of marketing ROI."
"We look forward to further demonstrating the value of Albert to customers and shareholders during 2018."
For further information, please contact:
Hot Features
Premium
Albert Technologies Ltd. Tel: +972 3537 7137
Or Shani, Chief Executive Officer
Yoram Freund, Chief Financial Officer
https://albert.ai/
Liberum (NOMAD and Broker) Tel: +44 20 3100
2000
Neil Patel / Chris Clarke / Jonathan
Wilkes-Green
Powerscourt Tel: +44 20 7324
0492
John Elliott / Celine MacDougall +44 7 894 709 826
About Albert Technologies
Founded in 2010, Albert Technologies Ltd. (AIM: ALB.L), a global software company, is the creator of Albert - the first-ever fully autonomous artificial intelligence marketing platform, driving digital marketing campaigns from start to finish for some of the world's leading brands. Albert's mission is to liberate businesses from the complexities of digital marketing - not just by replicating their existing efforts, but by executing them at a pace and scale not previously possible. Albert serves as a highly intelligent and sophisticated member of brands' marketing teams, wading through massive amounts of data, converting this data into insights, and autonomously acting on these insights, across channels, devices and formats, in real time. This eliminates the manual and time-consuming tasks that currently limit the effectiveness and results of modern digital advertising and marketing. Brands such as The Big Red Group, Gallery Furniture and Dole Asia, and global advertising agencies, credit Albert with significantly increased sales, an accelerated path to revenue, the ability to make more informed investment decisions, and reduced operational costs.
The Company's core focus is its SaaS Sales Channel, which offers its artificial intelligence-based software, Albert, to brands using a SaaS model. Albert Technologies Ltd. listed in 2015 to accelerate both investment into and commercialisation of Albert.
The Company and its management received 18 awards in 2017, including being named as Gartner Cool Vendors in Advertising, an International Stevie Award for "Best New Product of the Year," the "Market Disruptor" Award from the Masters of Marketing, and being named "AI Application of the Year" by the Global Annual Achievement Awards for AI. Albert CEO, Or Shani, was recognized as Innovator of the Year (bronze) in the International Stevie Awards and was chosen for the DMN 40 Under 40 List. Amy Inlow, Albert CMO, was named a winner in the DMN Hall of Femme Awards and the American Business Awards (gold).
About Albert
Albert replaces the human campaign manager in managing brands' online advertising campaigns. A brand provides Albert with access to its Google, Facebook, Bing, Twitter and other online marketing channels. When a brand manager wishes to launch a new online advertising campaign, all that is needed is to simply log into Albert and deploy that new campaign, which is usually no more than a 15-minute task.
Albert autonomously creates hundreds of micro campaigns across all relevant online marketing channels (Google, Facebook, Bing, Twitter, Instagram, Display, Email, etc.), then reviews these hundreds of micro campaigns every few minutes and optimises each of them as needed. Albert works in very much the same way that a human campaign manager would, making correlation and cost/benefit-based decisions.
Where an experienced campaign manager could possibly make circa 100 decisions per day, Albert can make thousands per minute. Albert's ability to launch hundreds of micro strategies and review and amend them all every few minutes typically brings about a significant increase in ROI. In addition, all learnings from the decisions made remain in-house, and the brand has full and instant transparency and can easily scale up marketing activities through larger budgets or applications to new brands and new geographies, without hiring new expert campaign managers.
Overview
2017 was a significant year of transition and evolution of Albert Technologies. Albert, our AI marketing platform, gained further traction in the market, further proving its unique value to brands and agencies. A growing number of brands and agencies chose to use Albert, recognizing his technological superiority, as well as cost-efficient and results-driven performance. As a result, revenue grew significantly in 2017 to $1.7m (2016: $0.3m) with a monthly revenue run rate of $0.3m by the year end and increased customer pipeline.
During 2017, the Company began to successfully deploy its growth strategy of moving from small-to-medium-sized business customers to large brands and global enterprises, as well as establishing strategic partnerships and relationships with global advertising agencies and distribution partners.
We continued to increase investment in Sales and Marketing and R&D activities in order to support business development. During the year we strengthened our sales team in the United States, as well as increased our R&D efforts to enhance the scalability and performance of our SaaS solution.
As previously announced, at the end of 2017 we ceased our Indirect business operations due to continued losses, thereby allowing us to focus on capitalising on the growing momentum in our SaaS business.
Market review
The AI Marketing space is a nascent market. As of 18 months ago, the leading technology research firms were not covering the space as it did not exist. The technology adoption is in its early stages, and the market requires significant education on the value that AI and autonomous tools can bring to businesses. Yet the AI Marketing space is acknowledged to represent immense growth opportunities. In fact, a recent MarketsandMarkets report in which IBM, SAP, Google, Microsoft and Albert were profiled predicts the AI Marketing space will grow to $40B by 2025.
Currently, our direct sales and marketing efforts are primarily focused on the North American market. Partners, such as The Big Red Group, are leveraged to bring Albert to global territories.
Operational review
After launching Albert, our SaaS product, in 2016 and establishing sales and marketing infrastructure for market penetration, we began to see increased traction throughout 2017. During the period we increased our customer base by 2.5x, securing significant contract wins with consumer brands as well as signing strategic partnerships with large advertising agencies and international distribution partners.
In addition to the increase in the number of paying customers, the profile of our customers has also changed. We have succeeded in transitioning from small-medium businesses (with low marketing budgets) to enterprise customers with global reach. This strategic focus has enabled us to grow revenues rapidly and gain market profile, thereby showcasing Albert's technology and the significant value he can generate.
In March 2017, we secured a 12-month rolling contract with one of the world's largest nutrition, health and wellness companies. As part of this agreement, Albert Technologies deployed Albert across all online advertising campaigns of one of its leading brands within its largest South American market. This contract win followed a four-month pilot in which Albert was compared with the customer's existing advertising agency, which is a subsidiary of a leading global network. During the pilot, Albert consistently delivered superior return on investment metrics when compared to previous campaigns managed by the incumbent agency. In addition, Albert provided greater transparency, control and valuable marketing insights during the pilot.
In July 2017, we announced a strategic partnership with a leading business services group in Australia and New Zealand. Under the agreement, the business services group has the right to distribute Albert to brands directly and also to agencies, while guaranteeing minimum SaaS revenues of $0.8m for the first year of activity, and carries the potential to become a significant revenue opportunity in the second and third years of activity. As with the contract win outlined above, this partnership was agreed following a successful trial period. Within 24 hours of deployment, Albert identified and executed thousands of marketing actions, which could have taken a human marketing expert up to a year. Furthermore, the partner's customer acquisition costs were reduced by more than a quarter within 30 days.
After the period end, in February 2018, we announced an agreement with one of the top 5 global advertising agencies for a pilot project. The onboarding process is currently under way, and indicates our steady progress in marketing the power of our AI platform to drive transformative performance and value in digital marketing. The agency pilot, which involves several brands in different geographies, is expected to complete during the second half of 2018, and if successful will be followed by a long-term commercial agreement.
As part of our drive to build out Albert's international partnerships and channels and expand our global presence, we appointed Mao Keo as Global VP, Alliances & Channel Development in January 2018. Keo joined Albert with more than 15 years of experience in senior business development and strategic roles, including at Adobe and Oracle, where she focused on international markets and revenue growth.
Our total number of employees increased by almost 50% during 2017, mainly in R&D which includes resource dedicated to client integration. At the end of 2017 our total headcount was 100 employees, including 62 R&D employees and 17 in sales and marketing.
As previously announced, at the end of 2017 we ceased our Indirect business due to continued structural decline in revenues and margins, which resulted in losses from this business in 2017. The Company's full focus and resources are now invested in our SaaS business.
Executing our strategy
In 2017 we made good progress in securing significant new customer wins, which has translated into meaningful growth in our SaaS revenues.
In addition to successfully onboarding new customers, we have also seen our "land and expand" strategy bear fruit. This progress has been supported by the proven ease of onboarding clients, in terms of the speed, cost and technical integration of Albert into their own systems. The value of our "land and expand" strategy is greatest when we engage with large global enterprises or global advertising agencies, where the "expand" opportunities are much greater.
In the second half of the year we began to execute a clear strategy for partnering with advertising agencies, and have invested sales and marketing effort in promoting this strategy, which has resulted in recent contract wins, pilot projects and increased interest from large global advertising agencies as they face continued technological disruption and challenges to their traditional operating model.
Summary and outlook
During 2017 we achieved some important milestones in our execution strategy, including a significant increase in the number of customers and spend per customer, contract wins with large enterprises, partnership agreements with advertising agencies, as well as meaningful pilot projects which provide clear proof of the benefits of our product offering as well as the market demand for technology-led efficient marketing solutions like Albert.
We have invested for long-term growth and as we continue to develop Albert's customer base and conduct pilots with leading global brands and global advertising agencies, we expect to report further progress in the rollout of Albert in the coming year. The new business pipeline is strong and we expect to announce further strategic contract wins over the coming months. The Board is focused on building shareholder value and remains confident in the overall long-term growth prospects of the Company.
Financial review
Introduction
During 2017 we made significant progress in growing our SaaS revenues. We have continued to invest in R&D and sales and marketing initiatives to enable our current and future growth, resulting in increased operating expenses. At the end of 2017 we ceased the Indirect business activity and these results are presented as discontinued operations.
Revenues
Revenues from continuing operations amounted to $1.7m for 2017, an increase of 8x compared to revenues of $0.2m in 2016. Monthly recurring revenues increased 9x and reached $0.3m in December 2017, compared to $0.03m in December 2016.
The increase in revenues was achieved by increasing the client list, coupled with a 6x increase in the average monthly revenue per customer during the period December 2016 to December 2017, due to the strategic focus on shifting to larger customers.
Revenues from our Indirect business are set out in note 9 of our consolidated financial statements below.
Loss from continuing operations
Operating loss from continuing operations for 2017 totalled $11.8m, compared to $9.3m in 2016.
Excluding share-based compensation expenses of $0.3m and depreciation expenses of $0.1m, adjusted operating loss totalled $11.4m, compared to $8.4m loss in 2016 (excluding share-based compensation expenses of $0.8m, depreciation expenses of $0.1m and relocation bonus of $0.1m).
The increase in our operating loss is attributed to the increase in our R&D and S&M expenses due to the recruitment of additional employees and the resources invested in our US operations.
Adjusted* Financial Review for continuing operations:
2017 2016
$'000 $'000 Diff
Revenues 1,733 230 1,503
Cost of revenues* (284) (33) (251)
Gross profit 1,449 197 1,252
--------- -------- --------
% of revenues 84% 86%
Research and Development
expenses* (5,560) (3,459) (2,101)
Selling and Marketing
expenses* (5,360) (3,863) (1,497)
General and Administrative
expenses* (1,910) (1,226) (684)
Total operating expenses (12,830) (8,548) (4,282)
--------- -------- --------
Operating loss* (11,381) (8,351) (3,030)
--------- -------- --------
* Non-IFRS and unaudited, excludes share based compensation expenses of $361K (R&D-$197K, S&M-$109K and G&A-$55K) and $874K (R&D-$349, S&M-$366K and G&A-$159 K) in 2017 and 2016, respectively, depreciation expenses of $80K (Cost of revenues-$1K, R&D-$66K, S&M-$5K and G&A-$8K) and $62K (Cost of revenues-$1K, R&D-$45K, S&M-$9K and G&A-$7K) in 2017 and 2016, respectively, and relocation bonus to the CTO, included in R&D expenses, in the amount of $50K in 2016.
Loss from discontinued operations
Following the cessation of our Indirect business at the end of 2017, the indirect business results were classified as discontinued operations. Loss from discontinued operations totalled $1.2m in 2017, compared to profit of $0.2m in 2016.
Cash flows
Cash, cash equivalents and short-term bank deposits at 31 December 2017 were $11.1m (31 December 2016: $22.6m). The decline in our cash position is attributed to our operating activities. We continue to maintain close cash control. In addition, Company management and the Board of Directors believe that the Company's existing financial resources are adequate to satisfy its expected liquidity requirements through the end of 2018. In addition, the Company has adopted a contingency plan, which was approved by the Board, to be effected, in whole or in part, at its discretion, to preserve cash to allow the Company to continue its operations and meet its obligations, to the extent required for at least one year from the date of approval of the consolidated financial statements.
FORWARD LOOKING STATEMENT
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 Albert Technologies' 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, Albert Technologies 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.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands
31 December
------------------
Note 2017 2016
---- -------- --------
CURRENT ASSETS:
Cash and cash equivalents $ 3,955 $ 22,577
Short-term bank deposits 7,105 -
Restricted cash 101 187
Trade receivables, net 3 2,175 3,239
Other accounts receivable and prepaid
expenses 747 361
-------- --------
Total current assets 14,083 26,364
-------- --------
NON-CURRENT ASSETS:
Property and equipment, net 4 254 228
Total non-current assets 254 228
-------- --------
Total assets $ 14,337 $ 26,592
======== ========
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. dollars in thousands
31 December
------------------
Note 2017 2016
---- -------- --------
LIABILITIES AND EQUITY:
CURRENT LIABILITIES
Trade payables $ 1,618 $ 2,306
Other accounts payable and accrued
expenses 5 2,013 981
-------- --------
Total current liabilities 3,631 3,287
-------- --------
NON-CURRENT LIABILITIES
Employee benefit liabilities,
net 118 112
-------- --------
EQUITY 8
Share capital -
Ordinary shares 162 160
Share premium 39,559 39,146
Capital reserve (193) (193)
Accumulated deficit (28,940) (15,920)
-------- --------
Total equity 10,588 23,193
-------- --------
Total liabilities and equity $ 14,337 $ 26,592
======== ========
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
U.S. dollars in thousands (except per share data)
Year ended
31 December
---------------------
Note 2017 2016
---------- ---------
Continuing operations:
Revenues 10 $ 1,733 $ 230
Cost of revenues 12a (285) (34)
---------- ---------
Gross profit 1,448 196
---------- ---------
Operating expenses:
Research and development 12b (5,823) (3,903)
Selling and marketing 12c (5,474) (4,238)
General and administrative 12d (1,973) (1,392)
Total operating expenses (13,270) (9,533)
---------- ---------
Operating loss (11,822) (9,337)
Financial income 217 105
Financial expenses (17) (116)
Loss before taxes on income (11,622) (9,348)
Taxes on income 6e (184) (20)
---------- ---------
Net loss from continuing operations $ (11,806) $ (9,368)
Discontinued operations:
Net profit (loss) after tax
from discontinued operations 9 $ (1,214) $ 154
---------- ---------
Net loss and total comprehensive
loss $ (13,020) $ (9,214)
---------- ---------
Net loss per share attributable
to the Company's shareholders
(in $) 14
Basic and diluted loss per ordinary
share $ (0.21) $ (0.15)
========== =========
Basic and diluted loss per ordinary
share for continuing
Operations $ (0.19) $ (0.15)
========== =========
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. dollars in thousands
Share Capital Accumulated Total
Share capital premium reserve deficit equity
------------- ---------- -------- ----------- --------
Balance as of 1
January 2016 $ 160 $ 38,082 $ (193) $ (6,706) $ 31,343
Exercise of options *) - - - - *) -
Cost of share-based
payment, net - 1,064 - - 1,064
Total comprehensive
loss - - - (9,214) (9,214)
Balance as of 31
December 2016 160 39,146 (193) (15,920) 23,193
Exercise of options 2 - - - 2
Cost of share-based
payment, net - 413 - - 413
Total comprehensive
loss - - - (13,020) (13,020)
Balance as of 31
December 2017 162 39,559 (193) (28,940) 10,588
============= ========== ======== =========== ========
*) Represents an amount lower than $ 1.
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. dollars in thousands
Year ended
31 December
---------------------
2017 2016
---------- ---------
Cash flows from operating activities:
Net loss $ (13,020) $ (9,214)
---------- ---------
Adjustments to reconcile net loss
to net cash used in operating activities:
Adjustments to the profit or loss
items:
Share-based payment 413 1,064
Tax expense 184 50
Depreciation 107 85
Exchange rate differences in respect
of cash and cash equivalents 17 105
721 1,304
---------- ---------
Changes in asset and liability items:
Decrease in trade receivables 1,064 1,501
Increase in other accounts receivable
and prepaid expenses (386) (104)
Decrease in trade payables (688) (1,511)
Increase in other accounts payable
and accrued expenses 1,211 90
Accrued interest on short-term bank
deposits (105) -
Increase in employee benefit liabilities,
net 6 27
1,102 3
---------- ---------
Cash paid during the year for:
Taxes (363) (229)
---------- ---------
Net cash used in operating activities (11,560) (8,136)
---------- ---------
The accompanying notes are an integral part of the consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Cont.)
U.S. dollars in thousands
Year ended
31 December
--------------------
2017 2016
-------- --------
Cash flows from investing activities:
Purchase of property and equipment $ (133) $ (195)
Investment in short-term bank deposits (7,000) -
Withdrawal of (investment in) restricted
cash 86 (136)
Net cash used in investing activities (7,047) (331)
-------- --------
Cash flows from financing activities:
Exercise of options 2 *) -
IPO related expenses - (40)
Net cash provided by (used in) financing
activities 2 (40)
-------- --------
Exchange rate differences in respect
of cash and cash equivalents (17) (105)
-------- --------
Decrease in cash and cash equivalents (18,622) (8,612)
Cash and cash equivalents at the beginning
of the year 22,577 31,189
-------- --------
Cash and cash equivalents at the end
of the year $ 3,955 $ 22,577
======== ========
*) Represents an amount lower than $ 1.
The accompanying notes are an integral part of the consolidated financial statements.
NOTE 1:- GENERAL a. Company description:
Albert Technologies Ltd. (formerly: Adgorithms Ltd.) ("the Company") was incorporated under the laws of Israel and commenced operations in September 2010. The Company's registered address is 20 Lincoln Street, Tel-Aviv, Israel.
The Company offers Artificial Intelligence-based software ("Albert") to brands and advertising agencies using a SaaS model. The Company develops and deploys algorithmic solutions to provide marketers with a self-driving solution for cross-channel campaign execution, testing, optimization, analysis, and insights.
The Company's shares are admitted for trading on AIM, commencing June 2015, under the symbol "ALB" (formerly "ADGO").
b. In March 2014, the Company established a wholly-owned subsidiary in the United States, Albert Technologies Inc. (formerly: Adgorithms Inc.), which is engaged in the distribution of the Company's products and services in the United States, as well as provides the Company with advisory and management services.
In August 2016, the Company established a wholly-owned subsidiary in Israel, AA Digital Media (All Aspects) Ltd. which commenced operating in November 2016 and ceased its operations in December 2017. All Aspect was engaged in trading media in various strategies with an array of participants in the online advertising value chain ("In- direct activity" or "In-direct business").
In May 2017, the Company established a wholly-owned subsidiary in Brazil, Adgorithms Brasil Internet Ltda, which is engaged in the distribution of the Company's products and services in Brazil. (Albert Technologies Inc., AA Digital Media and Adgorithms Brasil Internet Ltda, collectively, "the Subsidiaries").
c. The Company management and the Board of Directors believe that the Company's existing financial resources are adequate to satisfy its expected liquidity requirements through the end of 2018. In addition, the Company has adopted a contingency plan, which was approved by the Board, to be effected, in whole or in part, at its discretion, to preserve cash to allow the Company to continue its operations and meet its obligations, to the extent required for at least one year from the date of approval of the consolidated financial statements.
d. On 5 December 2017, the Company publicly announced the decision of its Board of Directors to cease the In-direct business by the end of 2017. The In-direct activity is presented in the statement of operations and other comprehensive loss as "discontinued operations", including comparative data. For further information please refer to Note 9.
e. The consolidated financial statements were approved for issuance by the Board of Directors on 9 March 2018.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been applied consistently in the consolidated financial statements for all periods presented, unless otherwise stated.
a. Basis of presentation:
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS as adopted by the EU").
The consolidated financial statements have been prepared on a cost basis.
b. Consolidated financial statements:
The consolidated financial statements comprise the financial statements of the Company and subsidiaries that are controlled by the Company. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Potential voting rights are considered when assessing whether an entity has control. The consolidation of the financial statements commences on the date on which control is obtained and ends when such control ceases.
The financial statements of the Company and the Subsidiaries are prepared as of the same dates and periods. The consolidated financial statements are prepared using uniform accounting policies by the Company and the Subsidiaries. Significant intragroup balances and transactions and gains or losses resulting from intragroup transactions are eliminated in full in the consolidated financial statements.
c. Significant accounting judgments, estimates and assumptions used in the preparation of the consolidated financial statements:
The preparation of the consolidated financial statements requires the management of the Company to make estimates and assumptions that have an effect on the application of 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.
In the process of applying the significant accounting policies, the Company has made the following judgments which have a significant effect on the amounts recognised in the consolidated financial statements:
Development costs
The Company evaluates project development costs for capitalisation in accordance with its accounting policy. Before such costs can be capitalised, the Company needs to demonstrate that "the intangible asset will generate probable future economic benefits", among other factors. The Company does not meet the threshold requirements for capitalisation of project development costs and therefore expenses all such costs.
d. Functional currency and foreign currency: 1. Functional currency and presentation currency:
The consolidated financial statements are presented in U.S. dollars, the Company's and its Subsidiaries functional currency, and are rounded to the nearest thousand, unless stated otherwise. The functional currency best reflects the economic environment in which the Company operates and conducts its transactions.
2. Transactions in foreign currency:
Transactions denominated in foreign currency are recorded based on the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currency as of the reporting date are translated into the functional currency based on the exchange rate at each reporting date. Exchange rate differences are recorded in profit or loss.
Non-monetary assets and liabilities that are measured in terms of historical cost in foreign currency are translated into the Company's functional currency using the exchange rate as of the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated into the functional currency based on the exchange rate as of the date that the fair value was determined.
e. Cash and cash equivalents:
Cash includes cash balances available for immediate use. Cash equivalents include short-term highly liquid deposits in banks (with original maturities of three months or less) that are readily convertible into known amounts of cash and are part of the Company's cash management.
f. Restricted cash:
Restricted cash is primarily invested in deposits used as security for office leases, credit line limit and letter of credit to service providers.
g. Short-term bank deposit:
Bank deposits with maturities of more than three months but less than one year are included in short-term deposits.
h. Allowance for doubtful accounts:
The allowance for doubtful accounts is determined in respect of specific debts whose collection, in the opinion of Company's management, is doubtful. Impaired debts are derecognised when they are assessed as uncollectible.
i. Property and equipment, net:
Items of property and equipment are measured at cost, including direct acquisition costs, less accumulated depreciation, accumulated impairment losses, if any, and excluding day-to-day servicing expenses.
Depreciation is recognised in profit or loss on a straight-line basis over the estimated useful life of the property and equipment (generally 3-7 years).
j. Impairment of non-financial assets:
The Company evaluates the need to record an impairment of the carrying amount of non-financial assets whenever events or changes in circumstances indicate that the carrying amount is not recoverable. If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount. The recoverable amount is the higher of fair value less costs of sale and value in use. In measuring value in use, the expected future cash flows are discounted using a pre-tax discount rate that reflects the risks specific to the asset. The recoverable amount of an asset that does not generate independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognised in profit or loss.
An impairment loss of an asset, other than goodwill, is reversed only if there have been changes in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. Reversal of an impairment loss, as above, shall not be increased above the lower of the carrying amount that would have been determined (less depreciation or amortisation) had no impairment loss been recognised for the asset in prior years and its recoverable amount. The reversal of the impairment loss is carried to profit or loss.
k. Employee benefits: 1. Post-employment benefits:
The Company has a defined benefit plan in respect of severance pay pursuant to the Severance Pay Law in Israel. According to the Law, employees are entitled to severance pay upon dismissal or retirement. The liability for termination of employment is measured using the projected unit credit method. The actuarial assumptions include expected salary increases and rates of employee turnover based on the estimated timing of payment. The amounts are presented based on discounted expected future cash flows using a discount rate determined by reference to market yields at the reporting date on high quality corporate bonds that are linked to the Consumer Price Index with a term that is consistent with the estimated term of the severance pay obligation.
In respect of its severance pay obligation to certain of its employees, the Company makes current deposits in pension funds and insurance companies ("the plan assets").
Plan assets are comprised from assets held by a long-term employee benefit funds or qualifying insurance policies. Plan assets are not available to the Company's own creditors and cannot be returned directly to the Company.
The liability for employee benefits shown in the consolidated statement of financial position reflects the present value of the defined benefit obligation less the fair value of the plan assets.
Remeasurements of the net liability in respect of the defined benefit plan are recognised in other comprehensive income in the period in which they occur.
On 1 January 2015 the Company agreed to adopt Section 14 to the Severance Pay Law under which the Company pays fixed contributions and will have no legal or constructive obligation to pay further contributions only for the period commencing from1 January 2015. Contributions in respect of severance pay are recognised as an expense when contributed simultaneously with receiving the employee's services and no additional provision is required in the financial statements.
2. Short-term benefits:
Short-term employee benefits are benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services. These benefits include salaries, paid annual leave, paid sick leave, recreation and social security contributions and are recognised as expenses as the services are rendered. A liability in respect of a cash bonus or a profit-sharing plan is recognised when the Company has a legal or constructive obligation to make such payment as a result of past service rendered by an employee and a reliable estimate of the amount can be made.
l. Share-based payment transactions:
The cost of equity-settled transactions with employees and others is measured at the fair value of the equity instruments granted at grant date.
The cost of share-based payments is recognised in profit or loss, with a corresponding increase in equity, over the period in which the relevant employees become fully entitled to the award. The amount recognised in profit or loss, taking the vesting conditions into account, consisting of service and performance conditions other than market conditions, is adjusted to reflect the actual number of equity instruments that are expected to ultimately vest.
m. Provisions:
A provision is recognised when there is a present obligation, legal or constructive, as a result of a past event and a reliable estimate can be made of the amount of the obligation and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation.
n. Revenues:
The Company derives its revenues from campaign management SaaS ("Software as a Service") platform and until the end 2017 the Company also derived part of its revenues from sales through bids for advertising spaces on advertising exchanges ("In-direct").
Revenue is recognised in profit or loss when the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Company and the associated costs can be measured reliably. Revenue is measured at the fair value of the consideration received, net of discounts.
When the Company acts as an agent or as a broker without being exposed to the significant risks and rewards associated with the transaction, the amounts collected on behalf of the principal are not revenues, and revenues reflect the amount of the commission. When the Company acts as a principal and is exposed to the significant risks and rewards associated with the transaction, revenues reflect the gross inflows of the economic benefits.
In determining whether the Company is acting as the principal or an agent, the Company follows the accounting guidance for principal-agent considerations. While none of the factors identified in this guidance is individually considered presumptive or determinative, because the Company is the primary obligor in the arrangement and is responsible for (i) selecting and contracting with third party suppliers for the purchase of inventory, (ii) having general inventory risk over advertising spaces bought, (iii) establishing the selling price, and (iv) assuming credit risk in the transaction, with respect to In-direct revenues, the Company acts as the principal and therefore reported all revenues earned and costs incurred on a gross basis.
With respect to SaaS revenues, the Company evaluated that it acts as an agent, based on the accounting guidance for principal-agent considerations, and therefore reports those revenues on net basis.
Deferred revenues
Payments received from customers, which do not meet the criteria for revenue recognition, are recorded as deferred revenues.
o. Research and development costs:
Research expenditures are recognised in profit or loss when incurred. Development costs are also recognised in profit or loss unless they can be capitalised as an intangible asset because the Company can demonstrate: the technical feasibility of completing the development of the intangible asset so that it will be available for use or sale; the Company's intention to complete the development of the intangible asset and use or sell it; the ability to use or sell the intangible asset; how the intangible asset will generate future economic benefits; the availability of adequate technical, financial and other resources to complete the intangible asset; and the ability to measure reliably the respective expenditure asset during its development period.
p. Taxes on income:
Taxes on income in the consolidated statements of operations are comprised from current and deferred taxes. Taxes in respect of current or deferred taxes are carried to the consolidated statements of operations except to the extent that the taxes arise from items which are recognised directly in equity or in other comprehensive income.
The current tax liability is measured using the tax rates and tax laws that have been enacted or substantively enacted by the reporting date as well as adjustments required in connection with the tax liability in respect of previous years.
Deferred tax balances are measured at the tax rates that are expected to apply when the asset is realised or the liability is settled, based on tax laws that have been enacted or substantively enacted by the reporting date.
q. Earnings (loss) per share:
Earnings (loss) per share are calculated by dividing the net income (loss) attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period. Basic earnings (loss) per share only include shares that were actually outstanding during the period. Potential ordinary shares are included in the computation of diluted earnings (loss) per share only when their conversion has a dilutive effect on the earnings (loss) per share. Further, potential ordinary shares that are converted during the period are included in diluted earnings (loss) per share only until the conversion date and from that date in basic earnings (loss) per share.
If the number of ordinary or potential ordinary shares outstanding changes as a result of a bonus issue or share split during the reported periods or after the reporting period but before the financial statements are authorised for issue, the calculations of basic and diluted earnings per share are adjusted retrospectively for all periods presented.
r. Disclosure of new standards in the period prior to their adoption:
IFRS 15, "Revenue from Contracts with Customers":
In May 2014, the IASB issued IFRS 15, "Revenue from Contracts with Customers": ("IFRS 15").
IFRS 15 replaces IAS 18, "Revenue", IAS 11, "Construction Contracts", IFRIC 13, "Customer Loyalty Programs", IFRIC 15, "Agreements for the Construction of Real Estate", IFRIC 18, "Transfers of Assets from Customers" and SIC-31, "Revenue - Barter Transactions Involving Advertising Services".
IFRS 15 introduces a five-step model that will apply to revenue earned from contracts with customers:
Step 1: Identify the contract with a customer, including reference to contract combination and accounting for contract modifications.
Step 2: Identify the separate performance obligations in the contract
Step 3: Determine the transaction price, including reference to variable consideration, financing components that are significant to the contract, non-cash consideration and any consideration payable to the customer.
Step 4: Allocate the transaction price to the separate performance obligations on a relative stand-alone selling price basis using observable information, if it is available, or using estimates and assessments.
Step 5: Recognise revenue when the entity satisfies a performance obligation over time or at a point in time.
IFRS 15 is to be applied retrospectively for annual periods beginning on or after 1 January 2018. IFRS 15 allows an entity to choose to apply a modified retrospective approach, according to which IFRS 15 will only be applied in the current period presented to existing contracts at the date of initial application. No restatement of comparative periods is required.
The Company is still evaluating the possible impact of IFRS 15 but believes, based on an analysis performed to date, that its effect, if any, on its consolidated financial statements would be immaterial.
IFRS 9, "Financial Instruments" ("IFRS 9")
In July 2014, the IASB issued the final version of IFRS 9 that replaces IAS 39, "Financial Instruments: Recognition and Measurement". IFRS 9 addresses all three aspects of the accounting for financial instruments: classification and measurement, impairment and hedge accounting.
IFRS 9 is effective for annual periods beginning 1 January 2018. The Company believes that the adoption of IFRS 9 will not have a material impact on its consolidated financial statements.
IFRS 16, "Leases":
In January 2016, the IASB issued IFRS 16, "Leases" ("the new Standard"). According to the new Standard, a lease is a contract, or part of a contract, that conveys the right to use an asset for a period of time in exchange for consideration.
According to the new Standard:
Lessees are required to recognise an asset and a corresponding liability in the statement of financial position in respect of all leases (except in certain cases) similar to the accounting treatment of finance leases according to the existing IAS 17, "Leases".
Lessees are required to initially recognise a lease liability for the obligation to make lease payments and a corresponding right-of-use asset. Lessees will also recognise interest and depreciation expenses separately.
Variable lease payments that are not dependent on changes in the Consumer Price Index ("CPI") or interest rates, but are based on performance or use (such as a percentage of revenues) are recognised as an expense by the lessees as incurred and recognised as income by the lessors as earned.
In the event of change in variable lease payments that are CPI-linked, lessees are required to remeasure the lease liability and the effect of the remeasurement is an adjustment to the carrying amount of the right-of-use asset.
The new Standard includes two exceptions according to which lessees are permitted to elect to apply a method similar to the current accounting treatment for operating leases. These exceptions are leases for which the underlying asset is of low value and leases with a term of up to one year.
The accounting treatment by lessors remains substantially unchanged, namely classification of a lease as a finance lease or an operating lease.
The new Standard is effective for annual periods beginning on or after 1 January 2019. Earlier application is permitted provided that IFRS 15, "Revenue from Contracts with Customers", is applied concurrently.
For leases existing at the date of transition, the new Standard permits lessees to use either a full retrospective approach or a modified retrospective approach, with certain transition relief whereby restatement of comparative data is not required.
The Company is evaluating the possible effects of the new Standard. The effect of this standard is expected to be immaterial.
NOTE 3:- TRADE RECEIVABLES
Trade receivables are non-interest bearing and are in generally in terms of 30 to 90 days.
As of 31 December 2017 trade receivables are net of an allowance for doubtful accounts in the amount of $ 24 (2016 - $ 35).
NOTE 4:- PROPERTY AND EQUIPMENT, NET
31 December
-----------
2017 2016
----------- -----
Cost:
Office furniture and equipment $ 82 $ 56
Computers and software 214 118
Leasehold improvements 214 203
510 377
----------- -----
Accumulated depreciation:
Office furniture and equipment 17 9
Computers and software 102 55
Leasehold improvements 137 85
256 149
----------- -----
Depreciated cost $ 254 $ 228
=========== =====
NOTE 5:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
31 December
--------------
2017 2016
------- -----
Accrued expenses $ 1,008 $ 324
Tax payable 160 17
Other governmental authorities 277 217
Employees and payroll accruals 505 372
Other 63 51
$ 2,013 $ 981
======= =====
NOTE 6:- TAXES ON INCOME
a. The Law for the Encouragement of Capital Investments, 1959:
Amendment to the Law for the Encouragement of Capital Investments, 1959 (Amendment 71):
On 5 August 2013, the "Knesset" (Israeli Parliament) issued the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013 and 2014), 2013 which consists of Amendment 71 to the Law for the Encouragement of Capital Investments ("the Amendment"). According to the Amendment, the tax rate on preferred income from a preferred enterprise in 2014 and thereafter will be 16% (in development area A - 9%).
The Amendment also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise's earnings as above will be subject to tax at a rate of 20%.
In October 2014, the Company received final approval from the Israeli Tax Authorities for a "Preferred Enterprise" status according to which the Company's revenues meet the definition of "Preferred Income" under the above law. According to the approval, starting 2013, the Company's income derived from the right to use software, not including certain services as detailed in the approval, is deemed "Preferred Income" under the Law for the Encouragement of Capital Investments, 1959. The approval is limited to the period between the tax years 2013 through 2017.
The tax benefits under "Preferred Enterprise" status are conditional upon the fulfillment of the conditions stipulated by the above law and the approval received from the tax authorities.
b. Tax rates applicable:
Tax rates in Israel on income other than Preferred Income:
In January 2016, the Law for Amending the Income Tax Ordinance (No. 216) (Reduction of Corporate Tax Rate), 2016 was approved, which includes a reduction of the corporate tax rate from 26.5% to 25%, effective from 1 January 2016.
In December 2016, the Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), 2016 which reduces the corporate income tax rate to 24% (instead of 25%) effective from 1 January 2017 and to 23% effective from 1 January 2018.
As there were no deferred tax balances as of 1 January and 31 December 2017, the change in the tax rates had no effect in the financial statements.
Tax rates in the U.S:
A company incorporated in the U.S. - weighted average tax at the rate of about 40% (Federal tax, State tax and City tax of the city where the company operates).
On 22 December 2017, the U.S. enacted the Tax Cuts and Jobs Act (the "Act"), which among other provisions, reduced the U.S. corporate tax rate from 35% to 21%, effective 1 January 2018. At 31 December 2017, the Company is not expecting the Act to have a material effect on its consolidated financial statements as there are no deferred taxes.
Tax rate in Brasil:
Based on Brasilian laws, for Corporate Income Tax purposes, there are two methods: "Assumed Profit" or "Actual Profit". The Company has chosen the Assumed method for the year 2017. Under the Assumed Profit method, taxable income is computed by using 34% corporate tax on 32% of the gross revenue. Additional taxes in this method are PIS and COFINS, which rates are 0.65% and 3%, respectively calculated based on the gross revenue.
c. Final tax assessments:
The Israeli parent company received final tax assessments until the year 2014. The Subsidiaries have yet to receive final tax assessments since their incorporation.
d. Carryforward operating tax losses for tax purposes of the Israeli parent company amounted to approximately $18,315, as of 31 December 2017.
Carryforward operating tax losses for tax purposes of the Israeli subsidiary amounted to approximately $1,573, as of 31 December 2017.
Carryforward tax losses in Israel may be set against future taxable income. No deferred tax assets have been recorded in respect of these carryforward tax losses due to the uncertainty of their realisation.
e. Taxes on income included in the consolidated statements of operations:
Year ended
31 December
--------------
2017 2016
------- -----
Current taxes $ 184 $ 20
Deferred taxes - -
$ 184 $ 20
======= =====
f. Theoretical tax:
Year ended
31 December
---------------------
2017 2016
---------- ---------
Loss before taxes on income $ (11,622) $ (9,348)
---------- ---------
Statutory tax rate 24% 25%
========== =========
Tax computed at the statutory
tax rate (2,789) (2,337)
Increase (decrease) in taxes
on income resulting from
the following factors:
Effect of "Preferred Enterprise"
status 831 680
Effect of non-deductible
expenses 97 267
Effect of temporary differences
and losses for which deferred
taxes have not been recognised 2,046 1,387
Tax adjustment in respect
of different tax rate of
foreign subsidiaries (12) (28)
Other 11 51
---------- ---------
Taxes on income $ 184 $ 20
========== =========
NOTE 7:- COMMITMENTS AND CONTINGENCIES
Lease commitments:
The Company leases office facilities under operating leases, which expire in 2018. Future minimum commitments under non-cancelable operating lease agreements as of 31 December 2017 are as follows:
2018 $ 233
=====
Rental expenses for the years ended 31 December 2017 and 2016 amounted to $ 488 and $ 403, respectively.
Legal contingencies:
From time to time, the Company is party to various legal proceedings incidental to its business. As of December 31 2017, the Company accrued an immaterial amount to cover probable losses from legal proceedings and threatened litigation.
On 6 September 2016, a statement of claim was filed with the Magistrate Court of Tel-Aviv, Israel (the "Court") against the Company, Albert's CEO and founder, Mr. Or Shani, and the Company's then CFO, Mr. Ron Stern (the "Defendants") by Mr. Tal Saar (the "Plaintiff"), a former service provider of the Company. The statement claims, among other things, that the Defendants are liable for certain fees due to such service provider and demanding to receive information with respect to payments made to Mr. Stern by the Company (the "Claim"). A statement of defense and a motion to dismiss the Claim were filed by the Defendants with the Court on 20 November 2016 and 30 December 2016, respectively. The plaintiff claims he is entitled to a payment of NIS 600 thousands (approximately $ 171, based on the exchange rate as of 31 December 2017). During 2017 the Defendants filed a response to the Plaintiff' statement and the Plaintiff filed an amended statement of claim. Pre-trial hearing scheduled for 16 April 2018.
No provision in respect of the Claim was recorded in the financial statements as of 31 December 2017, as the Company's current position is that all allegations are groundless and it is unlikely that any allegations brought against the Company, Mr. Shani and Mr. Stern will be accepted by the Court.
NOTE 8:- EQUITY
a. Composition of share capital:
31 December 31 December
2017 2016
------------------------- --------------------------
Issued and Issued and
Authorised outstanding Authorised outstanding
----------- ------------ ----------- ------------
Number of shares
-----------------------------------------------------
Ordinary Share
of NIS 0.01 par
value 100,000,000 62,390,708 100,000,000 61,725,271
=========== ============ =========== ============
b. Share-based payments:
In October 2013, the Board of Directors of the Company adopted the Company's 2013 Share Option Plan ("Plan"). The Plan provides for the grant of options to purchase Ordinary shares of the Company to employees, officers, directors, consultants and advisors of the Company.
The share-based payments that the Company granted to its employees and non-employees are described below.
There have been no modifications to any of the options during 2016 and 2017, other than the modification mentioned below.
In June 2016 the CEO and founder, Mr. Or Shani, waived his rights with respect to all of his existing options over 2,012,999 Ordinary shares. As a result of the aforementioned waiver, an acceleration was recognised and accordingly, the Company recorded in its consolidated statement of operations an expense amounting to $146.
Options issued to employees:
Options granted under the Plan expire 10 years from the vesting commencing date. The options generally vest over three years (1/3 at each year).
In June 2016, the Company granted 3,072,981 options to its employees (the "June 2016 grant"). The June 2016 grant included 1,302,085 options that in addition to a service condition require the employees to meet certain non-market performance goals. Of these options, the performance goals for 246,795 options were achieved as of 31 December 2017, and the related compensation costs, subject to service vesting conditions, were recorded in the financial statements. For the remaining 1,055,290 performance-based options, not met as of 31 December 2017, and accordingly, no compensation costs in respect of these options are being recorded in the financial statements. On 9 March 2018 the Board of Directors approved the retroactive modification of the performance goals for 555,290 options (of the 1,055,290 options referred to above).In 2017, the Company granted 1,620,253 options to its employees subject to service vesting conditions.
The following table lists the number of share options, the weighted average exercise prices of share options and change in the number of outstanding options during the year:
Year ended 31 December
----------------------------------------------
2017 2016
---------------------- ----------------------
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
----------- --------- ----------- ---------
Outstanding
at beginning
of year 5,395,912 $ 0.489 4,536,448 $ 1.399
Granted 1,620,253 0.318 3,072,981 0.219
Exercised (665,437) 0.003 (26,418) 0.003
Forfeited (1,384,891) 0.949 (2,187,099) 1.504
----------- --------- ----------- ---------
Outstanding
at end of year 4,965,837 $ 0.370 5,395,912 $ 0.489
=========== ========= =========== =========
Exercisable
at end of year 1,634,385 $ 0.539 1,217,125 $ 0.606
=========== ========= =========== =========
The Company estimates the fair value of stock options granted to its employees and non-employees using the Black-Scholes-Merton option-pricing model ("B&S"). The B&S requires a number of assumptions, of which the most significant estimates are as follows:
-- Volatility - in 2016 and 2017 the Company's Ordinary shares had not been publicly traded for long enough to accurately evaluate volatility, and therefore the volatility assumption is based on the volatilities of other publicly-traded companies that management considered as comparable to the Company.
-- Expected option term - the expected term of the options represents the period of time that the options are expected to be outstanding.
-- Risk-free interest -the risk-free interest rate is based on the exercise price currency, based on the US daily treasury yield curve rate with an equivalent term to the expected life of the option.
The following table lists the inputs to the B&S model used for the fair value measurement of equity-settled share options for the above plan:
2017 2016
----------- -----------
Dividend yield
(%) - -
Expected volatility
of the share
prices (%) 50% 52.35%
Risk-free interest
rate (%) 1.99%-2.33% 0.94%-1.31%
Expected life
of share options
(years) 6 5.83-6.25
Share price
($) 0.34-0.44 0.244
Exercise price
($) 0.22-0.42 0-0.231
The options outstanding under the Company's Plans as of December 31, 2017 and 2016 have been separated into ranges of exercise price as follows:
Ranges of
exercise December 31
----------------------
price 2017 2016
---------- --------- ---------
$0-0.26 3,222,117 4,188,112
$0.27-0.42 1,206,920 -
$0.42-1.73 536,800 1,207,800
4,965,837 5,395,912
========= =========
The weighted average fair values of options granted for the years ended 31 December 2017 and 2016, were $ 0.283 and $ 0.132, respectively.
The weighted average remaining contractual life of the outstanding options as of 31 December 2017 and 2016, were 8.41 and 8.77 years, respectively.
For the options exercised during 2017 and 2016, the weighted average market price of the Company's shares at the time of exercise was $0.38 and $0.25, respectively.
Options issued to non-employees:
The Company's outstanding options to non-employees as of 31 December 2017 and 2016 were as follows:
Year ended 31 December
----------------------------------------------
2017 2016
---------------------- ----------------------
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
----------- --------- ----------- ---------
Outstanding
at beginning
of year 506,975 $ 0.003 506,975 $ 0.003
Granted 158,504 0.003 - -
Exercised - - - -
Forfeited - - - -
----------- --------- ----------- ---------
Outstanding
at end of year 665,479 $ 0.003 506,975 $ 0.003
=========== ========= =========== =========
Exercisable
at end of year 480,557 $ 0.003 242,801 $ 0.003
=========== ========= =========== =========
The following table lists the inputs to the B&S model used for the fair value measurement of equity-settled share options for the above plan:
2017
-----
Dividend yield
(%) -
Expected volatility
of the share
prices (%) 50%
Risk-free interest
rate (%) 2.01%
Expected life
of share options
(years) 6
Share price
($) 0.44
Exercise price
($) 0
The cost of share based payments from continuing operations recognised in profit or loss for services received from employees and consultants is shown in the following table:
Year ended
31 December
2017 2016
------ ------
Research and development $ 197 $ 349
Selling and marketing 109 366
General and administrative 55 159
------ ------
$ 361 $ 874
====== ======
NOTE 9:- DISCONTINUED OPERATIONS
On 5 December 2017, the Company publicly announced the decision of its Board of Directors to cease the In-direct business by the end of 2017. At 31 December 2017, In-direct business was classified as discontinued operations. The results of the In-direct business for the years 2017 and 2016 are presented below:
Year ended
31 December
2017 2016
--------- --------
Revenues $ 6,682 $ 16,173
Expenses (7,877) (15,957)
--------- --------
Operating income (loss) (1,195) 216
Financial expenses (19) (32)
--------- --------
Profit (loss) before taxes
on income (1,214) 184
Taxes on income - (30)
--------- --------
Net profit (loss) from discontinued
operations $ (1,214) $ 154
========= ========
Basic and diluted profit (loss)
per Ordinary share for discontinued
operations (*) $ (0.019) $ 0.002
========= ========
(*) See Note 14 for the weighted average number of Ordinary shares used in the computation
NOTE 10:- REPORTABLE SEGMENTS
a. Based on the management reporting system, the Company operates in a single operating segment as provider of on-line marketing services.
b. Revenues from continuing operations, based on the location of customers, are as follows:
Year ended
31 December
--------------
2017 2016
------- -----
America $ 1,285 $ 101
EMEA 234 129
APAC 214 -
$ 1,733 $ 230
======= =====
c. The Company's non-current assets are mostly located in Israel.
d. In 2017, revenues from two customers individually represented 20% and 12% of the Company's revenues. Revenues from all other customers individually represented less than 10% of the Company's revenues.
In 2016, revenues from four customers individually represented percentages higher than 10% of the Company's revenues (between 11% to 15% for each customer).
NOTE 11:- FINANCIAL INSTRUMENTS
Financial risk management objectives and policies:
The Company is exposed to market risk and credit risk, as following:
a. Market risk:
Market risk is the risk that the fair value of future cash flows or a financial instrument will fluctuate because of changes in market prices. Market risk is comprised from three types of risks: interest rate risk, currency risk and other price risk. As of 31 December 2017 and 2016, the Company considers the exposure to market risk to be immaterial.
b. Credit risk:
Credit risk is the risk that counterparty will not meet its obligations as a customer or under a financial instrument leading to a loss to the Company. The Company 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 and foreign currency transactions.
1. Trade receivables:
Customer credit risk is managed in the Company subject to the Company's policies, procedures and controls relating to customer credit risk management. Credit quality of a customer is assessed based on a credit analysis and rating and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored.
The Company's trade receivables are derived from sales to customers located in different countries, primarily in the United States. The Company performs ongoing credit evaluations for its customers and an impairment analysis is performed at each reporting date on an individual basis for the Company's customers. The maximum exposure to credit risk as of the reporting date is the carrying value of trade receivables (see Note 3).
The Company does not hold collateral as security for these receivables. The Company evaluates the concentration of risk with respect to trade receivables as low.
2. Cash, cash equivalents and restricted deposits:
Credit risk from balances with banks and financial institutions is managed by the Company's management in accordance with the Company's policy. Cash, cash equivalents and restricted cash are deposited with major banks in Israel and in the US that are of high quality.
NOTE 12:- ADDITIONAL INFORMATION TO THE CONSOLIDATED STATEMENTS FROM CONTINUING OPERATIONS
Year ended 31
December
--------------------------
2017 2016
------------- -------
a. Cost of revenues:
Salaries and benefits $ 261 $ 20
Other 24 14
$ 285 $ 34
============= =======
b. Research and development
expenses:
Salaries and benefits $ 4,771 $ 2,929
Cost of share-based payment 197 349
Subcontractors 327 275
Other 528 350
------------- -------
$ 5,823 $ 3,903
============= =======
c. Selling and marketing expenses:
Salaries and benefits $ 3,467 $ 2,410
Cost of share-based payment 109 366
Advertising and promotion 1,191 702
Travel 273 140
Other 434 620
------------- --------
$ 5,474 $ 4,238
============= ========
d. General and administrative
expenses:
Salaries and benefits $ 616 $ 320
Cost of share-based payment 55 159
Public company costs 342 345
Legal 308 196
Travel 77 34
Other 575 338
$ 1,973 $ 1,392
============= =======
NOTE 13:- COMPENSATION TO KEY MANAGEMENT PERSONNEL
Year ended
31 December
----------------
2017 2016
------- -------
Salaries $ 1,741 $ 1,953
Bonus 278 -
Relocation Bonus - 50
Post-employment benefits 29 50
Share-based compensation 98 399
$ 2,146 $ 2,452
======= =======
NOTE 14:- NET LOSS PER SHARE
Details of the number of shares used in the computation of basic and diluted net loss per share:
Year ended
31 December
----------------------
2017 2016
---------- ----------
Denominator for basic net earnings
per share 61,985,174 61,703,256
Effect of dilutive securities:
Options - -
---------- ----------
Weighted average number of ordinary
shares used in the computation
of diluted net earnings per share 61,985,174 61,703,256
========== ==========
In 2016 and 2017, all outstanding options have been excluded from the calculation of the diluted net loss per share because they are anti-dilutive (decrease net loss per share).
- - - - - - - - - - - - - - - - - - - - - - - - - -
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FKCDPOBKDBNK
(END) Dow Jones Newswires
March 12, 2018 03:00 ET (07:00 GMT)
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