TAKING DISTRIBUTED
TRAINING SIMULATION
PERSONALLY
‘16
SIMIGON LTD
2016 ANNUAL REPORT
About SimiGon
SimiGon (AIM: SIM) is a leading developer and
supplier of distributed simulation solutions for
defence and civilian applications. SimiGon is the
creator of SIMbox, a leading PC-based platform for
creating, managing and deploying simulation-based
content across multiple domains. Through its off-
the-shelf training solutions for demanding high-skill
occupations, SimiGon provides diverse organizations
with
training.
SimiGon’s growing client base includes blue-chip
training and simulation systems providers as well as
air forces and commercial airlines worldwide.
Founded in 1998, SimiGon maintains offices in Israel
and the United States.
faster and more cost-effective
Contents
3
4
6
7
13
15
Financial and Operational Highlights
Market
Solutions
Chairman & CEO Reviews
Board & Management
Financial
2
TAKING DISTRIBUTED TRAINING SIMULATION
PERSONALLY
When it comes to distributed simulation solutions, SimiGon technology is the way
to go. Leading the industry shift away from inflexible, stationary and expensive
training systems, SimiGon offers personal, portable and cost-effective training
solutions optimized for the PC or laptop. Our off-the-shelf platform and products –
for air, land, sea and industrial applications – are highly flexible, adaptable and
robust. This “personal” approach enables multiple high-skill users to train
simultaneously on multiple platforms, saving defence and civilian organizations
significant time and money. We offer state-of-the-art simulation solutions for
non-training applications, bringing the best of personal simulation to wider
audiences.
Continue to establish and prove capability by
successfully delivering on all contracts
Identified opportunities for expansion beyond
core markets into other domains such as crane
operators, consumer drivers and civil aviation
Ongoing transition to longer term, high visibility
license contracts
Next generation SIMbox v.5.3 released in Sept
2016, bringing more advanced capabilities to the
training and simulation industry
Financial Highlights
Net profit of $0.36 million (2015: $1.78 million)
Revenues of $6.02 million (2015: $6.94 million)
Gross margin 69% (2015: 78%)
Basic and diluted EPS $0.01 (2015: $0.04)
Annual dividend declared of 0.136 cents per
share
Share buy-back programme
shareholder approval)
(subject
to
Operational Highlights
Continued success winning new business and
expanding relationships in core markets:
Military and aviation markets: Winning
Notice from the Israeli Air Force for $2
million contract
Non-military targeted vertical markets:
five-and-a-half year contract worth $7.9
million to deliver SIMbox based training
solutions to a leading provider of training
solutions for the civilian aviation industries
in the Far East
Continuing to meet project milestones for
long term contract with Check-6, the
Company's first major contract outside the
aerospace and defence industry.
3
APPLYING ROBUST TRAINING & SIMULATION SYSTEMS
FOR MULTIPLE DOMAINS
Robust Training and Simulation systems are needed to improve individual readiness and
organization-wide performance for high skills jobs in multiple domains.
Key Trends
The military and civilian training and simulation
markets are forecast to achieve significant growth
over
training
requirements for high skill positions and the evident
cost savings available through advanced training
technology.
the next decade due
to new
The Military Training and Simulation market,
SimiGon’s traditional core market, is expected to
reach US$17 billion by 2026 while the civilian, Smart
Education and Learning market, representing new
expansion opportunities for SimiGon, is expected to
grow from $193.24 billion in 2016 to $584.04 billion
by 2021.
Commercial training continues to value technology-
based solutions that reduce costs, similar to the
ongoing Military training trend.
Well trained operators in demanding, high skill roles
are required in military and civilian organizations. The
type of training and delivery platform is wide ranging
while a common core technology capable of meeting
the disparate requirements of each domain is highly
desirable. While the best simulation technology can’t
completely fully replicate the sensation of landing on
a moving aircraft carrier; drilling for oil on a deep sea
rig; providing maintenance service on an F-16 flight
line, or interviewing patients with severe medical
issues, simulation training has significant usefulness
for hard skills and soft skills training. This is supported
by a large body of research. In short, by simulating the
operating environment and real world conditions,
personnel are better prepared to handle real life
situations from basic operations to troubleshooting to
emergencies, in a safe, cost effective, environmentally
friendly setting. The military sector is driven by new
platform acquisitions and
technology upgrades
requiring advanced training of complex systems.
Likewise, the civilian market is driven by a need to
reduce accidents and
liability through advanced
training methods and technologies.
Training and simulation is utilized across multiple
military and civilian domains to provide realistic, cost-
effective training.
For example, in military aviation, the cost savings of
simulated vs. flight hour is generality 90% or greater. With
this enormous cost savings, the Government and Civilian
sectors recognize the value of simulation in total training
through
programs. Additional efficiencies delivered
training technologies such as an Intelligent Tutor include a
dynamic training capacity capable of adapting to a
trainee’s skill level and enabling individual pace learning.
The market will continue to seek and require cost
effective, advanced training and simulation technologies
and
training and
simulation technologies, solutions and services provide
effective and efficient training systems to the market,
delivering substantial time and cost savings for customer
and partners.
solutions. SimiGon’s disruptive
Additional business growth is developed through system
maintenance, upgrades and support contracts for existing
training devices as well as technology upgrades and
further deployment of
training aids, devices and
simulators.
SimiGon’s technology products and services mix provide
added value to customer requirements through improved
training efficiencies and training analytics for saving time
and money.
Business Growth Opportunities
SimiGon is engaged in several market plays that will lead
to sustainable, rapid growth.
SimiGon’s role as a Prime Contractor to the US and
Government sector as well as a key technology supplier to
Tier One integrators, is leading to recurring business with
current customers and new business. The Company’s
systems are globally recognized as a leading training
technology for achieving proficiency in complex skills and
operations for individual and collective training. The
Company is building on the expertise it has in delivering
advanced training solutions to develop near term and
in the Government sector. The
long term business
Company
into new,
is also successfully expanding
targeted vertical markets such as maintenance training,
commercial aviation training, oil and gas industry training
and homeland security.
4
HIGH SKILLS JOBS REQUIRE ADVANCED, PERSONALIZED TRAINING &
SIMULATION (CONT.)
According to Deloitte’s Global Aerospace & Defense
Outlook for 2017, the military subsector will grow due
to global security threats and increases in the defense
budgets by the Trump Administration and by regional
powers such as Japan and India. Boeing estimates a
worldwide requirement for over 39,620 new jet
airplanes, valued at $5.9 trillion, attributing this to
evolving aviation product offerings and growth in
emerging markets.
A key component of the aforementioned $584 billion
global smart education & learning market is Learning
Management Systems (LMS). The market share of LMS is
expected to increase due to its ability to create and
deliver course according to customer needs, facilitating
students and instructors collaboration 24/7/365 through
mobile access. The North American market is expected to
hold the largest market share during the forecast period
because of the prevalence of smart devices.
The value of the global military fixed wing aircraft
market is estimated to grow nearly 5% between 2017-
2027, up from a value of US$60.3 billion in 2016.
Multi-role aircraft are 59.3% of the market and
transport aircraft account for 23%. The third and
fourth largest market segments are ISR aircraft and
bombers, with a cumulative share of 12.5%. There are
also numerous multi-role platforms being developed
indigenously in India, South Korea, Pakistan, and
Japan, further boosting the multi-role sub-sector
value over the forecast period.
Unmanned Aircraft Vehicles (UAV) is another area
forecasted for rapid growth, for military and civilian
purposes. Teal Group's 2016 military market study
estimates that UAV production will soar from current
worldwide UAV production of $2.8 billion annually in
2016 to $9.4 billion in 2025, totalling $69.7 billion in
the next ten years. Military UAV research spending
would add another $26 billion over the decade.
Lt. Gen. Chris Nowland, the Air Force deputy chief of
staff for operations, plans and requirements (AF/A3),
said, “We focus on fighter pilots, but it’s not just
[them]. Our problem is capacity. It’s how do we get
the throughput up to produce the number of pilots
we want.” The Federal Aviation Administration's
issuing draft rules for commercial drone flights is
having a major effect. According to BI Intelligence,
many companies are already authorized to fly drones
commercially under a US government "exemption"
program. Shipments of consumer drones will
quadruple. Price competition and new technologies
will make flying drones easier. Revenues from drones
sales are expected to top $12 billion in 2021.
Major multinational tech companies such as Samsung,
Google, Amazon and Facebook, as well as defense and
aerospace
developing UAV
businesses either organically or through acquisitions.
corporations
are
SimiGon’s high technology training platform
fulfills
multiple roles in this market, comprised of e-learning,
virtual
learning, social
learning,
learning, and adaptive
learning.
instructor-led training, mobile
simulation-based
In the civilian aviation sector, Boeing’s Current Aircraft
Finance Market Outlook states there was approximately
$127 billion worth of aircraft deliveries in 2016, up from
$122 billion in 2015. This is expected to reach $172 billion
by 2020. Boeing’s 2016 Current Market Outlook (CMO)
projects a demand for 39,620 new airplanes over the next
20 years, worth $5.9 trillion.
This growth will place an extraordinary demand for new
airline pilots and technicians. Boeing forecasts that by
2035 the aviation industry will need to supply more than
two million new aviation personnel—617,000 commercial
airline pilots, 679,000 maintenance technicians, and
814,000 cabin crew. Skilled Instructors will also be
required to support this workforce.
This market presents the Company with a remarkable and
exciting opportunity. SimiGon’s
training
technologies, methodologies and solutions, proven and
in the military aviation market, are fully
successful
transferable to commercial aviation training.
innovative
The Company’s current and past performance is essential
to compete and win new contracts in the Government
and Civilian sectors and achieve growth. The ability to
leverage SimiGon R&D and technologies for multiple
domains remains consistent with the Company’s strategy
to be active in multiple vertical markets. SimiGon delivers
the advanced, training and simulation management
systems and services that high skills and professional
organizations demand.
5
GETTING PERSONAL
WITH DISTRIBUTED SIMULATION SOLUTIONS
SimiGon’s comprehensive portfolio of off-the-shelf solutions – including a state-of-the-art simulation platform and
range of compelling products – “closes the knowledge gap” for professional users. At the same time, SimiGon’s
flexible solutions are easily integrated either by customer organizations or third-party systems integrators for both
military and civilian applications.
SIMbox
SimiGon is the creator of SIMbox, a leading PC-based
platform
for creating, managing and deploying
simulation based content across multiple domains
including
training, mission debriefing, homeland
security and entertainment. SIMbox is a flexible, off-
the-shelf 3D simulation engine comprised of a wide
array of software modules that empowers users to
create an unlimited range of new products and content.
Built from the ground up as a robust and flexible
platform, SIMbox has been deployed successfully by
large training and simulation systems providers, leading
military contractors, and over 20 air forces and
commercial airlines worldwide. SIMbox is comprised of
three main environments:
SIMbox Toolkit development environment: SIMbox
Toolkit
suite,
empowering non-programmers to create, reuse and
control simulation-based applications.
SIMbox Server management environment: SIMbox
Server which serves as the Learning Management
System (LMS), contains various software modules used
for configuration management of developed content,
control over content distribution, data gathering from
end users, and data analysis and report generation.
SIMbox Runtime delivery environment: SIMbox
Runtime provides hi-fidelity 3D distributed simulations
that place the user
in a virtual or constructive
environment with numerous viewpoints for both
military and civilian applications.
easy-to-use development
an
is
Major Existing products under SIMbox
Fully Functional F-16 Training Device
T-6 Flight Training Device
Cessna Caravan Training Device
Sensor Operator Training System
KnowBook™ Family
KnowBook is a family of PC-based training applications
used by leading organisations for training professional
users. KnowBook provides a common platform for
learning, training, planning and debriefing.
The key members of the KnowBook family are:
* AirBook™: the family’s flagship application that
enables aircrew and organisations to remain completely
6
updated with the rapidly changing demands of the
military and civilian aviation world.
GroundBook, MarineBook and CarBook: the newest
members of the KnowBook family designed for ground,
maritime and driving training scenarios.
AirTrack™
AirTrack represents the next generation of passenger in-
flight entertainment
solutions. Successfully
(IFE)
installed and operational on airlines worldwide, AirTrack
is a cost-effective, rapidly deployable solution for
airlines seeking to upgrade their IFE systems. Based on
advanced SIMbox technology, the system’s capabilities
include hi-fidelity 360º 3D simulation views, moving
maps, external plane views, dynamic media, and real-
time flight data and news. AirTrack is provided with an
easy-to-use, PC-based software configuration tool that
enables airlines to independently and rapidly customize
and upload in-flight content based on specific needs.
Debriefing Systems
SimiGon offers advanced post-mission debriefing
applications that provide critical feedback and improve
operational readiness. Utilizing a standard Windows
graphical user interface (GUI), the PC-based systems can
be deployed at any location and are extremely simple to
operate. SimiGon’s debriefing systems include D-Brief
PC and MDDS Pro. Operated from a server connected to
multiple client workstations, the systems analyse flight
data stored on the aircraft’s PMC or RMM cartridge. D-
is used to support real-time air combat
Brief PC
debriefing. MDDS Pro is a digital debriefing solution
incorporating video with 3D simulation.
Air Traffic Control
SimiGon's successfully deployed Air Traffic Control
training solution includes instructor operator stations,
virtual pilots, voice recognition and the ability for
instructors to modify training sessions in real time. The
systems are used by ATC instructors to train new
controllers in guiding aircraft through take-off and
landing procedures as well as for recurrent and
operational training. The Company aims to leverage its
success in this market to compete for additional military
and civilian ATC training contracts.
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP
Chairman & CEO Reviews
Chairman’s Statement
“The Board remains confident in the
Group’s long term growth potential
and is encouraged by the ongoing
evolution of the market as training
moves increasingly toward learning
through experience
than
through manuals”
rather
Alistair Rae, Chairman
The financial performance for the year was impacted by
circumstances outside of the Company’s control,
however the fundamentals of the business remained
strong and profitable, with a healthy base of recurring
revenues and improvements achieved across a number
of strategic objectives.
The Group continued to successfully execute on its
organic growth strategy, winning business with new
strategic customers and within the existing base, as well
as successfully leveraging its leading industry position
and technology platform to further penetrate into new
targeted, high growth markets. Importantly, the Group
continued to make good progress in its transition
toward high value, longer term contracts which provide
better revenue and profit visibility and will improve the
financial footing of the Group going forward.
SimiGon maintains a healthy balance sheet with a
significant liquid cash balance of $8.14 million. The
Board intends to pay a dividend of 0.136 cents per
share. Furthermore, in light of the strong cash position,
the Board
in place, subject to
shareholder approval, an irrevocable, non-discretionary
programme for the repurchase of its ordinary shares, to
be held in treasury, up to a total value of $0.2 million.
intends to put
learning
through experience rather
The Board remains confident in the Group’s long term
growth potential and is encouraged by the ongoing
evolution of the market as training moves increasingly
toward
than
through manuals. The Board believes SimiGon is ideally
positioned to capitalise on the significant market
its comprehensive offering of
opportunity through
providing end-users with a
training
complete
environment on a single, integrated platform.
We increasingly see evidence of the market moving
toward a full solution, across defense, commercial and
consumer applications, and as this happens, the more
differentiated SimiGon’s solution becomes.
On behalf of the Board, I would like to thank all
employees whose commitment, expertise and passion
for the business is what continues to drive us forward,
and to our shareholders and customers for their
ongoing support. We have a strong platform in place
with industry-leading technology, an exciting market
opportunity and a clear pipeline of new opportunities,
which leaves me confident in the Group’s ability to
deliver growth over the long term.
Alistair Rae
Chairman
Chief Executive’s Review
to
“Company
secure
continues
significant new contracts while
its end markets and
diversifying
reaching
increasing
an
audience”.
ever
Amos Vizer, President & CEO
SimiGon continues to cement its position as a prime
contractor for major long term simulation programmes,
which is reflected by our success in securing a number
of significant new contracts during the year. We also
continued to deliver project milestones for long term
contracts, underpinning our strategic position as a
technology partner to our customers.
Looking ahead, the transition to high value, long term
contracts is continuing and whilst this may impact
revenue performance in the short term, the expected
improvement in long term revenue and profit visibility
provides a much stronger footing for the Company.
7
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
We are confident that the previously announced
contract delays will be concluded in the near future and
the associated revenue and profit is expected to be
additional to current expectations for the financial
years 2017 and 2018.
The Board looks to the future with optimism and is
confident in the Company’s ability to deliver growth
over the long term.
This core market remained robust during the year with
two major contracts awarded. The Company has also
identified new opportunities such as crane operators,
consumer drivers and civil aviation
in the mass
commercial and consumer application market which
the Board believes provides the Company with a huge
expanded market opportunity to pursue as a result of
the fundamental shift in training through experience
rather than through manuals.
Overview
While the Company’s financial performance for year
2016 has been affected by circumstances that were
outside of its control the underlying business remains
profitable and continues to perform well with new
business won and growing recurring revenues from
existing strategic partners. The pipeline of new business
in the Company’s core military, aviation and non-
military verticals remains strong and the Board is
encouraged by new opportunities identified in the mass
application market.
For the year SimiGon recorded a net profit of $0.36
million (2015: $1.78 million) and revenue of $6.02
million
(2015: $6.94 million). The Company has
concluded that it must recognize in FY 2016 certain
costs of meeting additional client demands outside the
original scope of a major $6.7 million contract (as
announced in June 2013). In addition, the Company has
in
also been disappointed that procedural delays
concluding the signatory processes underlying
its
contract with the Israeli Air Force (as announced on 20
June 2016) have not enabled it to recognize any related
revenues during the year. Research and development
expenses increased from $1.47 million in 2015 to $1.71
million
the Company’s
commitment and focus on ongoing R&D to ensure
future success.
in 2016 which
reflects
SimiGon is a technology and services provider for large
simulation training programs to governments and
private sector organizations.
The Company’s core end market is defense-related
industries as well as vertical markets such as civilian
applications for pilot training, maintenance training and
soft skills training.
supplier
The Board is confident that the fundamentals of the
business remain strong and our business in the past
year has further strengthened our position as a
preferred
training
technologies and solutions. The pipeline of business is
encouraging and this, combined with a growing market
opportunity and contracts scheduled to complete in the
current financial year, leaves the Board confident in the
long term prospects of the Company.
simulation and
for
Operational Review
SimiGon undertakes to win and develop strategic,
simulation-based training programs. The Company's
partners
chip
and
government
organizations as well as small businesses.
include
blue
SimiGon is altering the Modelling, Simulation & Training
world landscape with SIMbox technologies. The highly
agile SIMbox platform can be used to create simulation
content of any type and for any purpose. With the user
simulation content
friendly SIMbox Toolkit
development, SimiGon is focused on enabling non-
programmers to rapidly create simulation content.
for
Markets
Core markets: military, aviation, targeted
commercial verticals
The Company’s core end market is defence-related
industries as well as vertical markets such as civilian
applications for pilot training, maintenance training and
soft skills training. These targeted core markets share
similar characteristics in that they are highly regulated,
require complex and specialised skill training and have a
zero margin for error. The Company has been successful
in broadening out its core offering from the military
application to tangential targeted verticals, including
civil aviation.
8
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
Every program the Company is involved at is a growth
opportunity in that specific market while also adding
new capabilities that are easily transferable to vertical
markets, including civil aviation training and industrial
training and serves long term growth potential. While
SimiGon has a strong position as a technology provider
of choice for large military aviation training programs,
the Company
is very excited about the many
opportunities in its core market.
SimiGon’s proven credentials in this market space as a
strategic
simulation
technologies pave the way for a leading role in
additional military flight training programmes.
supplier of
training
and
New mass consumer application market
The Company has been at the forefront of designing
and providing highly technical simulation and training
solutions in markets to increase learning efficiencies,
reduce risk and save costs for its clients, where there is
absolutely no margin for error. The fact that the
Company has contracts with bodies such as the US Air
Force and the Israeli Air Force is testament to the
quality of the solutions that it provides.
The Company believes that, as a result and through its
high levels of IP and the experience gained over the
last years, it is well placed to benefit from a cultural
shift in how training is delivered in a diverse range of
industries, solving a wide array of problems that
eventually reduce risk and save costs.
providing
Where online video is so readily accessible, written
instruction manuals
and
functionality guides are fast becoming obsolete. The
trend towards ‘learning by doing’ simulation is growing
at pace with consumers demanding visual and
interactive problem solving.
usability
it
SimiGon’s technology positions
ideally to take
advantage of this trend and currently provides the
end-users with the compressive training environment
solution needed. Whilst the company’s offering in this
market is at a nascent stage, the Board believes it has
the potential to offer a significant new, highly
profitable revenue stream.
Business model:
SimiGon's strategy, in line with market requirements,
is to focus on long-term, high value, stable license
contracts that provide better revenue and profit
visibility as a result of distributing over the period in
which they are provided rather than on single lump
sum license sales.
Growth Strategy
The Company’s organic growth strategy is focused on
strategic customers and growing
winning new
engagement within the existing customer base.
SimiGon’s ability to capture market share is due to its
ongoing participation in large scale simulation and
training projects. This strong track record enables the
Company to increase its strategic business scope and
potential revenue streams. The Company's strategy is
to compete as a prime contractor when feasible and as
a subcontractor if the business analysis determines a
higher win probability as a subcontractor.
When participating on a team as a technology provider
and services subcontractor, the Company provides
partners with significant added value as a training
technologies developer and solution provider.
its major
SimiGon has been delivering on all of
contracts during 2016 and it continues to increase its
visibility
in the market and awareness of new
opportunities as a prime contractor and strategic
partner. The Company leverages direct relationships
with end users and partners. As the business and
sound reputation grow, SimiGon will be better
disposed to contend for larger contracts.
The Company is committed to R&D to ensure its
products and services remain at the forefront of the
evolving training / education landscape. A continuous
innovative solutions enables the
rollout of new,
Company to deepen its relationship with existing
clients and capture new customers.
9
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
Contracts overview:
New contract wins
Delivery of a major contract as prime
contractor
In June 2013, The Company announced that it had
signed a contract valued at $6.7 million for a major
training programme. This was a milestone contract for
in terms of the geographic region, the
SimiGon
programme scope and the contract value.
Delivery under this contract has continued during 2016
although on a slower timetable than expected as a
result of the client requesting SimiGon to provide a
number of deliverables outside of the original contract
scope. As part of SimiGon’s drive to support all its
clients, the Company has been prepared to agree to
these new demands and has been meeting the delivery
milestones during year 2016. The Company now
expects to complete all system delivery milestones and
receive the requisite client confirmations within the
first half of year 2017.
Expansion into the civil aviation market
In May 2016, SimiGon signed an exclusive five-and-a-
half-year contract to deliver SIMbox based training
solutions to a leading provider of training solutions for
the civilian aviation industries in the Far East. Under
the terms of the contract, SimiGon will be paid $7.9
million to license its SIMbox software over the contract
period, with a minimum of $1.4 million per year
starting this year.
This contract is part of SimiGon's strategy to focus on
long-term, high value, stable license contracts that
provide better revenue and profit visibility rather than
on single lump sum license sales. In addition, this is
another major contract outside of the defence industry
which further expands the Company's growth strategy
to diversify
its
its product offering and
addressable market. The contract underlines SimiGon's
ability to penetrate a much larger market and can be a
stepping stone to securing additional business in the
civilian aviation industry through similar opportunities.
increase
SimiGon announced in June 2016 a Contract Winning
Notice for a $2 million contract from the Israeli Air
Force ("IAF") to provide advanced F-16 maintenance
trainers to be delivered within a period of 18 months
once the expected contract is signed.
training
By adding a new solution for virtual maintenance
training to its product offering, SimiGon will be able to
build upon its past performance to succeed in a
growing market of virtual
for aircraft
technicians. The same technology, training aids and
methodology of delivering advanced training for
aircrew
leveraged for maintenance staff
training, saving organizations considerable time and
money with a single training technology backbone.
This comprehensive solution is already being marketed
worldwide and will contribute to the Company’s
market share.
is now
lessons
The contract deliverables include SimiGon's SIMbox
enterprise training system and interactive Simulation
for F-16 maintenance
Based Training
technicians. The client-server system will support 60
trainees annually. Each trainee will have a personal
workstation allowing them to learn avionics and front
line maintenance with the support of a Virtual
Instructor (VI) for a self-paced syllabus in a fully
immersive, virtual environment. This solution further
demonstrates the flexibility and extensibility of SIMbox
as a suitable training solution for virtually any domain,
including maintenance. This agreement is the latest in
a long line of SimiGon contracts for providing its
products and services to leading military organizations
worldwide. The Contract Winning Notice underscores
SimiGon's successful entry
into the maintenance
training market and opens the door to compete for
and win similar opportunities in the future.
During year 2016 SimiGon has been awarded an
additional contract valued of $0.4 million from its
strategic European aircraft manufacturer customer,
which mainly includes the delivery of licenses as part
of simulation based training of the client installed at
academic training centers.
10
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
Long term contracts
The Company has an increasing portfolio of long term
partnerships developing further business and provide
revenue visibility. Many of these partnerships are
expected to continue with additional contracts through
2017 and beyond.
SimiGon continues in its support for the UK Military
Flying Training System (UKMFTS) as a technology and
services provider to Lockheed Martin. The Company
continues to deliver under this long term contract, now
in its seventh year of support, exceeding partner and
end user expectations of SimiGon’s technologies and
performance.
Check-6 Inc., one of the leading providers of training
solutions to the energy and mining industries, is a
textbook example of SimiGon’s ability
to help
companies achieve new growth. Throughout this
contract, SimiGon has successfully executed against its
agreed deliverables. This relationship continues to
yield long term business. The Company is optimistic
that additional agreements will be executed to extend
this relationship.
The USAF maintenance and support contract awarded
to SimiGon for the SIMbox based T-6A Modular
Training Devices SimiGon delivered as part of a June
2011 contract demonstrates the long term nature of
the relationship with this strategic customer. SimiGon
continues in its efforts to support this customer and
expand this relationship.
SimiGon continues to support a major existing
European customer the Company has been supplying
with software and services since 2009. The customer is
operating SimiGon training solutions in four different
training centers daily and is receiving very positive
customer reviews. SimiGon
is certain that this
relationship will continue and lead to additional future
orders.
SimiGon’s support for successful Unmanned Aerial
Vehicle (“UAV”) training solutions for a
leading
in the small tactical unmanned aircraft
provider
systems remains solid.
11
Through SimiGon's ecosystem, the SIMbox technology
supports
training and advanced
operational training at the schoolhouse. SimiGon
continues to leverage this success in the UAV market.
initial operator
Annual dividend declaration
In light of the strong cash position and further to the
Company’s previously declared intention to pay an
annual dividend, the Board intends to pay a dividend
of 0.136 cents per share, equating to approximately
19% of the Company’s earnings per share (2015:
approximately 15%) and to approximately 19% of the
Company's net profit (2015: approximately 17.2%). The
dividend will be payable on Friday 26 May 2017. The
record date for payment of the dividend will be Friday
5 May 2017. The ex-dividend date will be Thursday 4
May 2017.
In line with the Israeli tax ordinance and regulations,
the dividend payment will be subject to 25%
withholding at source unless reduced by a relevant tax
treaty.
In
tax
this regard, shareholders, who have a
withholding exemption or reduced withholding tax
rate from dividend payments obtained from by Israeli
Tax Authorities, should present and deliver it to the
Company, together with the contact details of their
stock broker, no later than the end of the business day
on Wednesday 3 May 2017.
Share buy-back programme
to put
Given the significant liquid cash balance of $8.14
million and subject to shareholder approval, the Board
intends
irrevocable, non-
in place an
discretionary programme for the repurchase of its
ordinary shares up to a total value of $0.2 million. It is
intended that the repurchase programme will be
the
independently managed by
Company’s nominated adviser and broker, which will
make trading decisions independently and without the
influence of the Company.
finnCap
Ltd,
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
Any ordinary shares repurchased on behalf of the
Company will be held in treasury and will be notified to
a Regulatory Information Service in accordance with
the AIM Rules
for Companies. The repurchase
last until full repurchase of the
programme will
Company’s Ordinary Shares and will be conducted
within pre-set parameters and in accordance with the
authority that will be granted by the Company’s
shareholders
Further
repurchase
announcements in relation to the implementation of
the
share buy-back programme and obtaining
shareholder approval will be made in due course.
shares.
to
Financial Performance
Revenue for the year ended 31 December 2016 was
$6.02 million, compared to $6.94 million in 2015. In
terms of regional breakdown, 44% of SimiGon’s
revenues came from North America (2015: 56%), 19%
from Europe, Middle East, South America and Australia
(2015: 27%) and 37% from the Far East (2015: 17%).
Gross profit for the year ended 31 December 2016 was
$4.1 million, as compared to $5.4 million for the year
ended 31 December 2015. Accordingly, gross margins
decreased to 69% for the year ended 31 December
2016 as compared to 78% for the year ended 31
December 2015. Net profit for the fiscal year of $0.36
million (2015: profit of $1.78 million).
Total operating expenses for the year ended 31
December 2016 increased by 4% to $3.91 million as
compared to $3.77 million for the year ended 31
December 2015. Research and development expenses
for year ended 31 December 2016 increased by 16% to
$1.71 million as compared to $1.47 million for the year
ended 31 December 2015, mainly due to increase
salary expenses. Marketing expenses for the year
ended 31 December 2016 decreased by 12% to $1.09
million as compared to $1.25 million for the year
ended 31 December 2015 mainly due salary expenses.
General and administration expenses for the year
ended 31 December 2016 increased by 6% to $1.11
million as compared to $1.05 million the year ended 31
December 2015 mainly to the collection in year 2015
of debts for which provisions for doubtful debts were
recorded
in the prior period and provisions for
doubtful debts recorded in year 2016.
The Company has recorded a net income tax credit of
$0.07 million for the year ended 31 December 2016
mainly as a result of creating a deferred tax asset in
relation to the expected utilization of carry forward
losses against expected income in future years.
As a consequence of the factors above, operating
profit for the year ended 31 December 2016 amounted
to $0.22 million, as compared to $1.64 million for the
year ended 31 December 2015.
Net basic and diluted earnings per share decreased to
$0.01 for the year ended 31 December 2016 as
compared to $0.04 for the year ended 31 December
2015.
As at 31 December 2016 the Company had liquid cash
of $8.14 million as compared to $7.41 million as at 31
December 2015 and trade receivables of $2.92 million
compared to $3.72 million for the year ended 31
December 2015. $1.01 million of the year end trade
receivables balance has been collected since the year
end.
Outlook
SimiGon continues to be profitable through focusing
on its strategic milestones and delivering against them.
The Company’s goal of being a prime contractor and
technology provider for major, long term simulation
is being achieved and the
training programmes
Company continues to secure significant new contracts
while diversifying its end markets and reaching an ever
increasing audience.
The transition towards high value long term license
contracts is expected to continue. Though this may
lead to lower revenue from these contracts in the
short term, it is expected to give SimiGon much greater
visibility over both revenue and profits in the long
term.
The Board of Directors is confident in its aim to
successfully deliver long term growth.
Amos Vizer
President & CEO
12
DISPLAYING PERSONAL COMMITMENT TO
ORGANIZATIONAL SUCCESS
Board of Directors
Alistair Rae, Non-Executive Chairman
Alistair is currently chief executive of
LTG Technologies Plc, an AIM traded
company, having been
a non-
executive director from 2002 to 2005.
He was the group finance director of
Jarvis Plc from 2004 to 2005, guiding
the company through a period of reconstruction. Prior
to this he was a director in the corporate finance
department of HSBC Investment Bank from 1996 to
2002, and before that he worked in corporate finance at
Cazenove for ten years in the UK and the Far East.
Alistair qualified as a chartered accountant with KPMG.
storage
applications.
Amos Vizer, President & CEO
founding SimiGon, Amos
Prior to
software
founded
a
Logi-Cali,
in
development house specializing
data
He
previously served as marketing and
business development manager of
ISYS Operational Management Systems, an international
IT company. Amos also previously worked for the
missiles division of RAFAEL Armament Development
Authority Ltd. Additionally, he served ten years in the
Israeli Air Force (IAF) as an F-4 Phantom Fighter
navigator, a flight school course commander, and a
Popeye missile weapons officer. With extensive training
in advanced software development, Amos holds a BA in
business administration.
its
in
financial
Efraim Manea, CFO
Mr. Manea joined the Company as its
June 2008,
finance controller
managing
aspects
reporting,
financial
including
corporation
tax
and
accounting
preparation, budget and forecasting
and risk management. He has more than seven years of
accounting and management experience and before
joining SimiGon served for approximately four years as
an Audit Team Manager at Ernst & Young's High-
Technology sector. Mr Manea is a Certified Public
Accountant and holds a BA in Accounting and Business
Administration from the College for Management in
Israel.
Eitan Cohen, Non-Executive Director
Eitan Cohen is a Co-Founder and Chief
Executive Officer of ASIC Depot OOD
an EDA and Semiconductor design
centre. Eitan previously held positions
as CEO and Country manager
for
Semiconductor and EDA companies, in
to the
of multi-million
which
he led
dollardeals with
tier-one companies and managed
business development activities with potential partners
worldwide.
award
Pappo,
Independent Non-
Ran
Executive Director
Mr. Ran Poppo has 25 years of business
experience while delivering results
worldwide. Mr. Pappo
is the Chief
Executive Officer of Diva Hirschthal Ltd.
in
large organization engaged
a
designing, manufacturing and world wild selling of high
quality swimwear. Mr. Pappo also serves as a director in
JS Group Srl, supervising its financial activities while
reviewing its manuals and goals. Mr Pappo is a strategic
consultant focusing on organizational workflows, financial
forecasting, budgeting, auditing, human
resources
optimization, production planning and marketing. Mr
Pappo has an extensive financial knowledge including
budgeting, managing and auditing financial statements
for national Organizations. Mr. Pappo holds a BS in
International
Business Administration, Finance and
Marketing, from the College for Management in Israel.
Independent
Deborah M. Bitman,
Non-Executive Director
Mrs. Deborah M. Bitman has extensive
experience on school
improvement
committees and other school activities
and programs. Mrs. Bitman works with
address
various
curriculum standards and needs. Working as a director at
the Jewish Academy of Orlando, she has great experience
in school policy guidance, budget review, future plans,
and creating and managing educational curriculum. Mrs.
Deborah M. Bitman holds a Bachelor in English from the
University of Michigan in Ann Arbor and a Masters in
Elementary Education
in
from
Bloomington.
Indiana University
educators
to
13
DISPLAYING PERSONAL COMMITMENT TO
ORGANIZATIONAL SUCCESS (CONT.)
Management
Amos Vizer, President & CEO
Prior to founding SimiGon, Amos founded
Logi-Cali, a software development house
specializing in data storage applications. He
previously served as marketing and business
development manager of ISYS Operational
Management Systems, an international IT
company. Amos also previously worked for the missiles
division of RAFAEL Armament Development Authority Ltd.
Additionally, he served ten years in the Israeli Air Force (IAF)
as an F-4 Phantom Fighter navigator, a flight school course
commander, and a Popeye missile weapons officer. With
extensive training in advanced software development, Amos
holds a BA in business administration.
in
aspects
June 2008, managing
including
Efraim Manea, CFO
Mr Manea joined the Company as its finance
its
controller
financial
financial
reporting, corporation accounting and tax
preparation, budget and forecasting and risk
management. He has more than seven years
of accounting and management experience and before joining
SimiGon served for approximately four years as an Audit
Team Manager at Ernst & Young's High-Technology sector.
Mr Manea is a Certified Public Accountant and holds a BA in
Accounting and Business Administration from the College for
Management in Israel.
Roger Torres - Director, Programs
Mr Torres joined SimiGon’s Programs team in
2011. He has over 14 years of management
primarily with Aerospace,
experience,
Department
and
of Defense
Courseware Development programs. Prior to
program management Mr. Torres was a pilot,
and flew charter, corporate, and commercial operations
world-wide. He holds several certificates and ratings from the
aviation industry, including Flight Instructor, Flight Engineer,
and Airline Transport Pilot. Mr. Torres has a Bachelor in
Vocational Education and a Master’s in Aeronautical Science.
(DoD),
Hagai Pichovich - VP, R&D
Mr Pichovich
joined the company as a
software developer for the LMS team in 2006
and since then carried out various roles such
as team lead and Director of R&D. He has an
extensive experience with large scale project
architecture and deep knowledge with
SimBox based solutions and internals. Picho has over 15 years
of experience with software development using various
technologies and methodologies, and holds a bachelor degree
in computer science.
14
Alon Shavit, VP Business Development
Before joining SimiGon, Alon served 15
years in the Israeli Air Force (IAF), having
flown F-16s for the past 20 years. He was
an instructor in the Operational Training
Unit (OTU) on A-4s for two years and a
commander of the F-16 OTU for 18
months. His last role in the IAF was managing the planning,
coordination, synchronization, and monitoring of the
training program. Alon holds an MBA and bachelor’s degrees
in economics and psychology.
Koby Ben Yakar, VP Product
Koby, has a distinguished record as an
experienced manager with extensive
technical skills and knowledge. Mr. Ben
Yakar has led a wide range of projects with
cross-functional teams, including serving
as SimiGon’s Information Technology team
the architecture, design and
leader and overseeing
development of the SIMbox LCMS Server infrastructure. Mr.
Ben Yakar has over 10 years of experience in large training
and simulation technologies enterprise projects with a
technical
proven ability
relationships for large-scale projects.
to manage business and
and
training,
Jeff Annis, VP Sales & Marketing
Mr Annis, joined SimiGon in 2011 and has
a career in the Sales & Marketing of
simulation,
software
development technology, primarily in the
Aerospace/Defense
Automotive
sectors. Before joining SimiGon he held
Director positions at Adacel Systems, Advanced Rotorcraft
Technology, and Engenuity Technologies each specializing in
high-tech, advanced pilot training software systems. Prior to
this Mr. Annis founded American Data-Pro, a company
specializing in the development of database and network
systems. Mr. Annis has a Bachelor degree in Management
and Marketing from Troy University in Alabama.
and
joined
SimiGon
Merav Nahmani, Director of Human
Resources
Ms. Nachmani,
in
November 2005 and has been managing
SimiGon’s HR Department since July 2009.
Ms. Nachmani has more than ten years of
experience in financial aspects including
payroll controlling, accounts payable, accounts receivable ,
cash flow and tax reporting. Before joining SimiGon Ms.
Nachmani served as a bookkeeping & salary controller in
several High-Technology companies. Ms. Nachmani has a
Bookkeeping & Salary controller diploma.
FINANCIALS
Consolidated Financial Statements of SimiGon Ltd.
and Its Subsidiaries as of December 31, 2016
(U.S. Dollars in Thousands)
INDEX
Corporate Governance
Report on Directors Remuneration
Directors Report
Independent Auditors' Report
Consolidated Statement of Financial Position
Consolidated Statements of Comprehensive Income
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Share Information, Advisers, Contact Information
PAGE
16
17
18 – 19
20
21 - 22
23 - 24
25
26 - 27
28 – 71
72
15
CORPORATE GOVERNANCE FOR THE PERIOD ENDED 31 DECEMBER 2016
Introduction
SimiGon Ltd. commenced trading on the AIM Market operated by the London Stock Exchange on 2 November 2006.
Although the rules of AIM do not require the Company to comply with the Combined Code on corporate governance
(“the Code”) published by the Financial Reporting Council, the Company fully supports the principles set out in the
Code and will attempt to comply with them wherever appropriate, given the Company’s size, the constitution of the
Board and the resources available to the Company. Details are provided below of how the Company applies those
parts of the Code, which it believes to be appropriate.
Directors
The Board comprises two executive Directors, two Non- Executive Directors and two independent Non-Executive
Directors nominated by the majority shareholders of the Company. The Board generally meets a minimum five times a
year and receives a Board pack comprising a report from senior management together with any other material
deemed necessary for the Board to discharge its duties. It is the Board’s responsibility for formulating, reviewing and
approving the Group’s strategy, budgets, major items of expenditure and acquisitions.
Audit Committee
The audit committee consists of Eitan Cohen, Dr. Vered Shany and Nevat Simon and meets at least twice a year. The
role of the audit committee is to review the management and systems of internal control of the company, including in
consultation with the internal auditor and the company’s independent auditor and to recommend any remedial
action. In addition, the approval of the audit committee is required to effect certain related-party transactions.
Remuneration Committee
The remuneration committee consists of Alistair Rae, Dr. Vered Shany and Nevat Simon. The Remuneration
Committee has a primary responsibility to review the performance of the Company’s executive directors and the
senior employees and to recommend their remuneration and other terms of employment.
Shareholder Relations
The Company meets with its shareholders and analysts periodically to encourage communication with shareholders.
In addition, the Company intends to facilitate communication with shareholders through the annual report and
accounts, interim statement, press releases as required during the ordinary course of business and the Company
website (www.simigon.com).
Going Concern
The directors have satisfied themselves that the Company has adequate resources to continue in operational
existence for the foreseeable future, and for this reason the financial statements are prepared on a going concern
basis.
Internal Control
The Board is responsible for the system of internal control and for reviewing its effectiveness. Such systems are
designed to manage rather than eliminate risks and can provide only reasonable and not absolute assurance against
material misstatement or loss. Each year, on behalf of the Board, the audit committee reviews the effectiveness of
these systems. This is achieved primarily by considering risks potentially affecting the Group and from discussions with
the external auditors. Each year, the Group is subject to internal audit, the results of which are presented to the audit
committee.
A comprehensive budgeting process is completed once a year and is reviewed and approved by the Board. The
Group’s results, as compared against budget, are reported to the Board on a quarterly basis and discussed in detail at
each meeting of the Board. The Group maintains appropriate insurance cover in respect of any legal actions against
the Directors as well as against material loss or claims against the Group and reviews the adequacy of the cover
regularly. To comply with AIM rules, the Company has adopted a code for dealings in its shares by directors and
employees.
16
REPORT ON DIRECTORS REMUNERATION
Remuneration Policy
The remuneration packages for non-executive directors are based principally on annual salaries. The remuneration
packages for independent non-executive directors are based on an annual fixed fee and till October 2009 were
including payment for each Board or Board committee meeting attended. The remuneration packages for executives
are based on annual salaries and benefits.
Executive
Ami Vizer *
Efraim Manea **
Non-Executive
Alistair Rae
Eitan Cohen
Nevat Simon ***)
Dr. Vered Shany ***)
Mr. Ran Pappo
Dr. Vered Shany
Total
Total 2016
$
410,635
141,140
46,807
26,400
-
-
26,400
26,400
677,782
Total 2015
$
410,697
123,689
53,348
26,400
26,400
26,400
-
-
666,934
* Year 2016 does not include $59,651 paid in respect of vacation days, additional $28,721 paid in respect of
severance allocation transfer, additional $35,145 paid in respect to health insurance, annual bonus of $62,500
paid in respect to year 2015 performance and annual bonus provision of $36,762 in respect to year 2016
performance.
Year 2015 does not include $19,583 paid in respect of vacation days, additional $28,721 paid in respect of
severance allocation transfer, additional $35,144 paid in respect to health insurance, annual bonus of $79,609
paid in respect to year 2014 performance and annual bonus provision of $62,500 in respect to year 2015
performance.
** Year 2016 does not include annual bonus of $16,121 paid in respect to year 2015 performance and annual
bonus provision of $ 9,551 in respect to year 2016.
Year 2015 does not include annual bonus of $20,470 paid in respect to year 2014 performance and annual
bonus provision of $ 16,121 in respect to year 2015.
*** On December 30, 2015 Mr. Ran Pappo and Mrs. Deborah M Bitman were appointed as an independent external,
replacing Mr. Nevat Simon and Dr. Vered Shany, respectively.
Please see the Directors Report below for details of options and shares granted to directors.
17
DIRECTORS REPORT
The directors submit their report and the financial statements of the Group for the period ended 31 December 2016.
Incorporation and Admission onto the AIM Market
The Company was incorporated on 1 October 1998. On November 2006 the Company commenced trading on AIM and
issued 6,076,811 new Ordinary Shares of NIS 0.01 at price of £0.88 per share. The number of Ordinary Shares issued
immediately following the admission were 37,250,666.
Shares
As of December 31, 2016 the total numbers of Ordinary Shares Issued were 51,394,189.
Share Options
As of 31 December 2016, the outstanding balance of options granted to certain employees of SimiGon is
approximately 1.8 percent of the Company’s issued and outstanding shares at an average exercise price of $0.37. The
majority of the options vest in four years from the date of grant. The options expire in ten years from the date of
grant.
Review of Business and Future Developments
The business review is given within the Chief Executive Officer’s statement.
Dividends
Further to the Company’s previously declared intention to pay an annual dividend, the following dividend has been
distributed to its shareholders:
On 11 April 2017 the Company announced an annual dividend distribution of 0.136 cents per share for a total
issued and outstanding shares of 51,394,189, equating to approximately 19% of the Company’s earnings per
share and to approximately 19% of the Company's net profit for year 2016.
On 27 May 2016 an annual dividend of 0.6 cents per share for a total issued and outstanding shares of
50,993,154, equating to approximately 15% of the Company’s earnings per share and to approximately 17% of
the Company's net profit for year 2015 has been paid to the Company’s shareholders with respect to year 2015.
On 29 May 2015 an annual dividend of 0.6 cents per share for a total issued and outstanding shares of
50,079,690, equating to approximately 20% of the Company’s earnings per share and to approximately 22% of
the Company's net profit for year 2014 has been paid to the Company’s shareholders with respect to year 2014.
On 30 May 2014 an annual dividend of 0.543 cents per share for a total issued and outstanding shares of
47,292,706, equating to approximately 27% of the Company’s earnings per share and to approximately 30% of
the Company's net profit for year 2013 has been paid to the Company’s shareholders with respect to year 2013.
Suppliers Payment Policy
The Group does not operate a standard code in respect of payment to suppliers. It has due regard to the payment
terms of suppliers and generally settles all undisputed accounts within 60 days of the date of invoice, except where
different arrangements have been arranged with suppliers.
18
DIRECTORS REPORT (CONT.)
Directors
The following directors have held office during the year:
Mr. Amos Vizer has been an executive director of the Company since 4 November 1998.
Mr. Efraim Manea was appointed as an executive director on July 30, 2010.
Mr. Alistair Rae, appointed as a director and Chairman of the Board on 27 October 2006.
Mr. Eitan Cohen was appointed a non-executive director on June 3, 2008.
Mr. Ran Pappo, appointed as an independent director on December 30, 2015.
Mrs. Deborah M Bitman, appointed as an independent director on December 30, 2015.
Directors Interest in Shares and Share Options
The interest of directors in the issued share capital of the company at 31, December 2016 were as follows.
Directors
Alistair Rae
Eitan Cohen
Ami Vizer
Efraim Manea
Number of Ordinary
Shares Capital
227,249
97,000
11,365,489
284,346
Percentage of
Ordinary shares
0.40
0.19
22.11
0.55
Shares to be
issued
-
-
125,338 *)
32,564 *)
Options
-
-
50,000
50,000
*) The Company’s board of directors approved that 2016 annual bonuses to Mr. Ami Vizer, and to Mr. Efraim Manea
of $27,254 and $7,080 respectively, that have already been approved at the Company’s board meeting dated April
16, 2016 in accordance to the Company’s Director’s & Officer’s Compensation Policy, will be granted in Ordinary
Shares of the Company calculated based on the closing price on the day of announcement of the Company's
financial results for 2016 instead of being payable in cash. The grant of bonuses in Ordinary Shares of the Company
will also be subject to the approval of the Company’s shareholders.
Substantial Shareholdings
At 31, December 2016 the Company was informed of the following interests of 3% or more in its ordinary shares
issued at that date:
Shareholder
A. Vizer Holdings A. Vizer
Jeffrey Braun
Herald Investment Management Limited
Axxion S.A.
Green Venture Capital Ltd.
G. Poran Holding Ltd
Shroder Euroclear Nominees Limited
Number Of Ordinary Shares
11,365,489
6,543,039
5,050,000
3,500,000
3,067,848
2,273,444
1,711,070
Percentage of issued
21.83%
12.51%
9.66%
6.69%
5.87%
4.35%
3.27%
Auditors
Kost Forer Gabbay & Kasierer
A member of Ernst & Young Global
3 Aminadav St.
Tel Aviv 67067, Israel
19
Kost Forer Gabbay & Kasierer
3 Aminadav St.
Tel-Aviv 6706703, Israel
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
SIMIGON LTD.
We have audited the accompanying consolidated financial statements of SimiGon Ltd. and its subsidiaries
("the Group"), which comprise the consolidated statements of financial position as of December 31, 2016
and 2015, and the consolidated statements of comprehensive income, changes in equity and cash flows for
each of the years ended December 31, 2016, 2015 and 2014, and the related notes to the consolidated
financial statements, which, as described in Note 2 to the consolidated financial statements, have been
prepared on the basis of International Financial Reporting Standards as adopted by the European Union.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards as adopted by the European
Union; this includes the design, implementation, and maintenance of internal control relevant to the
preparation and fair presentation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's
preparation and fair presentation of the consolidated financial statements in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,
the consolidated financial position of the Group as of December 31, 2016 and 2015, and the results of its
operations and its cash flows for the each of the years ended December 31, 2016, 2015 and 2014 in
accordance with International Financial Reporting Standards as adopted by the European Union.
April 6, 2017
Tel-Aviv, Israel
KOST FORER GABBAY & KASIERER
A Member of Ernst & Young Global
20
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
SIMIGON LTD.
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Short-term bank deposit
Short-term investments
Trade receivables, net
Other accounts receivable and prepaid expenses
Total current assets
NON-CURRENT ASSETS:
Restricted cash
Long-term prepaid expenses
Deferred tax
Property, plant and equipment
Goodwill and intangible asset
Total non-current assets
Total assets
December 31,
2016
2015
Note
U.S. dollars in thousands
3
4
5
12
6
7
5,221
1,005
1,913
2,919
61
5,545
-
1,867
3,715
59
11,119
11,186
374
39
223
111
1,072
1,819
374
12
159
82
1,122
1,749
12,938
12,935
The accompanying notes are an integral part of the consolidated financial statements.
21
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
SIMIGON LTD.
EQUITY AND LIABILITIES
CURRENT LIABILITIES:
Trade payables
Deferred revenues
Other accounts payable and accrued expenses
Total current liabilities
NON-CURRENT LIABILITIES:
Long-term deferred revenues
Employee benefit liabilities
Other non-current liabilities
Total non-current liabilities
Total liabilities
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF
THE COMPANY:
Share capital
Additional paid-in capital
Accumulated deficit
Total equity attributable to equity holders of the Company
December 31,
2016
2015
Note
U.S. dollars in thousands
8
9
13a
10
98
558
684
123
574
875
1,340
1,572
38
222
732
992
-
192
722
914
2,332
2,486
125
16,629
(6,144)
10,610
124
16,526
(6,201)
10,449
Non-controlling interests
(4)
-
Total equity
10,606
10,449
Total liabilities and equity
12,938
12,935
The accompanying notes are an integral part of the consolidated financial statements.
April 6, 2017
Date of approval of the
financial statements
Alistair Rae
Non-Executive Chairman
of the Board of Directors
Ami Vizer
Chief Executive Officer
and Director
Efraim Manea
Chief Financial Officer
and Director
22
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SIMIGON LTD.
Revenues
Cost of revenues
Gross profit
Operating expenses:
Research and development
Selling and marketing
General and administrative
Total operating expenses
Operating profit
Finance income
Finance expenses
Income before income taxes
Income tax benefit
Net income
Note
15
14a
14b
14c
14d
14e
14f
12
Year ended
December 31,
2015
U.S. dollars in thousands
(except share and per share amounts)
2016
2014
6,018
1,882
4,136
1,714
1,092
1,107
3,913
223
172
103
292
69
361
6,935
1,534
5,401
1,472
1,245
1,048
3,765
1,636
74
82
1,628
154
1,782
8,316
1,989
6,327
2,381
1,458
1,181
5,020
1,307
178
127
1,358
-
1,358
The accompanying notes are an integral part of the consolidated financial statements.
23
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SIMIGON LTD.
Year ended
December 31,
2015
U.S. dollars in thousands
(except share and per share amounts)
2016
2014
Note
Net income
361
1,782
1,358
Other comprehensive income not to be
reclassified to profit or loss in subsequent
periods:
Remeasurement gain (loss) from defined benefit
plan
(2)
4
6
Total comprehensive income
359
1,786
1,364
Net income (loss) attributable to:
Equity holders of the Company
Non-controlling interests
Total comprehensive income (loss) attributable
to:
Equity holders of the Company
Non-controlling interests
365
(4)
1,786
-
1,358
-
361
1,782
1,358
363
(4)
1,786
-
1,364
-
359
1,786
1,364
Net basic and diluted earnings per share
attributable to equity holders of the Company
in U.S. dollars
Weighted average number of shares used in
computing basic earnings per share (in
thousands)
Weighted average number of shares used in
computing diluted earnings per share (in
thousands)
0.01
0.04
0.03
16
51,097
50,683
48,854
16
51,319
50,818
49,085
The accompanying notes are an integral part of the consolidated financial statements.
24
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Attributable to equity holders of the Company
Additional
paid-in
capital
Accumulated
deficit
Share
capital
Number
of shares
SIMIGON LTD.
Total
Non-
controlling
interests
Total
equity
U .S. dollars in thousands (except share amounts)
Balance as of December 31, 2013
47,292,706
113
16,248
(8,782)
7,579
Total comprehensive income
Dividend distribution
Share-based compensation
Exercise of stock options (Note
10a2 till 10a6)
-
-
-
2,786,984
-
-
-
8
-
-
90
12
1,364
(269)
-
1,364
(269)
90
-
20
Balance as of December 31, 2014
50,079,690
121
16,350
(7,687)
8,784
Total comprehensive income
Dividend distribution
Share-based compensation
Share issuance (Note 10 a7)
Exercise of stock options (Note
10a2 and 10a8 till 10a9)
-
-
285,000
628,464
-
-
1
2
-
65
107
4
1,786
(300)
-
-
1,786
(300)
65
108
-
6
-
-
-
-
-
-
-
-
-
-
-
7,579
1,364
(269)
90
20
8,784
1,786
(300)
65
108
6
Balance as of December 31, 2015
50,993,154
124
16,526
(6,201)
10,449
-
10,449
Total comprehensive income
Dividend distribution
Share-based compensation
Share issuance (Note 10 a7)
Exercise of stock options (Note
10a2)
-
-
-
100,000
301,035
-
-
-
*) -
1
-
-
65
38
-
363
(306)
-
-
363
(306)
65
38
-
1
(4)
-
-
-
-
359
(306)
65
38
1
Balance as of December 31, 2016
51,394,189
125
16,629
(6,144)
10,610
(4)
10,606
*)
Represents an amount lower than $ 1 thousand.
The accompanying notes are an integral part of the consolidated financial statements.
25
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIMIGON LTD.
Cash flows from operating activities:
Net income
361
1,782
1,358
Year ended
December 31,
2015
U.S. dollars in thousands
2014
2016
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Adjustments to the profit or loss items:
Depreciation and amortization
Deferred tax
Finance income, net
Share-based compensation
Change in employee benefit liabilities, net
Changes in asset and liability items:
Decrease (increase) in trade receivables
Decrease in other accounts receivable and prepaid
expenses (including long-term)
Increase (decrease) in trade payables
Increase (decrease) in deferred revenues
Increase (decrease) in other accounts payable and accrued
expenses
87
(64)
(71)
65
28
796
18
(25)
22
(167)
88
(159)
(34)
65
19
(3,209)
11
(30)
(351)
99
101
-
(9)
90
6
(257)
28
10
(293)
53
689
(3,501)
(271)
Net cash provided by (used in) operating activities
1,050
(1,719)
1,087
The accompanying notes are an integral part of the consolidated financial statements.
- 26 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIMIGON LTD.
Cash flows from investing activities:
Decrease (increase) in short-term investments
Decrease in restricted cash
Decrease (increase) in short-term bank deposits
Increase in long-term deposits
Purchase of fixed assets
Year ended
December 31,
2015
U.S. dollars in thousands
2014
2016
-
-
(1,001)
(26)
(66)
1,086
-
-
(2)
(16)
(2,943)
30
511
-
(39)
Net cash provided by (used in) investing activities
(1,093)
1,068
(2,441)
Cash flows from financing activities:
Proceeds from share issuance
Exercise of stock options
Dividend distribution
Repayment of refundable grants
Net cash used in financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
*) -
-
(306)
25
(281)
(324)
5,545
1
5
(300)
-
(294)
(945)
6,490
-
13
(269)
-
(256)
(1,610)
8,100
Cash and cash equivalents at end of year
5,221
5,545
6,490
(a)
Supplemental disclosure of non-cash financing
activities:
Receivable in respect of issuance of shares
Issuance of shares in respect of 2014 annual bonus to
directors and employees
1
38
2
107
7
-
*)
Represents an amount lower than $ 1 thousand.
The accompanying notes are an integral part of the consolidated financial statements.
- 27 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1:- GENERAL
SIMIGON LTD.
a.
b.
The Company commenced its operations on October 1, 1998, and is engaged in
developing advanced learning, training and simulation technologies and applications for
use in professional communities. The Company's registered office is in Herzlia, Israel.
The Company has two wholly-owned subsidiaries in the United States, SimiGon Inc. and
National Simulation Services Inc., which are engaged in the marketing of the Company's
products in the United States, and a wholly-owned subsidiary in Singapore, SimiGon Pte
Ltd., which is engaged in the marketing of the Company's products in the Far East and a
70% holding in a subsidiary located in Colombia for the purpose of marketing the
Company’s products in South America.
c.
The Company's shares are traded on the Alternative Investment Market ("the AIM") on
the London Stock Exchange.
d.
Definitions:
In these financial statements:
The Company
- SimiGon Ltd.
The Group
- SimiGon Ltd. and its subsidiaries.
Subsidiaries
- Companies that are controlled by the Company, as defined in IFRS
10.
Related parties
- As defined in IAS 24.
Dollar/$
- U.S. dollar
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been applied consistently in the financial statements for
all periods presented, unless otherwise stated.
a.
Basis of preparation of the financial statements:
These financial statements have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union ("IFRS as adopted by the EU").
b.
Functional currency, presentation currency and foreign currency:
The consolidated financial statements are presented in U.S. dollars, which is the
Company's functional currency. Each entity in the Group determines its own functional
currency and items included in the financial statements of each entity are measured using
that functional currency.
The functional currency of the subsidiaries is the U.S. dollar.
- 28 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Transactions, assets and liabilities in foreign currency:
SIMIGON LTD.
Transactions denominated in foreign currency (other than the functional currency) are
recorded on initial recognition at the exchange rate at the date of the transaction. After
initial recognition, monetary assets and liabilities denominated in foreign currency are
translated at the end of each reporting period into the functional currency at the exchange
rate at that date. Exchange differences, other than those capitalized to qualifying assets or
recorded in equity in hedging transactions, are recognized in profit or loss. Non-monetary
assets and liabilities measured at cost in a foreign currency are translated at the exchange
rate at the date of the transaction. Non-monetary assets and liabilities denominated in
foreign currency and measured at fair value are translated into the functional currency
using the exchange rate prevailing at the date when the fair value was determined.
c.
Consolidated financial statements:
The consolidated financial statements comprise the financial statements of companies that
are controlled by the Company (subsidiaries). 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 of the subsidiaries are prepared as of the
same dates and periods. The consolidated financial statements are prepared using uniform
accounting policies by all companies in the Group. Significant intragroup balances and
transactions and gains or losses resulting from intragroup transactions are eliminated in
full in the consolidated financial statements.
Non-controlling interests in subsidiaries represent the equity in subsidiaries not
attributable, directly or indirectly, to a parent. Non-controlling interests are presented in
equity separately from the equity attributable to the equity holders of the Company. Profit
or loss and components of other comprehensive income are attributed to the Company
and to non-controlling interests. Losses are attributed to non-controlling interests even if
they result in a negative balance of non-controlling interests in the consolidated statement
of financial position.
d.
Cash equivalents:
Cash equivalents are considered as highly liquid investments, including unrestricted
short-term bank deposits with an original maturity of three months or less from the date
of acquisition.
- 29 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
e.
Short-term deposits:
SIMIGON LTD.
Short-term bank deposits are deposits with an original maturity of more than three months
from the date of acquisition. The deposits are presented according to their terms of
deposit.
f.
Allowance for doubtful accounts:
The allowance for doubtful accounts is determined in respect of specific debts whose
collection, in the opinion of the Company's management, is doubtful.
The Company did not recognize an allowance in respect of groups of trade receivables
that are collectively assessed for impairment due to immateriality. Impaired receivables
are derecognized when they are assessed as uncollectible.
g.
Financial instruments:
1.
Financial assets:
Financial assets within the scope of IAS 39 are initially recognized at fair value
plus directly attributable transaction costs, except for financial assets measured at
fair value through profit or loss in respect of which transaction costs are recorded
in profit or loss.
After initial recognition, the accounting treatment of investments in financial assets
is based on their classification into one of the following categories:
financial assets at fair value through profit or loss;
loans and receivables.
a)
Financial assets at fair value through profit or loss:
This category includes financial assets held for trading (short-term
investments in mutual funds).
b)
Loans and Receivables:
Loans and receivables are investments with fixed or determinable payments
that are not quoted in an active market.
After initial recognition, loans are measured based on their terms at
amortized cost less directly attributable transaction costs using the effective
interest method and less any impairment losses. Short-term receivables (such
as trade and other receivables) are measured based on their terms, normally
at face value.
- 30 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
2.
Financial liabilities:
SIMIGON LTD.
Financial liabilities are initially recognized at fair value. After initial recognition,
loans and other liabilities are measured at amortized cost based on their terms net
of directly attributable transaction costs using the effective interest method.
A financial liability is derecognized when it is extinguished, that is when the
obligation is discharged or cancelled or expires. A financial liability is extinguished
when the debtor (the Group):
discharges the liability by paying in cash, other financial assets, goods or
services; or
is legally released from the liability.
i.
Leases:
The criteria for classifying leases as finance or operating leases depend on the substance
of the agreements and are made at the inception of the lease in accordance with the
following principles as set out in IAS 17.
The Group as lessee:
Operating leases:
Lease agreements are classified as an operating lease if they do not transfer substantially
all the risks and benefits incidental to ownership of the leased asset. Lease payments are
recognized as an expense in profit or loss on a straight-line basis over the lease term.
j.
Property, plant and equipment:
Property, plant and equipment are measured at cost, including directly attributable costs,
less accumulated depreciation, accumulated impairment losses and any related investment
grants and excluding day-to-day servicing expenses.
Depreciation is calculated on a straight-line basis over the useful life of the assets at
annual rates as follows:
Computers and peripheral equipment
Office furniture and equipment
Leasehold improvements
%
33
7 - 15 (mainly 15%)
Over the term of the lease or the
expected life, whichever is shorter
The useful life, depreciation method and residual value of an asset are reviewed at least
each year-end and any changes are accounted for prospectively as a change in accounting
estimate.
- 31 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
Depreciation of an asset ceases at the earlier of the date that the asset is classified as held
for sale and the date that the asset is derecognized. An asset is derecognized on disposal
or when no further economic benefits are expected from its use. The gain or loss arising
from the derecognizing of the asset (determined as the difference between the net disposal
proceeds and the carrying amount in the financial statements) is included in profit or loss
when the asset is derecognized.
k.
Intangible assets:
Intangible assets (Technology) acquired in a business combination are included at fair
value at the acquisition date. After initial recognition, intangible assets are carried at their
cost less any accumulated amortization and any accumulated impairment losses.
According to management's assessment, intangible assets have a finite useful life. The
assets are amortized over their useful life using the straight-line method and reviewed for
impairment whenever there is an indication that the asset may be impaired. The
amortization period and the amortization method for an intangible asset are reviewed at
least at each financial year end. Changes in the expected useful life or the expected
pattern of consumption of future economic benefits embodied in the asset are accounted
for prospectively as changes in accounting estimates. The amortization of intangible
assets is recognized in the profit or loss.
The useful life of the Technology is 10 years.
l.
Research and development:
Research and development costs are charged to profit or loss as incurred as development
costs do not meet the criteria for recognition as an intangible asset.
m.
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 recognized in profit or loss.
The following criteria are applied in assessing impairment of these specific assets:
- 32 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Goodwill in respect of business combination:
SIMIGON LTD.
For the purpose of impairment testing, goodwill acquired in a business combination is
allocated, at the acquisition date, to each of the Group's cash-generating units that is
expected to benefit from the synergies of the combination.
The Company reviews goodwill for impairment once a year as of December 31 or more
frequently if events or changes in circumstances indicate that there is impairment.
Goodwill is tested for impairment by assessing the recoverable amount of the cash-
generating unit (or group of cash-generating units) to which the goodwill has been
allocated. An impairment loss is recognized if the recoverable amount of the cash-
generating unit (or group of cash-generating units) to which goodwill has been allocated
is less than the carrying amount of the cash-generating unit (or group of cash-generating
units). Any impairment loss is allocated first to goodwill. Impairment losses recognized
for goodwill cannot be reversed in subsequent periods.
n.
Government grants:
Government grants are recognized where there is reasonable assurance that the grant will
be received and the Company will comply with the attached conditions.
Government grants received from the Office of the Chief Scientist ("OCS") and the Korea
Israel Industrial R&D Foundation as support for research and development projects which
grants include an obligation to pay royalties that are conditional on future sales arising
from the project, are recognized upon receipt as a liability if future economic benefits are
expected from the project that will result in royalty-bearing sales. If no such economic
benefits are expected, the grants are recognized as a reduction of the related research and
development expenses. In that event, the royalty obligation is treated as contingent
liability in accordance with IAS 37.
At the end of each reporting period, the Company evaluates, based on its best estimate of
future sales, whether there is reasonable assurance that the liability recognized, in whole
or in part, will not be repaid (since the Company will not be required to pay royalties). If
there is such reasonable assurance, the appropriate amount of the liability is derecognized
and recorded in profit or loss as a reduction of research and development expenses. If the
estimate of future sales indicates that there is no such reasonable assurance, the
appropriate amount of the liability that reflects expected future royalty payments is
recognized with a corresponding adjustment to research and development expenses.
- 33 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
Grants received after January 1, 2009, which are recognized as a liability, are accounted
for as forgivable loans, in accordance with IAS 20 (Revised), pursuant to the provisions
of IAS 39, "Financial Instruments: Recognition and Measurement". Accordingly, when
the liability for the loan is first recognized, it is measured at fair value using a discount
rate that reflects a market rate of interest. The difference between the amount of the
grants received and the fair value of the liability is accounted for upon recognition of the
liability as a government grant and recognized as a reduction of research and
development expenses.
After initial recognition, the liability is measured at amortized cost using the effective
interest method. Changes in the projected cash flows are discounted using the original
effective interest and recorded in profit or loss in accordance with the provisions of IAS
39.AG8.
Royalty payments are treated as a reduction of the liability.
o.
Revenue recognition:
Revenues are recognized in profit or loss when the revenues can be measured reliably, it
is probable that the economic benefits associated with the transaction will flow to the
Company and the costs incurred or to be incurred in respect of the transaction can be
measured reliably. When the Company acts as a principal and is exposed to the risks
associated with the transaction, revenues are presented on a gross basis. Revenues are
measured at the fair value of the consideration less any trade discounts.
The Company generates revenues mainly from licensing the software products and sales
of software licenses that require significant customization. The Company also generates
revenues from maintenance, support and training.
Revenues from software licensing that requires significant customization are recognized
by reference to the stage of completion of the transaction at the end of the reporting
period. When the outcome of the transaction cannot be estimated reliably, revenues are
recognized only to the extent of the costs recognized that are recoverable. A provision for
estimated losses on uncompleted contracts is recorded in the period in which such losses
are first identified. As of December 31, 2016 and 2015, no provision for such losses has
been identified.
Maintenance and support revenue included in multiple element arrangements is deferred
and recognized on a straight-line basis over the term of the maintenance and support
agreement. The fair value of the undelivered elements (maintenance and support services)
is determined based on the price charged for the undelivered element when sold
separately.
Deferred revenue includes unearned amounts received under maintenance and support
contracts, and amounts received from customers but not recognized as revenues.
- 34 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Revenues from software arrangements:
SIMIGON LTD.
Software arrangements contain multiple elements (software, integration, installation,
upgrades, support, training, consultation etc.). The Company evaluates the arrangement's
elements, including those delivered on a "when and if available basis", in order to
determine if the elements can be separately identified.
The Company recognizes revenues from the sale of software only after the significant
risks and rewards of ownership of the software have been transferred to the buyer for
which a necessary, but not sufficient condition, is delivery of the software, either
physically or electronically, or providing the right to use or permission to make copies, of
the software. The Company recognizes revenues from providing software related services
when the outcome can be measured reliably by reference to the stage of completion of the
transaction at the end of the reporting period.
If the services consist of a number of activities that are not defined over a specified period
of time, revenues are recognized on a straight-line basis over the specified period, unless
there is evidence that some other method better represents the stage of completion.
p.
Earnings per share:
Earnings per share are calculated by dividing the net income attributable to equity holders
of the Company by the weighted number of Ordinary shares outstanding during the
period. Basic earnings per share only include shares that were actually outstanding during
the period. Potential Ordinary shares are only included in the computation of diluted
earnings per share when their conversion decreases earnings per share or increases loss
per share from continuing operations. Further, potential Ordinary shares that are
converted during the period are included in diluted earnings per share only until the
conversion date and from that date in basic earnings per share. The Company's share of
earnings of investees is included based on the earnings per share of the investees
multiplied by the number of shares held by the Company.
q.
Provisions:
A provision in accordance with IAS 37 is recognized when the Company has a present
(legal or constructive) obligation as a result of a past event and it is probable that an
outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the amount of the obligation.
If the effect is material, provisions are measured according to the estimated future cash
flows discounted using a pre-tax interest rate that reflects the market assessments of the
time value of money and, where appropriate, those risks specific to the liability.
- 35 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
r.
Employee benefits:
SIMIGON LTD.
The Company's liability for severance pay pursuant to the Israel's Severance Pay Law (for
those who elected not to be fully included under section 14 of the Severance Pay Law,
1963) is based on the last monthly salary of the employee multiplied by the number of
years of employment, as of the date of severance.
The cost of providing severance pay is determined using an independent actuary.
Remeasurements, comprising of actuarial gains and losses, are recognized immediately in
the statement of financial position with a corresponding debit or credit to other
comprehensive income in the period in which they occur. Remeasurements are not
reclassified to profit or loss in subsequent periods.
Pursuant to Section 14 of the Severance Pay Law, which covers 75% of most of the
employees' severance pay, monthly deposits with insurance companies release the
Company from any future severance obligations in respect of those employees (defined
contribution). Deposits under Section 14 are recorded as an expense in the Company's
statements of comprehensive income.
s.
Fair value of financial instruments:
The carrying amounts of cash and cash equivalents, short-term deposits, short-term
investments, trade receivables, restricted cash, other accounts receivable, trade payables
and other accounts payable approximate their fair value due to the short-term maturity
and high probability of repayment of such instruments.
t.
Share-based payment transactions:
The Company applies the provisions of IFRS 2, "Share-Based Payment". IFRS 2 requires
an expense to be recognized where the Company buys goods or services in exchange for
shares or rights over shares ("equity-settled transactions"), or in exchange for other assets
equivalent in value to a given number of shares of rights over shares ("cash-settled
transactions"). The main impact of IFRS 2 on the Company is the expensing of
employees' and directors' share options (equity-settled transactions).
The Company's employees/other service providers are entitled to remuneration in the
form of equity-settled share-based payment transactions.
The cost of equity-settled transactions with employees is measured at the fair value of the
equity instruments granted at grant date. The fair value is determined using an acceptable
option pricing model.
As for other service providers, the cost of the transactions is measured at the fair value of
the goods or services received as consideration for equity instruments. In cases where the
fair value of the goods or services received as consideration of equity instruments cannot
be measured, they are measured by reference to the fair value of the equity instruments
granted .
- 36 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
The cost of equity-settled transactions is recognized in profit or loss, together with a
corresponding increase in equity, during the period which the performance and/or service
conditions are to be satisfied, ending on the date on which the relevant employees become
fully entitled to the award ("the vesting period"). The cumulative expense recognized for
equity-settled transactions at the end of each reporting period until the vesting date
reflects the extent to which the vesting period has expired and the Group's best estimate
of the number of equity instruments that will ultimately vest. The expense or income
recognized in profit or loss represents the change between the cumulative expense
recognized at the end of the reporting period and the cumulative expense recognized at
the end of the previous reporting period.
No expense is recognized for awards that do not ultimately vest, except for awards where
vesting is conditional upon a market condition, which are treated as vesting irrespective
of whether the market condition is satisfied, provided that all other vesting conditions
(service and/or performance) are satisfied.
u.
Finance income and expenses:
Finance income includes interest income on amounts invested, government grants and
exchange rate gains.
Finance expenses comprise interest expense on bank loan, government grants, fees and
exchange rate losses.
v.
Significant accounting judgments, estimates and assumptions used in the preparation of
the financial statements.
In the process of applying the significant accounting policies, the Group has made the
following judgments which have a significant effect on the amounts recognized in the
financial statements:
1.
Judgments:
-
Determining the fair value of share-based payment transactions:
The fair value of share-based payment transactions is determined upon initial
recognition by an acceptable option pricing model. The inputs to the model
include share price and exercise price and judgments regarding expected
volatility, expected life of share option and expected dividend yield.
- 37 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
2.
Estimates and assumptions:
SIMIGON LTD.
The preparation of the financial statements requires management to make estimates
and assumptions that have an effect on the application of the accounting policies
and on the reported amounts of assets, liabilities, revenues and expenses. These
estimates and underlying assumptions are reviewed regularly. Changes in
accounting estimates are reported in the period of the change in estimate.
The key assumptions made in the financial statements concerning uncertainties at
the end of the reporting period and the critical estimates computed by the Group
that may result in a material adjustment to the carrying amounts of assets and
liabilities within the next financial year are discussed below.
-
Chief Scientist grants:
Government grants received from the Office of the Chief Scientist at the
Ministry of Industry, Trade and Labor are recognized as a liability if future
economic benefits are expected from the research and development activity
that will result in royalty-bearing sales. There is uncertainty regarding the
estimated future cash flows and the estimated discount rate used to measure
the amount of the liability. As for the accounting treatment of grants
received from the OCS, see also Note 13.
-
Deferred tax assets:
Deferred tax assets are recognized for unused carryforward tax losses and
deductible temporary differences to the extent that it is probable that taxable
profit will be available against which the losses can be utilized. Significant
management judgment is required to determine the amount of deferred tax
assets that can be recognized, based upon the timing and level of future
taxable profits, its source and the tax planning strategy.
w.
Taxes on income:
Current or deferred taxes are recognized in profit or loss, except to the extent that they
relate to items which are recognized in other comprehensive income or equity.
1.
Current taxes:
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.
2.
Deferred taxes:
Deferred taxes are computed in respect of temporary differences between the
carrying amounts in the financial statements and the amounts attributed for tax
purposes.
- 38 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
Deferred taxes are measured at the tax rate that is expected to apply when the asset
is realized or the liability is settled, based on tax laws that have been enacted or
substantively enacted by the reporting date.
Deferred tax assets are reviewed at each reporting date and reduced to the extent
that it is not probable that they will be utilized. Temporary differences for which
deferred tax assets had not been recognized are reviewed at each reporting date and
a respective deferred tax asset is recognized to the extent that their utilization is
probable.
Taxes that would apply in the event of the disposal of investments in investees
have not been taken into account in computing deferred taxes, as long as the
disposal of the investments in investees is not probable in the foreseeable future.
Also, deferred taxes that would apply in the event of distribution of earnings by
investees as dividends have not been taken into account in computing deferred
taxes, since the distribution of dividends does not involve an additional tax liability
or since it is the Company's policy not to initiate distribution of dividends from a
subsidiary that would trigger an additional tax liability.
Deferred taxes are offset if there is a legally enforceable right to offset a current tax
asset against a current tax liability and the deferred taxes relate to the same
taxpayer and the same taxation authority.
x.
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 ("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".
The 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.
- 39 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
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:
Recognize 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
January 1, 2018. Early adoption is permitted. 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 evaluating the possible impact of IFRS 15 but is presently unable
to assess its effect, if any, on the financial statements.
IFRS 9, "Financial Instruments"
In July 2014, the IASB issued the final and complete version of IFRS 9, "Financial
Instruments" ("IFRS 9"), which replaces IAS 39, "Financial Instruments:
Recognition and Measurement". IFRS 9 mainly focuses on the classification and
measurement of financial assets and it applies to all assets in the scope of IAS 39.
According to IFRS 9, all financial assets are measured at fair value upon initial
recognition. In subsequent periods, debt instruments are measured at amortized
cost only if certain conditions are met. Subsequent measurement of all other debt
instruments and financial assets should be at fair value.
According to IFRS 9, the provisions of IAS 39 will continue to apply to
derecognizing and to financial liabilities for which the fair value option has not
been elected. IFRS 9 also prescribes new hedge accounting requirements.
IFRS 9 is to be applied for annual periods beginning on January 1, 2018. Early
adoption is permitted.
The Company is evaluating the possible impact of IFRS 9 but is presently unable to
assess its effect, if any, on the financial statements.
Amendments to IAS 7, "Statement of Cash Flows", regarding additional disclosures of
financial liabilities:
In January 2016, the IASB issued amendments to IAS 7, "Statement of Cash
Flows", ("the amendments") which require additional disclosures regarding
financial liabilities. The amendments require disclosure of the changes between the
opening balance and the closing balance of financial liabilities, including changes
from cash flows, changes arising from obtaining or losing control of subsidiaries,
the effect of changes in foreign exchange rates and changes in fair value.
- 40 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
The amendments are effective for annual periods beginning on or after January 1,
2017. Comparative information for periods prior to the effective date of the
amendments is not required. Early application is permitted.
The Company will include the necessary disclosures in the financial statements
when applicable.
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 recognize 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 recognize a lease liability for the obligation
to make lease payments and a corresponding right-of-use asset. Lessees will
also recognize interest and depreciation expenses separately.
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 January 1,
2019. Earlier application is permitted provided that IFRS 15 is applied
concurrently.
The Company believes that the new Standard is not expected to have a material
impact on the financial statements.
- 41 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3:- SHORT-TERM INVESTMENTS
SIMIGON LTD.
December 31,
2016
2015
U.S. dollars in thousands
Financial assets classified as held for trading at fair value
through profit or loss- Mutual Funds *)
1,913
1,867
*) Short-term investments in mutual funds are considered as highly liquid low risk
investments.
NOTE 4: - TRADE RECEIVABLES
Trade receivables (1)
December 31,
2016
2015
U.S. dollars in thousands
2,919
3,715
(1) Net of allowance for doubtful debts
259
224
Trade receivables are non-interest bearing and are generally on 30 - 90 days' terms.
The aging analysis of trade receivables is as follows:
Neither past
due nor
impaired
Past due but not impaired
< 30
days
30 - 60
days
60 - 90
day
U.S. dollars in thousands
2016
2015
2,279
3,579
297
72
-
-
-
> 90
days
343
64
Total
2,919
3,715
NOTE 5:- RESTRICTED CASH
a.
b.
c.
As part of a $ 6.7 million contract signed in May 2013 in which the Company was
selected as a prime contractor to deliver a SIMbox based training solution, on June 10,
2013 the Company issued a Performance Bond in favor of its customer in a total amount
of $ 335 thousand prior to contract deliveries and receiving payments from the client. The
expiration date of the Performance Bond has been extended to October 30, 2018.
To operate an ongoing business bank account, the Company is obligated to secure a
deposit in the amount of $ 15 thousand in favor of the bank.
As part of its premises lease agreement, the Company is obligated to secure a deposit in
the amount of $ 24 thousand in favor of the landlord.
- 42 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6:- PROPERTY, PLANT AND EQUIPMENT
Composition and movement:
SIMIGON LTD.
Cost:
Balance as of January 1, 2015
Disposal during the year
Acquisitions during the year
Balance as of December 31, 2015
Disposal during the year
Acquisitions during the year
Balance as of December 31, 2016
Accumulated depreciation:
Balance as of January 1, 2015
Disposal during the year
Depreciation during the year
Balance as of December 31, 2015
Disposal during the year
Depreciation during the year
Balance as of December 31, 2016
Depreciated cost as of December 31, 2016
Depreciated cost as of December 31, 2015
Computers
and
peripheral
equipment
Office
furniture
and
equipment
Leasehold
improvements
Total
U.S. dollars in thousands
747
(10)
8
745
(4)
29
770
705
(10)
24
719
(4)
27
742
28
26
204
-
8
212
-
1
213
145
-
13
158
-
4
162
51
54
55
-
-
55
-
36
91
53
-
-
53
-
6
59
32
2
1,006
(10)
16
1,012
(4)
66
1,074
903
(10)
37
930
(4)
37
963
111
82
NOTE 7:- GOODWILL AND INTANGIBLE ASSET
Technology **)
Goodwill *)
Total
Carrying amount as of
December 31,
2016
2015
U.S. dollars in thousands
4
1,068
1,072
54
1,068
1,122
*)
As the activities of Visual Training Solution Group (“VTSG”) have been fully integrated
into those of the Company, the goodwill arising in the acquisition of VTSG is evaluated
for impairment purposes as part of the cash generating unit representing the Company. As
of December 31, 2016, the recoverable amount determined using the fair value of the
Company, based on the market price of its shares, exceeded significantly the carrying
amount of the Company's net assets (equity), and therefore, no provision for impairment
was recorded.
- 43 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 7:- GOODWILL AND INTANGIBLE ASSET (Cont.)
SIMIGON LTD.
**) During the years ended December 31, 2016, 2015 and 2014, the Company recorded
amortization in the amount of $ 50 thousand, $ 51 thousand and $ 50 thousand,
respectively, which was recorded in cost of revenues.
NOTE 8:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Employees and payroll accruals
Accrued expenses
NOTE 9:- EMPLOYEE BENEFIT LIABILITIES, NET
a.
Post-employment benefits:
December 31,
2016
2015
U.S. dollars in thousands
373
311
684
554
321
875
According to the labor laws and Severance Pay Law in Israel, the Company is required to
pay compensation to an employee upon dismissal or retirement or to make current
contributions in defined contribution plans pursuant to Section 14 to the Severance Pay
Law, as specified below.
The Company's liability is accounted for as a post-employment benefit. The computation
of the Company's employee benefit liability is made in accordance with a valid
employment contract based on the employee's salary and employment term which
establish the entitlement to receive the compensation.
Section 14 to the Severance Pay Law, 1963 applies to part of the compensation payments,
pursuant to which the fixed contributions paid by the Company into pension funds and/or
policies of insurance companies release the Company from any additional liability to
employees for whom said contributions were made. These contributions and contributions
for benefits represent defined contribution plans.
2016
Year ended December 31,
2015
U.S dollars in thousands
2014
Expenses in respect of defined
contribution plans
99
94
108
- 44 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9:- EMPLOYEE BENEFIT LIABILITIES, NET (Cont.)
b.
Amounts recognized in the statements of comprehensive income are as follows:
SIMIGON LTD.
Current service cost
Interest cost
Exchange rate
Total expense included in profit or loss
Year ended
December 31,
2015
U.S. dollars in thousands
2014
2016
47
8
3
58
46
7
(1)
52
50
7
(20)_
37
c.
Changes in the present value of defined benefit obligation:
Composition:
Balance at January 1
Interest cost
Exchange rate
Current service cost
Benefits paid
Remeasurement loss (gain)
Balance at December 31
d.
The actuarial assumptions used are as follows:
Year ended
December 31,
2015
U.S. dollars in thousands
2014
2016
192
8
3
47
(30)
2
222
178
7
(1)
46
(34)
(4)
192
177
7
(21)
50
(29)
(6)
178
Year ended
December 31,
2015
2014
2016
Discount rate
4.05%
4.13%
3.83%
Future salary increases
3.60%
3.55%
3.80%
Average expected remaining working
years
7.85
7.57
6.78
Year ended
December 31,
2016
2015
2014
U.S. in thousands
Remeasurement gain (loss) in respect of
defined benefit plan
(2)
4
6
- 45 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIMIGON LTD.
NOTE 10:- EQUITY
a.
Share issuance:
1. Further to the implementation of a one-year plan for salary reduction of 15% for the
Non-Executive Board members dated July 27, 2009, on April 12, 2012 the Company
issued a total of 72,000 and 47,727 Ordinary Shares to the Company's Non-Executive
Directors and to Non-Executive Chairman of the Board respectively in return for a
one year salary reduction.
On October 9, 2013 the Company issued a total of 72,000 and 47,727 Ordinary
Shares to the Company's Non-Executive Directors and to Non-Executive Chairman
of the Board respectively in return for a one year salary reduction.
2. On September 12, 2011, the Board of Directors approved the implementation of a
share bonus plan ("the Share Bonus Plan") for year 2011.
According to the Share Bonus Plan, the Bonus Compensation will be granted with an
equivalent value of Ordinary shares based on the quoted fair market price of the
shares as of September 12, 2011, which is equal to $ 0.0812 per Ordinary share ("the
Bonus Shares"). The Bonus Shares will vest upon receiving actual payment from the
customer under the relevant PO ("the Bonus Shares Vested Date").
The fair value, on date of grant equal to $ 0.08 per Ordinary Share.
Based on full vesting as of December 31, 2011, the Company's senior management
and other employees are entitled to a total of 2,889,379 Ordinary Shares and a total of
3,141,288 Options at an exercise price of NIS 0.01 per share of the Company, which
Ordinary Shares and Options were issued in 2012.
On April 12, 2012 the Company issued a total 2,055,838 Ordinary Shares and
3,141,288 Options at an exercise price of 0.01 NIS each ("Options") to its senior
management and other employees.
On October 11, 2012, a total of 833,541 Ordinary Shares of have been issued to
senior management and employees, including 516,921 Ordinary Shares to Mr. Ami
Vizer the Chief Executive Officer of the Company and also a Director of the
Company.
Further to the above, on April 30, 2014 a total of 1,712,429 options were exercised
under the Company's Stock Option Plan by senior management into SimiGon's
Ordinary Shares at an exercise price of NIS 0.01 each. Out of the shares issued,
1,497,674 and 37,582 Ordinary Shares were issued to the Company's CEO and CFO,
who are also Directors of the Company; respectively.
On November 11, 2014 a total of 527,554 options were exercised under the
Company's Stock Option Plan into SimiGon's Ordinary Shares at an exercise price of
NIS 0.01 each by the Company's CEO, who is also Director of the Company.
- 46 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
On April 27, 2015, a total of 600,270 options were exercised under the Company’s
Stock Option Plan by the Company’s CEO, Mr. Ami Vizer, who is also a Director of
the Company, into Ordinary shares at an exercise price of NIS 0.01 each.
On September 27, 2016, a total of 301,035 options were exercised under the
Company’s Stock Option Plan by the Company’s CEO, Mr. Ami Vizer, who is also a
Director of the Company, into Ordinary shares at an exercise price of NIS 0.01 each.
The Company recorded share-based compensation expenses of $ 46 thousand and
$ 65 thousand, in respect of the bonus compensation for year 2014 and 2013,
respectively.
3. On April 30, 2014 a total of 27,500 options were exercised under the Company's
Stock Option Plan by senior management into SimiGon's Ordinary Shares at an
exercise price of $ 0.08 each.
4. On April 30, 2014 a total of 454,000 options were exercised under the Company's
Stock Option Plan by senior management into SimiGon's Ordinary Shares at an
exercise price of NIS 0.01 each.
5. On May 20 2014, a total of 15,500 options were exercised under the Company's
Stock Option Plan by a former employee into SimiGon's Ordinary Shares of 0.01
NIS. Out of the options exercised, 8,000 Options and 7,500 Options were exercised at
an exercise price of $ 0.13 and $ 0.08 each; respectively.
6. On November 11 2014, a total of 50,001 options were exercised under the Company's
Stock Option Plan by a former employee into SimiGon's Ordinary Shares of 0.01
NIS. Out of the options exercised, 16,667 Options and 33,334 Options were exercised
at an exercise price of $ 0.25 and $ 0.14 each; respectively.
7. On February 26, 2015, the Company’s Board of directors approved the grant of an
annual bonus to key employees and Non-Executive Directors of $150 thousand in
recognition of their contribution to the Company's positive financial performance in
2014 and as part of the Company’s consistent approach to compensate its key
employees and Non-Executive Directors (excluding the Company’s CEO and CFO).
The bonus was to be granted in shares calculated based on the closing price on the
day of announcement of the Company's financial results for 2014. The bonus granted
to the Non-Executive Directors was subject to the approval of the Company’s
shareholders. A provision for this bonus was recorded in the 2014 annual financial
statements.
Further to the above, on May 21, 2015 the Company issued a total of 285,000
Ordinary shares to the key employees and Non-Executive Directors
On September 27, 2016 the Company issued a total of 100,000 Ordinary shares to the
Non-Executive Directors, in respect of the above bonus.
- 47 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
8. On January 21, 2015, a total of 3,194 options were exercised under the Company's
Stock Option Plan by a by a former employee at an average exercise price of $ 0.19.
9. On April 16, 2015, a total of 25,000 options were exercised under the Company's
Stock Option Plan by a by a former employee at an average exercise price of $ 0.12.
10. With respect to fiscal year 2016 and in accordance to the Company's Compensation
Policy Plan mentioned below, on April 16, 2016, the Company’s Board of directors
approved the grant of annual bonuses in the amount of up to $ 125 thousand and up to
NIS 125 thousand to Mr. Ami Vizer, the Company's Chief Executive Officer who is
also a Director of the Company and to Mr. Efraim Manea, a director of the Company
and its CFO; respectively. The granted bonuses are subject to revenues, net profit and
share price criteria and milestones.
On April 6, 2017 the Company’s board of directors approved that the bonuses were to
be granted in Ordinary Shares of the Company calculated based on the closing price
on the day of announcement of the Company's financial results for 2016 instead of
being payable in cash. The grant of bonuses in Ordinary Shares of the Company will
also be subject to the approval of the Company’s shareholders. A provision for this
bonus was recorded in the 2016 annual financial statements.
b.
Composition of share capital:
December 31,
2016, 2015
and 2014
Authorized
2016
December 31,
2015
Issued and outstanding
2014
Number of shares
Ordinary shares of
NIS 0.01 par value each
100,000,000
51,394,189 50,993,154 50,079,690
c.
Stock option plan:
In August 2000, the Company's Board of Directors authorized an incentive share option
plan ("the Option Plan") and has since granted options to purchase Ordinary shares to
employees and consultants. Under the Option Plan, options generally vest ratably over a
period of four years, commencing with the date of grant.
The exercise price of the options granted under the Option Plan may not be less than the
par value of the shares. The options generally expire no later than 10 years from the date
of the grant, and are non-transferable, except under the laws of succession. On November
2, 2010, the Company decided to increase its Option Plan reserves by 8,000,000 options
to accumulate a total of 17,500,000. As of December 31, 2016, an aggregate of 1,924,149
Ordinary shares of the Company are still available for future grant.
- 48 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
On January 31, 2012 the Board of Directors granted to the Company employees a total of
190,000 options to purchase Ordinary shares of the Company. Such options are granted in
accordance with the Company's Employees' Stock Option Plan (the "ISOP") and will vest
quarterly over a period of 4 years commencing from the grant date at an exercise price of
US$ 0.14.
On April 11, 2013 the Board of Directors granted to the Company employees a total of
155,000 options to purchase Ordinary shares of the Company. Such options were granted
in accordance with the Company's Employees' Stock Option Plan and will vest quarterly
over a period of 4 years commencing from the grant date at an exercise price of $ 0.33.
On May 30, 2013 the Board of Directors granted to the Company employees a total of
150,000 options to purchase Ordinary shares of the Company. Such options were granted
in accordance with the Company's Employees' Stock Option Plan and will vest quarterly
over a period of 4 years commencing from the grant date at an exercise price of $ 0.42.
On July 10, 2014 the Board of Directors approved a total grant of 237,000 options to
purchase Ordinary shares of the Company the SimiGon’s employees. Such options were
granted in accordance with the Company's Employees' Stock Option Plan and will vest
quarterly over a period of 4 years commencing from the grant date at an exercise price of
$ 0.43.
On November 13, 2014 the Board of Directors approved a total grant of 10,000 options to
purchase Ordinary shares of the Company the SimiGon’s employees. Such options were
granted in accordance with the Company's Employees' Stock Option Plan and will vest
quarterly over a period of 4 years commencing from the grant date at an exercise price of
$ 0.39.
On April 14, 2016 the Board of Directors approved a total grant of 40,000 options to
purchase Ordinary shares of the Company the SimiGon’s employees. Such options were
granted in accordance with the Company's Employees' Stock Option Plan and will vest
quarterly over a period of 4 years commencing from the grant date at an exercise price of
$ 0.24.
On November 24, 2013, the Company's Board of directors approved the extension of the
Israeli Share and Option Plan for 2003 for additional 10 years under the same terms and
conditions.
Further to the termination of the US Stock Option Plan from December 2006 (USOP
2006), on November 23, 2016, the Company's Board of directors approved the adoption
of a new US Share and Option Plan (USOP) which will be based on the same terms and
conditions of USOP 2006. The new USOP is subject to the approval of the Company’s
shareholders.
- 49 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
The fair value of share options is measured at the grant date using the Black-Scholes
option pricing model taking into account the terms and conditions upon which the options
were granted. The following are the inputs to the model used for the years ended
December 31, 2016 and 2014: risk-free interest rate ranging from 0.87% - 2.15%; a
dividend yield of 3%; expected volatility of 80% for years 2014 and 2016; and a weighted
average expected life of the options of 6.25 years. The weighted average fair values of the
options granted in 2016, 2014 and 2013 were $0.24, $ 0.43 and $ 0.38, respectively.
A summary of the activity in options to employees, consultants, and directors (including
the senior management, see d. below) for the years 2016, 2015 and 2014 is as follows:
2016
Year ended
December 31,
2015
2014
Number
of
options
Weighted
average
exercise
price
Number
of
options
Weighted
average
exercise
price
Weighted
average
exercise
price
Number
of options
$ 0.416
1,386,507
$ 0.241
35,000
(301,035)
$ 0.003
(25,000) $ 0.250
(187,639) $ 1.276
2,121,188 $ 0.297
- -
(628,464) $ 0.008
(22,050) $ 0.6
(84,167) $ 0.417
4,962,471
227,000
(2,786,984)
$ 0.134
$ 0.425
$ 0.007
(128,300) $ 0.6
(152,999) $ 0.214
Outstanding at
beginning of year
Granted
Exercised
Expired
Forfeited
Outstanding at end of
year
907,833
$ 0.372
1,386,507 $ 0.416
2,121,188
$ 0.297
Exercisable options
733,769
$ 0.307
958,585 $ 0.393
908,481
$ 0.409
The options outstanding as of December 31, 2016, have been separated into ranges of
exercise price as follows:
Exercise price
$ 0.002 - $ 0.25
$ 0.335 - $ 1.2
$ 1.33 - $ 2.5
Options
outstanding
as of
December 31,
2016
405,833
447,000
55,000
907,833
Weighted
average
remaining
contractual
life (years)
3.90
2.42
0.65
Options
exercisable
as of
December 31,
2016
375,833
323,936
25,000
733,769
- 50 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
d.
Options to the CEO and senior employees:
SIMIGON LTD.
1.
On January 27, 2010, the Board of Directors granted 1,249,000 options as follows:
a)
b)
c)
d)
e)
A total of 360,000 options were granted to the CEO at an exercise price of
NIS 0.01 per share.
A total of 312,000 options were granted to senior management at an exercise
price of NIS 0.01 per share.
A total of 132,000 options were granted to employees at an exercise price of
NIS 0.01 per share.
A total of 304,000 options were granted to employees at an exercise price of
$ 0.13 per share.
A total of 141,000 options were granted to the former CFO at an exercise
price of NIS 0.01 per share.
The options will vest in 3 tranches annually equal amounts commencing as of
January 1, 2010 and will be conditional upon the following:
a)
Employee being employed by the Company, and
b)
The EBITDA of the Company (on a consolidated basis) for the relevant
fiscal year (2011, 2012 and 2013) shall increase by more than 20%
compared to the previous year.
The 2011 EBITDA performance goal was not achieved therefore the first
tranche did not vest.
The 2012 and 2013 EBITDA performance goal was achieved.
Vesting will be fully accelerated in the event of any of the following:
a) Merger, acquisition or reorganization of the Company with one or more
other entities;
b)
A sale of all or substantially all of the assets or shares of the Company;
c)
An investment in the Company of at least $ 2 million.
As of December 31, 2013 a total of 552,233 options have been vested and the
Company recorded share-based compensation expenses in a total of $ 15 thousand,
$ 12 thousands and $ 6 thousands in respect to Mr. Ami Vizer, the Company's
Chief Executive Officer who is also a Director of the Company, to senior
management and to employees, respectively for the year 2013.
- 51 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
2.
3.
4.
Further to the above and to note 2a6, on April 30, 2014 a total of 454,000 options
were exercised under the Company's Stock Option Plan by senior management into
SimiGon's Ordinary Shares at an exercise price of NIS 0.01 each. Out of the shares
issued, 240,000 and 50,000 Ordinary Shares were issued to the Company's CEO
and CFO, who are also Directors of the Company; respectively
On June 29, 2011 the Company's Board of Directors approved. the extension in
terms of options granted to former senior employee according to which, options in
a total of 75,000 will be exercisable until June 10, 2012 only in case of a
Transaction (as defined in the Company's Share Option Plan). All other vested
options in a total of 85,400 will be exercisable until December 7, 2012 only in case
of a Transaction (as defined in the Company's Share Option Plan).
On November 28, 2011 the Annual General meeting of the Company's approved
the grant of 40,000 options to purchase ordinary shares of the Company to Mr.
Efraim Manea, a director of the Company and its CFO. Such options are granted to
Mr. Manea in accordance with the Company's Employees' Stock Option Plan (the
"ISOP") and in the same terms that similar options are granted to the employees of
the Company. The options will be vested over 36 months commencing September
2012 at an exercise price of US$ 0.08. The Vested Options are exercisable only in
an event of a Transaction as defined under the ISOP.
Further to note 10a2, (a) on April 12, 2012, the Company issued 2,926,533 and
182,541 Options to Mr. Ami Vizer, the Company's Chief Executive Officer who is
also a Director of the Company, and to senior management, respectively; (b) on
December 20, 2012 the Annual General meeting of the Company's approved the
grant of 37,582 options to purchase Ordinary Shares to Mr. Efraim Manea, a
director of the Company and its CFO and (c) as of December 31, 2014 and 2013,
the Company recorded share-based compensation expenses in a total of $ 46
thousand and $ 66 thousand in respect to the CEO, respectively.
On April 30, 2014 a total of 1,497,674 and 182,541 Options have been exercised
into Ordinary Shares of the Company by Mr. Ami Vizer and to senior
management, respectively;
On November 11, 2014 a total of 527,554 Options have been exercised into
Ordinary Shares of the Company by Mr. Ami Vizer
On April 27, 2015, a total of 600,270 Options have been exercised into Ordinary
Shares of the Company by Mr. Ami Vizer
On September 27, 2016, a total of 301,035 Options have been exercised into
Ordinary Shares of the Company by Mr. Ami Vizer
- 52 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10:- EQUITY (Cont.)
SIMIGON LTD.
5. On April 30, 2014 a total of 27,500 options were exercised under the Company's
Stock Option Plan by senior management into SimiGon's Ordinary Shares at an
exercise price of $ 0.08 each. Out of the shares issued, 7,500 Ordinary Shares were
issued to Mr. Efraim Manea the Company's Financial Officer who is also a
Director of the Company
e.
Shares to the CEO and senior employees:
Further to Note 10a2, (a) on April 12, 2012 the Company issued a total 1,972,233 and
66,291 Ordinary Shares to Mr. Ami Vizer the Company's Chief Executive Officer who is
also a Director of the Company and to senior management, respectively; (b) On October
11, 2012, a total of 516,921 and 309,711 Ordinary Shares each have been issued, to Mr.
Ami Vizer and to senior management, respectively; (c) On April 30, 2014 a total of
1,497,674 and 214,755 Ordinary Shares have been issued, to Mr. Ami Vizer and to senior
management, respectively; (d) On November 11, 2014 a total of 527,554 Ordinary Shares
have been issued, to Mr. Ami Vizer (e) (f) On April 27, 2015, a total of 600,270 Ordinary
Shares have been issued, to Mr. Ami Vizer and (h) On September 27, 2016, a total of
301,035 Ordinary Shares have been issued, to Mr. Ami Vizer.
For the years ended December 31, 2015 and 2014, the Company recorded share-based
compensation expenses in a total of $ 28 thousand and $ 46 thousand, in respect to the
shares granted to the CEO, respectively.
NOTE 11:- JOINT VENTURE
On March 30, 2014 SimiGon's subsidiary ("the Subsidiary") entered into a Joint Venture
agreement ("the Joint Venture") with a company based in China that will provide the Joint
Venture with aviation services. Under the terms of the Joint Venture agreement, the Subsidiary
will provide the SIMbox licenses enabling the Joint Venture to develop its own training
solutions. The Subsidiary will invest $ 30 thousand in the Joint Venture representing an interest
of 4% in its shares. As of the date of the approval of the financial statements as of December 31,
2016, the Joint Venture hasn’t started to operate, yet.
On April 20, 2016 SimiGon's subsidiary ("the Subsidiary") entered into an agreement with
Team Systems International LLC (TSI) in which both parties will establish a Joint Venture for
business cooperation (“the Agreement”). Under the term of the Agreement, the Subsidiary will
hold 49% of the Joint Venture while TSI will hold 51%. On February 22, 2017 the Joint
Venture was established under the name TSIM LLC.
- 53 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12:- INCOME TAXES
a.
Tax benefits under the Law for the Encouragement of Capital Investments, 1959:
SIMIGON LTD.
The Company has been granted an "Approved Enterprise" status for an original program
and an additional expansion program, ("the programs") under the Law for the
Encouragement of Capital Investments, 1959 ("the Law"). According to the provisions of
the Law, the Company has elected to enjoy the "alternative benefits track" - a waiver of
grants in return for tax benefits.
The "Approved Enterprise" status will allow the Company a tax benefit on undistributed
income derived from the "Approved Enterprise" program.
The income derived from this "Approved Enterprise" will be tax-exempt for a period of
two years, and may enjoy a reduced tax rate of 10% to 25% (based on percentage of
foreign ownership) for an additional five years. The seven-year period of benefits will
commence with the first year in which the Company earns taxable income.
The Company completed the implementation of its programs.
The period of tax benefits, detailed above, is subject to limits of the earlier of 12 years
from the commencement of production, or 14 years from receiving the approval. The
period of benefits has not yet commenced. The company expects to remain in the scope
of the preferred tax regime described above until the end of 2018.
The entitlement to the above benefits is conditional upon the Company's fulfilling the
conditions stipulated by the above Law, regulations published thereunder and the letters
of approval for the specific investments in "Approved Enterprises". In the event of failure
to comply with these conditions, the benefits may be canceled and the Company may be
required to refund the amount of the benefits, in whole or in part, including interest.
Should the Company derive income from sources other than the "Approved Enterprise"
during the period of benefits, such income shall be taxable at the regular corporate tax
rate.
If tax-exempt profits derived from "Approved Enterprise" are distributed to shareholders,
they would be taxed at the corporate tax rate applicable to such profits as if the Company
had not elected the alternative system of benefits, currently between 10%-25% for an
"Approved Enterprise".
An amendment to the Law, which became effective in 2005 ("the Amendment") changed
certain provisions of the Law. The change in the tax rate will have immaterial effects on
the Company.
As a result of the Amendment, a company is no longer obliged to implement an
"Approved Enterprise" status in order to receive the tax benefits previously available
under the alternative benefits provisions, and therefore there is no need to apply to the
Investment Center for this purpose (Approved Enterprise status remains mandatory for
companies seeking grants).
- 54 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12:- INCOME TAXES (Cont.)
SIMIGON LTD.
Rather, a company may claim the tax benefits offered by the Investment Law directly in
its tax returns, provided that its facilities meet the criteria for tax benefits set out by the
Amendment. A company is also granted a right to approach the Israeli Tax Authorities for
a pre-ruling regarding their eligibility for benefits under the Amendment.
Tax benefits are available under the Amendment to production facilities (or other eligible
facilities), which are generally required to derive more than 25% of the company's
business income from export. In order to receive the tax benefits, the Amendment states
that a company must make an investment in the benefited enterprise exceeding a
minimum amount specified in the Law. Such investment may be made over a period of
no more than three years ending at the end of the year in which the company requested to
have the tax benefits apply to the beneficiary enterprise ("the Year of Election").
Where a company requests to have the tax benefits apply to an expansion of existing
facilities, then only the expansion will be considered a benefited enterprise and the
company's effective tax rate will be the result of a weighted combination of the applicable
rates. In this case, the minimum investment required in order to qualify as a benefited
enterprise is required to exceed a certain percentage of the company's production assets
before the expansion.
The duration of tax benefits is subject to a limitation of the earlier of 7 years from the
Commencement Year, or 12 years from the first day of the Year of Election.
Amendments to the Law for the Encouragement of Capital Investments, 1959:
In December 2010, the "Knesset" (Israeli Parliament) passed the Law for Economic
Policy for 2011 and 2012 (Amended Legislation), 2011 ("the Amendment"), which
prescribes, among others, amendments in the Law for the Encouragement of Capital
Investments, 1959 ("the Law"). The Amendment became effective as of January 1, 2011.
According to the Amendment, the benefit tracks in the Law were modified and a flat tax
rate applies to the Company's entire preferred income. Commencing from the 2011 tax
year, the Company will be able to opt to apply (the waiver is non-recourse) the
Amendment and from the elected tax year and onwards, it will be subject to the amended
tax rates that are: 2011 and 2012 - 15% (in development area A - 10%), 2013 - 12.5% (in
development area A - 7%) and in 2014 and thereafter - 16% (in development area A -
9%).
b. Measurement of results for tax purposes under the Income Tax (Inflationary Adjustments)
Law, 1985:
Results for tax purposes are measured in terms of earnings in NIS after certain
adjustments for increases in the Israeli Consumer Price Index ("CPI"). As explained in
Note 2b, the financial statements are presented in U.S. dollars.
The difference between the annual change in the Israeli CPI and in the NIS/dollar
exchange rate causes a difference between taxable income or loss and the income or loss
before taxes reflected in the financial statements.
- 55 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIMIGON LTD.
NOTE 12:- INCOME TAXES (Cont.)
c.
Carryforward losses:
Domestic:
As of December 31, 2016, 2015 and 2014, the Company had accumulated losses for
Israeli tax purposes of approximately $ 0.4 million, $ 0.5 million and $ 1.5 million,
respectively, which may be carried forward, in order to offset taxable income in the
future, for an indefinite period (See Note f below).
Foreign:
As of December 31, 2016, 2015 and 2014, the federal tax loss carryforwards of the U.S.
subsidiaries amounted to approximately $ 5.2 million, $ 5.5 million and $ 5.9 million,
respectively. Such losses are available for offset against future U.S. taxable income of the
subsidiaries and will expire in the years 2023-2026.
As of December 31, 2016 and 2015, the tax loss carryforwards of the Singaporean
subsidiary amounted to approximately $ 79 thousands and $ 75 thousands; respectively,
which may be carried forward, in order to offset taxable income in the future, for an
indefinite period.
As of December 31, 2016, the tax loss carryforwards of the Colombian subsidiary
amounted to approximately $ 32 thousands, which may be carried forward, in order to
offset taxable income in the future, for an indefinite period.
As of December 31, 2016, total deferred tax assets of $ 223 thousand were recorded in
respect of certain carryforward operating losses in SimiGon Ltd and SimiGon Inc.
d.
Tax rates applicable to the income of the Company and its subsidiaries:
Domestic:
The Israeli corporate income tax rate was 25% in 2016 and 26.5% in 2015 and 2014.
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 January 1, 2016.
The effect of the reduction of the tax rate on the balance of deferred taxes as of December
31, 2015, was immaterial.
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 January 1, 2017 and to 23% effective from January 1, 2018.
- 56 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12:- INCOME TAXES (Cont.)
SIMIGON LTD.
The deferred tax balance as of December 31, 2016, has been calculated based on the
revised tax rates. The effect of the change in the tax rate on the balance of deferred taxes
was immaterial.
A company is taxable on its real capital gains at the corporate income tax rate in the year
of sale.
Foreign:
The U.S. subsidiaries were incorporated in Orlando, Florida, U.S.A., and are taxed
according to U.S. tax laws. The statutory federal tax rate is 35%.
e.
Tax assessments:
The Company's tax assessments in Israel for the years until and including 2009 are
considered final, subject to the powers vested with the director of the Tax Authority
pursuant to sections 145, 147 and 152 to the Income Tax Ordinance.
f.
Tax reconciliation:
In 2014, the main reconciling item between tax expense, assuming income before taxes
was taxed at the statutory tax rate of the Company, and the tax expense recorded in profit
or loss is carryforward tax losses and tax exemption for which no deferred taxes were
provided. In years 2016 and 2015, the income tax benefit recorded in profit or loss is due
to the recognition of carryforward losses which were not recognized in prior years –see
item c. above.
NOTE 13:- OTHER LIABILITIES AND COMMITMENTS
a.
Royalty commitments:
1.
In June 2001, the Company and a third party signed a Cooperation and Project
Funding Agreement with Britech, which is an establishment of the United
Kingdom-Israel Industrial Research and Development Fund. According to the
agreement, Britech agreed to fund, by conditional grant, the implementation of the
proposal submitted by the Company and the third party for a research and
development project in the maximum amount of £ 227 thousand.
The Company shall make repayments to Britech, based on gross sales derived from
the sale, leasing or other marketing or commercial exploitation of the innovation,
including service or maintenance contracts, commencing with the first commercial
transaction. Such payments shall be repaid in Pounds Sterling at the rate of 2.5% of
the first year's gross sales and, in succeeding years, at the rate of 5% of the gross
sales until 100%-150% of the conditional grant and other sums have been repaid
(incremental 50% based upon agreed milestone which was not fulfilled).
- 57 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13:- OTHER LIABILITIES AND COMMITMENTS (Cont.)
SIMIGON LTD.
The Company received a total amount of $ 324 thousand, of which $ 150 thousand
and $ 174 thousand were deducted from the research and development expenses in
2001 and 2003, respectively.
Although the development of technology had been completed by the third party
and the Company, the Company has never received the third party's portion of the
developed technology upon completion of the project although it requested it from
both the third party and Britech.
Therefore, since the Company cannot utilize the developed technology without the
essential portion developed by the third party, the Company has not paid any
royalties to Britech and the Company's management believes that it will not be
required to pay royalties in the future for the abovementioned project. In addition,
the Company did not submit any patent applications in connection with the Britech
grant.
2.
On September 1, 2009, the Company and a third party signed a Cooperation and
Project Funding Agreement with KORIL ("the Agreement"), which is an
establishment of the Korea-Israel Industrial Research and Development Fund.
According to the agreement, KORIL agreed to fund, by conditional grant, the
implementation of the proposal submitted by the Company ("the proposal") and the
third party for a research and development project in the maximum amount of
$ 273 thousand.
As of December 31, 2016, the Company received a total amount of $ 254 thousand.
The Company shall make repayments to KORIL, based on gross sales derived from
the gross invoiced sales value of the products, processes, inventions, technology,
discoveries, improvements, modifications, methods, software, specifications, or
any form of technical information developed or arising from the proposal (gross
sales). Such payments shall be repaid in U.S. dollars at the rate of 2.5% of the first
year's gross sales until 100% of the conditional grant and other sums have been
repaid.
The total non-current liability for the years ended December 31, 2016 and 2015
was $ 191 thousand and $ 206 thousand, respectively.
3.
On September 16, 2010, the Company signed a Project Funding Agreement ("the
Agreement") with the Israeli Chief Scientist ("the OCS"). According to the
Agreement, the OCS agreed to fund, by conditional grant, the implementation of
the proposal submitted by the Company for a research and development project in
the maximum amount of $ 365 thousand.
On March 29, 2011, the Company signed on a supplement to the Agreement ("the
Supplement"). According to the Supplement, the OCS agreed to fund, by
conditional grant, the implementation of the proposal submitted by the Company
for a research and development continued project in the maximum amount of $ 278
thousand.
- 58 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13:- OTHER LIABILITIES AND COMMITMENTS (Cont.)
SIMIGON LTD.
As of December 31, 2016, the Company received total amount of $ 611 thousand.
The Company shall make repayments to the OCS, based on gross sales derived
from the gross invoiced sales value of the products, processes, inventions,
improvements, modifications, methods, software,
technology, discoveries,
specifications, or any form of technical information developed or arising from the
proposals (gross sales).
Such payments shall be repaid in NIS at the rate of 3% of the first year's gross sales
until 100% of the conditional grant and other sums have been repaid.
The total non-current liability for the years ended December 31, 2016 and 2015
was $ 425 thousand and $ 444 thousand, respectively.
4.
On April 7, 2011, the Company and a third party signed a Cooperation and Project
Funding Agreement with the OCS, which is an establishment of the Italian-Israel
Industrial Research and Development Fund. According to the agreement, the OCS
agreed to fund, by conditional grant, the implementation of the proposal submitted
by the Company ("the proposal") and the third party for a research and
development project in the maximum amount of $ 91 thousand.
As of December 31, 2016, the Company received a total amount of $ 95 thousand.
The Company shall make repayments to the OCS, based on gross sales derived
from the gross invoiced sales value of the products, processes, inventions,
improvements, modifications, methods, software,
technology, discoveries,
specifications, or any form of technical information developed or arising from the
proposal (gross sales). Such payments shall be repaid in NIS at the rate of 3% of
the first year's gross sales until 100% of the conditional grant and other sums have
been repaid.
The total non-current liability for the year ended December 31, 2016 and 2015 was
$ 71 thousand and $ 72 thousand, respectively.
5.
On November 24, 2015, the Company and a third party signed a Cooperation and
Project Funding Agreement with the OCS, which is an establishment of the Italian-
Israel Industrial Research and Development Fund. According to the agreement, the
OCS agreed to fund, by conditional grant, the implementation of the proposal
submitted by the Company ("the proposal") and the third party for a research and
development project in the maximum amount of $ 62 thousand.
The Company shall make repayments to the OCS, based on gross sales derived
from the gross invoiced sales value of the products, processes, inventions,
improvements, modifications, methods, software,
technology, discoveries,
specifications, or any form of technical information developed or arising from the
proposal (gross sales). Such payments shall be repaid in NIS at the rate of 3% of
the first year's gross sales until 100% of the conditional grant and other sums have
been repaid.
- 59 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13:- OTHER LIABILITIES AND COMMITMENTS (Cont.)
SIMIGON LTD.
As of December 31, 2016, the Company received a total amount of $ 25 thousand.
The total non-current liability for the year ended December 31, 2016 was $
44 thousand.
b.
Lease commitments:
1.
2.
3.
4.
Premises occupied by the Company are rented under various non-cancelable lease
agreements. The latest rental agreement for the premises expires in October 2017
as determined under a lease agreement signed on October 1, 2014.
The Company has leased various motor vehicles under cancelable operating lease
agreements, which expire on various dates, the latest of which is in August 2018.
On March 2017 Company has leased additional motor vehicles under cancelable
operating lease agreements of which the latest expire in March 2019
Premises occupied by the subsidiaries are rented under non-cancelable lease
agreements. The latest rental agreement for the premises expires in March 2021 as
determined under a lease agreement signed on February 9, 2016 by SimiGon Inc.
Future minimum rental payments under non-cancellable operating leases are as
follows:
Year ended December 31,
2017
2018
2019
2020
2021
U.S. dollars
in thousands
211
77
77
79
17
461
The total expense for the years ended December 31, 2016, 2015 and 2014 was
$ 273 thousand, $ 266 thousand and $ 342 thousand, respectively.
- 60 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIMIGON LTD.
NOTE 14:- SUPPLEMENTARY INFORMATION TO THE STATEMENT OF COMPREHENSIVE
INCOME
a.
Cost of revenues:
Salaries and related benefits
Lease and office maintenance
Travel expenses
Depreciation and amortization
Share-based compensation
Subcontractors
b.
Research and development expenses:
Salaries and related benefits
Lease and office maintenance
Depreciation and amortization
Share-based compensation
Other
Government grants
c.
Selling and marketing expenses:
Salaries and related benefits
Lease and office maintenance
Consultant fees
Advertising and sales promotion
Travel expenses
Depreciation and amortization
Share-based compensation
Commission
d.
General and administrative expenses:
Salaries and related benefits
Lease and office maintenance
Travel expenses
Professional fees and public company
expenses
Depreciation and amortization
Share-based compensation
Doubtful debt provision
Other
Year ended
December 31,
2015
U.S. dollars in thousands
2016
2014
857
148
149
67
7
654
910
148
185
66
13
212
946
151
149
69
15
659
1,882
1,534
1,989
1,567
181
11
6
-
(51)
1,714
905
49
-
40
66
5
23
4
1,092
596
56
19
301
4
29
80
22
1,436
173
13
12
(121)
(41)
1,472
1,006
59
-
33
77
6
38
26
1,245
648
63
11
394
3
2
(78)
5
2,060
312
21
13
-
(25)
2,381
1,042
66
101
32
102
7
60
45
1,458
659
58
26
425
4
2
-
7
1,107
1,048
1,181
- 61 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIMIGON LTD.
NOTE 14:- SUPPLEMENTARY INFORMATION TO THE STATEMENT OF COMPREHENSIVE
INCOME (Cont.)
e.
Finance income:
Exchange rate differences
Government grants interest
Interest income from banks and short
term investments
f.
Finance cost:
Exchange rate differences
Government grants interest
Bank loans and fees
Year ended
December 31,
2015
U.S. dollars in thousands
2014
2016
53
-
119
172
65
36
2
103
67
-
7
74
74
4
4
82
132
37
9
178
120
-
7
127
NOTE 15:- REVENUES
The Company manages its business on the basis of one reportable segment.
a.
Revenues:
Software licenses and customization
Recurring Maintenance & Support
Training
Year ended
December 31,
2015
U.S. dollars in thousands
2016
2014
5,254
728
36
6,018
5,449
1,460
26
6,935
6,798
1,466
52
8,316
- 62 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15:- REVENUES (Cont.)
b.
Geographical information:
Revenues classified by geographical destinations based on the customer location:
SIMIGON LTD.
North America
Asia Pacific
Rest of the world (1)
Year ended
December 31,
2015
U.S. dollars in thousands
2016
2014
2,654
2,244
1,120
6,018
3,884
1,172
1,879
6,935
4,166
2,963
1,187
8,316
(1) Europe, South America, Middle East and Australia.
The carrying amounts of non-current assets (property, plant and equipment and intangible
assets) based on the location of the assets are as follows:
Asia Pacific and rest of the world
North America
2016
December 31,
2015
U.S. dollars in thousands
2014
29
1,154
1,183
30
1,174
1,204
43
1,233
1,276
c.
Information about major customers:
Revenues from major customers, each of whom amount to 10% or more of total revenues
reported in the financial statements:
Customer A
Customer B
Customer C
Customer D
Customer E
Customer F
Year ended
December 31,
2015
21%
3%
29%
11%
16%
-
2016
32%
9%
6%
2%
14%
23%
2014
22%
7%
20%
5%
32%
-
- 63 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16:- EARNINGS PER SHARE
SIMIGON LTD.
The following reflects the income and share data used in the basic and diluted earnings per share
computations:
Year ended
December 31,
2015
U.S. dollars in thousands
2016
2014
Net income for the year
361
1,782
1,358
2016
2015
2014
Weighted average number of Ordinary shares
for computing basic earnings (loss) per share
51,097
50,683
48,854
Effect of dilution:
Share options
222
135
231
Weighted average number of Ordinary shares
adjusted for the effect of dilution
51,319
50,818
49,085
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES
a.
Expenses to related party of a
shareholder:
Cost of revenues *)
Research and development *)
Selling and marketing *)
General and administration *)
Year ended
December 31,
2015
U.S. dollars in thousands
2014
2016
38
10
9
5
62
-
-
-
-
-
-
-
-
-
-
On February 9, 2016 the Company’s subsidiary signed an office lease agreement for a period of 60
*)
months commencing March 15, 2016 for annual rent of $75 thousand with TwoChi LLC, a company owned
(directly and together with relatives) by Mr. Ami Vizer the Chief Executive Officer of the Company, a
Director and a shareholder holding 22% of the issued share capital of the Company.
- 64 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
SIMIGON LTD.
b.
Compensation of key management
personnel of the Company:
Employee benefits *)
Share-based payments **)
Year ended
December 31,
2015
U.S. dollars in thousands
2014
2016
1,627
1
1,628
1,621
41
1,662
1,628
55
1,683
*)
Includes long-term employee benefits in the amount of $11 thousand, $ 8 thousand
and $ 11 thousand for the years ended December 31, 2016, 2015 and 2014,
respectively.
Year 2016 includes bonus provision to Mr. Efraim Manea, a director of the
Company and its CFO with respect to fiscal year 2016 in the amount of $ 9
thousand (see Note 17e). Year 2015 includes bonus provision to Mr. Efraim
Manea, a director of the Company and its CFO with respect to fiscal year 2015 in
the amount of $ 16 thousand (see Note 17e). Year 2014 includes bonus provision to
Mr. Efraim Manea, a director of the Company and its CFO with respect to fiscal
year 2014 in the amount of $ 21 thousand (see Note 17e).
Year 2016 includes bonus provision to Mr. Ami Vizer, the Company's Chief
Executive Officer and executive director ("the CEO") to be granted in Ordinary
Shares of the Company in respect to fiscal year 2016 in the amount of $ 37
thousand (see Note 17f). Year 2015 includes bonus provision to Mr. Ami Vizer, the
Company's Chief Executive Officer and executive director ("the CEO") in respect
to fiscal year 2015 in the amount of $ 63 thousand (see Note 17f). Year 2014
includes bonus provision to Mr. Ami Vizer, the Company's Chief Executive
Officer and executive director ("the CEO") in respect to fiscal year 2014 in the
amount of $ 80 thousand (see Note 17f).
Year 2016 includes bonus provision to VP Product with respect to fiscal year 2016
in the amount of $ 6 thousand.
Year 2015 includes bonus provision to VP Marketing with respect to fiscal year
2015 in the amount of $ 23 thousand.
As disclosed under Note 10a7, year 2014 includes bonus payment of $ 51 thousand
to the VP of Business Development, Director of human resource and VP Projects.
**) Years 2015 and 2014 include share-based compensation of $ 28 thousand and $ 46
thousand, respectively, due the Share Bonus Plan as described under Note 10e, in
respect to the CEO.
- 65 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
c.
Balances with related parties:
SIMIGON LTD.
The Company’s liability balances for related parties as of December 31, 2016 and
December 31, 2015 amount to $ 366 thousand and $ 422 thousand; respectively, out of
which, a total of $ 182 thousand and $ 192 thousand is related to severance, vacation and
recovery liabilities for key employees as of December 31, 2016 and December 31, 2015;
respectively.
d.
Compensation policy for the Company's Directors and officers:
On November 24, 2013, the Company's Board of directors approved the adoption of a
Compensation policy for the Company's Directors and officers (the "Compensation
Policy Plan") as required by the Israeli Companies Law in order to provide the Company
the ability to attract, retain, reward and motivate highly skilled Officers and to assure that
the compensation structure meets the Company's interests and its overall financial and
strategic objectives.
The Compensation policy for the Company's Directors and officers was approved at
SimiGon Annual General Meeting for year 2013 held on December 30, 2013.
On December 29, 2016 the Annual General Meeting for year 2016 has re-approve the
Compensation Policy Plan.
e.
Agreement with CFO:
On December 6, 2012, the Board of Directors approved the grant of a one-time cash
bonus to Mr. Efraim Manea, a director of the Company and its CFO with respect to fiscal
year 2013 in the amount of up to $ 34 thousand, subject to revenues, net profit and share
price criteria and milestones. The actual bonus was paid on May 2014 and amounted to $
34 thousand.
On November 24, 2013, the Board of Directors approved the grant of a one-time cash
bonus to Mr. Efraim Manea, a director of the Company and its CFO with respect to fiscal
year 2014 in accordance to the Company's Compensation Policy Plan mentioned above.
The granted bonus is in the amount of up to $ 35 thousand, subject to revenues, net profit
and share price criteria and milestones. The actual bonus was paid on May 2015 and
amounted to $ 21 thousand.
On February 26, 2015, the Board of Directors approved the grant of a one-time cash
bonus to Mr. Efraim Manea, a director of the Company and its CFO with respect to fiscal
year 2015 in accordance to the Company's Compensation Policy Plan mentioned above.
The granted bonus is in the amount of up to $ 35 thousand, subject to revenues, net profit
and share price criteria and milestones. As of December 31, 2015, the Company has made
a provision of $ 16 thousand in respect of its CFO annual bonus for year 2015. The actual
bonus was paid on May 2016 and amounted to $ 16 thousand.
- 66 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
SIMIGON LTD.
On April 14, 2016, the Board of Directors approved the grant of a one-time cash bonus to
Mr. Efraim Manea, a director of the Company and its CFO with respect to fiscal year
2016 in accordance to the Company's Compensation Policy Plan mentioned above. The
granted bonus is in the amount of up to $ 35 thousand, subject to revenues, net profit and
share price criteria and milestones. On April 6, 2017 the Company’s board of directors
approved that the bonus was to be granted in shares calculated based on the closing price
on the day of announcement of the Company's financial results for 2016. The grant of
bonus in Ordinary Shares of the Company will also be subject to the approval of the
Company’s shareholders. A provision for this bonus was recorded in the 2016 annual
financial statements. As of December 31, 2016, the Company has made a provision of $ 9
thousand in respect of its CFO annual bonus for year 2016.
f.
Significant agreements with shareholders:
1.
On September 21, 2006, the Company signed an agreement with Mr. Ami Vizer,
the Chief Executive Officer of the Company, according to which Mr. Ami Vizer is
engaged with a current salary of $ 313 thousand per annum (excluding bonuses and
benefits), terminable by either party on nine months' notice. In addition, pursuant to
this agreement, Mr. Vizer received options.
On January 27, 2010, the Board of Directors approved an increase of 10% in his
salary effective January 1, 2010.
On December 6, 2012, the Board of Directors approved a one-time cash bonus
grant to Mr Ami Vizer with respect to fiscal year 2011 in the amount of $ 30
thousand. It has also approved the grant of a one-time cash bonus to Mr Ami Vizer
with respect to fiscal years 2012 and 2013 in the amount of up to $ 125 thousand
per year, subject to revenues, net profit and share price criteria and milestones (the
"Conditions"). Based on the Conditions above, the Company recorded as of
December 31, 2012, a provision of $ 114 thousand in respect to Mr Ami Vizer
bonus for year 2012. The actual bonus was paid on April 2013 amounted to $ 120
thousand.
On November 24, 2013, the Board of Directors approved the grant to Mr. Ami
Vizer, the Company's Chief Executive Officer and executive director of a one-time
cash bonus to with respect to fiscal year 2014 in accordance with the Company's
Compensation Policy Plan mentioned above. The granted bonus is in the amount of
up to $ 125 thousand, subject to revenues, net profit and share price criteria and
milestones. On December 30, 2013 the Company's Annual General Meeting for
year 2013, approved 2014 bonus grant to Mr Ami Vizer. The actual bonus was paid
on May 2015 and amounted to $ 80 thousand.
In the annual general meeting for year 2013 held on December 30, 2013, the
shareholders, reapproved the employment agreement of Mr. Ami Vizer as the
Company's Chief Executive Officer and an executive director.
- 67 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
SIMIGON LTD.
On February 26 2015, the Board of Directors approved the grant to Mr. Ami Vizer,
the Company's Chief Executive Officer and executive director of a one-time cash
bonus to with respect to fiscal year 2015 in accordance with the Company's
Compensation Policy Plan mentioned above. The granted bonus is in the amount of
up to $ 125 thousand, subject to revenues, net profit and share price criteria and
milestones. As of December 31, 2015, the Company has made a provision of $ 63
thousand in respect of Mr. Ami Vizer annual bonus for year 2015. The actual
bonus was paid on May 2016 and amounted to $ 63 thousand.
Further to the approval of the Company's Board of Directors from November 24,
2015, on February 9, 2016 the Company’s subsidiary signed an office lease
agreement for a period of 60 months commencing March 15, 2016, for annual rent
of $75 thousand with TwoChi LLC, a company owned (directly and together with
relatives) by Mr. Ami Vizer the Chief Executive Officer of the Company, a
Director and a shareholder holding 22% of the issued share capital of the
Company.
On April 14, 2016, the Board of Directors approved the grant of a one-time cash
bonus to Mr. Ami Vizer, a director of the Company and its CEO with respect to
fiscal year 2016 in accordance to the Company's Compensation Policy Plan
mentioned above. The granted bonus is in the amount of up to $ 125 thousand,
subject to revenues, net profit and share price criteria and milestones. On April 6,
2017 the Company’s board of directors approved that the bonus was to be granted
in Ordinary Shares of the Company calculated based on the closing price on the
day of announcement of the Company's financial results for 2016 instead of being
payable in cash. The grant of bonus in Ordinary Shares of the Company will also
be subject to the approval of the Company’s shareholders. A provision for this
bonus was recorded in the 2016 annual financial statements. As of December 31,
2016, the Company has made a provision of $ 37 thousand in respect of its CEO
annual bonus for year 2016.
Total salary including employer tax (excluding share bonus grant mentioned under
Note 10a2) of Mr. Ami Vizer during year 2016 amounted to an annual salary of
$ 358 thousand, related benefits include bonus for 2015 fiscal year of $ 63
thousand, annual social benefits of $ 43 thousand (12.5% out of his annual salary),
expenses allowance of $ 6 thousand, recovery fees of $ 1 thousand, severance pay
of $ 29 thousand, car insurance of $3 thousand, vacation days of $ 39 thousand and
health insurance of $ 35 thousand. In addition, the Company has made a provision
for 2016 bonus of $ 37 thousand.
2.
On September 27, 2006, the Company entered into a consultant agreement ("the
Consultant Agreement") with Mr. Rami Weitz, pursuant to which Mr. Weitz
receives a fee of $ 122 thousand per annum in consideration of consulting services.
The agreement may be terminated by either party by at least six months' written
notice. In addition, pursuant to this agreement, Mr. Weitz received options.
- 68 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
SIMIGON LTD.
Prior to this agreement, Mr. Rami Weitz had been the Chairman of the Board of
Directors of the Company.
On April 22 2014, the Company signed on a Loan Agreement with Mr. Rami
Weitz ("the Loan Agreement") according to which, the Company will provide
Mr.Weitz with a loan in a total of $ 60 thousand bearing interest at the minimum
rate mandated by law, repayable within 12 months till April 7, 2015. According to
the Loan Agreement, the Company shall have the right at any time (even prior to
the due repayment date) to set-off and deduct any amount due hereunder from any
amount payable by the Lender to Mr.Weitz, to Packet Science Ltd. or to any
company in which Mr.Weitz and/or his immediate family and/or third respective
affiliates have a controlling interest.
On May 18 2014, the consultant Agreement was terminated and the Company
offset the above loan against fees due to Mr. Weitz.
NOTE 18:- DIVIDEND DISTRIBUTION
a. In May 2014 the Company's Board paid a dividend in an amount of $ 269 thousands
(approximately $ 0.543 cents per share).
b. In May 2015 the Company paid a dividend in an amount of $300 thousand ($ 0.6 cents
per share, representing approximately 22% of the Company's earnings per share for
2014).
c. In May 2016 the Company paid a dividend in an amount of $306 thousand ($ 0.6 cents
per share, equating to approximately 15% of the Company's earnings per share and to
approximately 17.2% of the Company's net income for year ended December 31, 2015).
NOTE 19:- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Capital management:
The primary objective of the Company's capital management is to ensure that it maintains a
strong credit rating and sufficient capital in order to support its business and maximize
shareholder value.
The Company manages its capital structure and makes adjustments to it, in light of changes in
economic conditions.
Financial risks factors:
The Company's activities expose it to various financial risks such as market risk (including
foreign exchange risk), credit risk and liquidity risk.
- 69 -
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19:- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
a.
Foreign exchange risk:
SIMIGON LTD.
The Company operates in a number of countries and is exposed to foreign exchange risk
resulting from the exposure to different currencies, mainly the NIS. As of December 31,
2016, balances in foreign currency are immaterial.
b.
Credit risk:
Financial instruments that potentially subject the Company to concentrations of credit risk
consist principally of cash and cash equivalents, short-term deposits, restricted cash,
short-term investments, trade receivables and other accounts receivables.
Cash and cash equivalents, including restricted cash and short-term deposits, are invested
in major banks in Israel and the United States. Management believes that the financial
institutions that hold investments of the Company and its subsidiaries are financially
sound and, accordingly, minimal credit risk exists with respect to these investments.
The Company trades only with creditworthy customers. The Company performs ongoing
credit evaluation of its customer's financial condition and requires collateral as deemed
necessary.
The Company has no off-balance-sheet concentration of credit risk such as foreign
exchange contracts, option contracts or other foreign hedging arrangements.
The Company has no significant concentrations of credit risk.
As of December 31, 2016, cash and cash equivalents together with the Company's short-
term bank deposits and short-term investments amounted to $ 8,139 thousand.
c.
Liquidity risk:
The table below presents the maturity profile of the Company's financial liabilities based
on contractual undiscounted payments:
December 31, 2016:
Government grants
Trade payables
Other accounts payable
and accrued expenses
Less than
one year
Between 2 to
4 years
U.S. dollars in thousands
More than 4
years
215
-
-
215
668
-
-
668
26
98
658
782
- 70 -
Total
909
98
658
1,665
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 19:- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
SIMIGON LTD.
December 31, 2015:
Less than
one year
Between 2
to 4 years
More than 4
years
U.S. dollars in thousands
Government grants
Trade payables
Other accounts payable
and accrued expenses
11
123
864
998
577
-
-
577
313
-
-
313
Total
901
123
864
1,888
NOTE 20:- SUBSEQUENT EVENT
On April 6, 2017 the Company’s board of directors approved that 2016 annual bonuses to Mr.
Ami Vizer, the Company's Chief Executive Officer who is also a Director of the Company and
to Mr. Efraim Manea, a director of the Company and its CFO, that have already been approved
at the Company’s board meeting dated April 16, 2016, were to be granted in Ordinary Shares of
the Company calculated based on the closing price on the day of announcement of the
Company's financial results for 2016 instead of being payable in cash. The grant of bonuses in
Ordinary Shares of the Company will also be subject to the approval of the Company’s
shareholders.
- - - - - - - - - - - - - - - - - -
- 71 -
SHARE INFORMATION
CONTACT INFORMATION
SimiGon is listed on the AIM. The shares of the
Company are available through the Crest settlement
system, enabling immediate, secured electronic trading
and registration of shareholders’ assets. Symbol: SIM
Financial Year End: 31 December
To request additional information about SimiGon
and our products, please contact us by telephone,
fax or e-mail:
ADVISERS
Nominated Adviser and Broker
finnCap
60 New Broad St
London, EC2M 1JJ
SimiGon Ltd.
1 Sapir St.
PO Box 12050
Herzliya, Israel 46733
Tel: +972-9-956-1777
Fax: +972-9-951-3566
Registrar
Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street
St Helier
Jersey
JE1 1ES
SimiGon Inc.
111 S. Maitland Avenue,
Suite 210, Maitland, Florida 32751
Phone: +1 (407) 951-5548
Fax: +1 (407) 960-4794
For more information:
info@simigon.com
Auditors and Reporting Accountants
Kost Forer Gabbay & Kasierer
A member of Ernst & Young Global
3 Aminadav Street
Tel Aviv 67067
Israel
Solicitor to the Company as to English law
Halliwells LLP
1 Threadneedle Street
London
EC2R 8AW
Counsel of the Company as to Israeli law
Amit, Pollak, Matalon & Co. Advocates and Notary
Nitsba Tower, 19th Floor, 17 Yitzhak Sadeh St.,
Tel Aviv 67775
Israel
Public Relation
AlmaPR
1 Fore Street
London
EC2Y 9DT
- 72 -
WWW.SIMIGON.COM