2019
Annual
Report
We take distrebuted simulation
traning personaly
1
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
faster and more cost-effective 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.
Contents
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5
7
8
13
15
Financial & Operational Highlights, Post Period Event and Coronavirus (COVID-19)
Market
Solutions
CEO and Executive Chairman Review
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.
Financial Highlights
• Revenues decreased by 3% to $4.88 million (2018:
$5.03 million)
• Gross margin decreased to 63% (2018: 81%)
• Operating loss increased by 91% to $1.45 million
(2018: $0.76 million)
• Net loss increased by 44% to $1.45 million (2018:
$1.01 million)
• Basic and diluted loss per share of $0.03 (2018: loss
•
per share $0.02)
Liquid cash and cash equivalents of $6.04 million as at
31 December 2019 (2018: $6.00 million)
Operational Highlights
• Awarded a $1.8 million contract from a
large
international defense electronics company to design,
develop and implement a C-130 virtual maintenance
training solution.
Secured additional $0.85 million contracts
in
aggregate with key European customers to provide
licenses, maintenance and support services for the
Customer’s simulation training centers.
Signed a Blanket Purchase Agreement (“BPA”) with
the U.S. Department of Defense Enterprise Software
Initiative to establish agreed pricing and processes for
government customers to purchase the Company's
products and services.
•
•
•
•
•
•
Secured an additional year of software and hardware
warranties and support services for the United States
Air Force T-6A Level 5 FAA Compliant Flight Training
Device, valued at up to $1.41 million over the course
of 12 months starting in April 2019.
SimiGon was awarded with phase one of a United
States Air Force (“USAF”) contract to provide twelve
(12) SIMbox-based F-15E Mixed Reality (“MR”) training
devices for USAF Air Combat Command (“ACC”).
SimiGon has been awarded with a strategic contract
with the USAF to provide Virtual Reality (“VR”)
systems for Columbus Air Force Base.
SimiGon won USAF contracts to provide Extended
Reality (“XR”) Solutions for Vance Air Force Base and
Sheppard Air Force Base.
• Awarded a BPA from the USAF for the supply of XR
Systems.
• Awarded a strategic contract by the United States Air
Force ("USAF") to provide SIMbox-based T-6A MR
training devices for USAF Undergraduate Pilot Training
(“UPT”) at Laughlin Air Force Base.
• Continued to support major military flight training
programs including:
➢ The USAF Air Education and Training
Command Undergraduate Remotely Piloted
Aircraft Training (“URT”);
➢ Support for Lockheed Martin's UK Military
Flight Training System ("UKMFTS"); and
➢ Provide software and services as part of long-
term relationship with a strategic European
customer.
3
TAKING DISTRIBUTED TRAINING SIMULATION
PERSONALLY (CONT.)
Coronavirus (COVID-19)
In March 2020 the World Health Organization declared
coronavirus COVID-19 a global pandemic. COVID-19
threatens to be a disruptor to companies, supply chains
and the world economy for at least the first half of 2020.
In light of the uncertainty as to the severity and duration of
the pandemic, the overall impact of COVID-19 on the
Company’s future revenues, profitability, liquidity and
financial position is difficult to assess at this time.
As of the date of approval of 2019 financial statements,
there has not been a significant impact on the Company’s
operations resulting from the COVID-19 outbreak and the
Company had not received any cancelation notices from its
customers in relation to active purchase orders as a result
of COVID-19.
In order to reduce the chances that SimiGon’s employees
will be infected with COVID-19 while working inside the
Company's offices, while assuring the continued efforts to
improve SimiGon’s technology capabilities and active
program deliveries, some of SimiGon's employees have
been instructed to work remotely from their homes.
• Completed multiple delivery milestones for the $2
million Israeli Air Force (“IAF”) F-16 Maintenance
Trainer Program (“IAF F16 Maintenance Trainer”)
contract announced in June 2016 and for the T6A
Simulation Based Trainers to the IAF Flight Academy
contract (“IAF T6A”) announced in September 2018.
SimiGon has continued its ongoing R&D efforts to
enhance simulation-based training across all hardware
devices and position the Company to capitalize on new
high growth market opportunities.
•
• Appointment of Jack Sarnicki as Chief Operating
Officer of SimiGon Inc., the main trading subsidiary of
the Company, and the addition of both Simon Bentley
as Non-Executive Director and Ronit Schwartz as
Independent Non-Executives Director to strengthen
the composition of the Company's board.
Post Period Event
On January 13, 2020 D.D Goldstein Real Estates and
Investment Ltd., which to the Company's knowledge
acquired 1,500,000 shares in the Company during 2019,
has filed two legal actions in the Tel Aviv District Court - a
petition for leave to file a monetary claim concerning
salaries on behalf of the Company and an action for
prerogative relief concerning resolutions approved at the
Company's annual general meeting held on December 30,
2019 regarding the appointment of directors and the
determination of their compensation.
The legal actions allege certain flaws in the election of Mr.
Simon Bentley, Mr. Ran Pappo, Mrs. Ronit Schwartz and
Mrs. Deborah Bitman as directors.
Upon review of the claims and as of the date of this
announcement, SimiGon do not foresee any potential
financial obligation to the Company even if the court was
to decide that these claims have merit (other than legal
expenses of defending the claims).
The Company has notified its insurers with respect to
allegations against directors and has recorded in year 2019
a provision of $0.08 million for corporate retention to be
paid to its insurers.
4
APPLYING ROBUST TRAINING & SIMULATION SYSTEMS FOR MULTIPLE
DOMAINS
Robust Training and Simulation systems with virtual, mixed and augmented reality (XR) capabilities are
needed to improve individual readiness and organization-wide performance.
Key Trends
The military and civilian training and simulation markets
are expected to grow significantly over the next decade
due to the combination of new training requirements,
emerging technologies such as XR and the proven cost
savings
training
through
technologies.
advanced
delivered
Prior to the COVID-19 pandemic, the Military Simulation
and Virtual Training market, SimiGon’s traditional core
market, was forecasted to reach US$128.5 billion between
2018-2028. The civilian, Smart Education and Learning
market, representing new expansion opportunities for
SimiGon, is expected to reach $423.2 billion by 2025, a
compound growth rate of 15.2%. The simulation-based
learning segment is anticipated to exhibit the highest
it enables corporations and academic
growth as
institutions to create realistic training in a controlled
environment before they start work in the field, in high
stakes, operational environments. This market includes
Simulation, eLearning, Virtual Instructor, Collaborative,
Adaptive and Blended
learning, all core technology
components of SimiGon’s training solutions. Commercial
training, particularly with XR capabilities, value technology-
based solutions that reduce costs, similar to the ongoing
Government training trend.
Well trained operators are required throughout military
and civilian organizations. There are no flights without
sufficient and properly trained aircrew, including pilots,
technicians and maintainers. Cross-domain training with a
scalable delivery platform with a common core, open
system architecture, capable of meeting the vast range
requirements of each skillset, is highly desirable. No
simulator can fully replicate the pilot’s sensation of a night
landing on a fast moving aircraft carrier; oil drilling on a
deep sea rig; providing maintenance service on a military
or civilian flight
line; rapidly de-icing a military or
commercial aircraft readying for taxi; or customer service
training. A large body of research supports simulation
based learning and training’s significant usefulness for hard
skills and soft skills jobs. Through simulations of operating
environments 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 generally 90% or greater.
With this enormous cost savings, the Government and
Civilian sectors recognize the value of simulation in total
training programs. Additional efficiencies delivered
through 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
technologies and
solutions.
training and simulation
SimiGon’s disruptive 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. Additional,
sustainable business is won 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 has several market plays that will lead to near
term and long term 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 premium training technology for achieving proficiency
in complex skills and operations for
individual and
collective training.
5
APPLYING ROBUST TRAINING & SIMULATION SYSTEMS FOR MULTIPLE
DOMAINS (CONT.)
The Company is building on the expertise it has in delivering
advanced training solutions to develop near term and long
term business in the Government sector. The Company is
also successfully expanding into new, targeted vertical
markets such as maintenance training, commercial aviation
training, oil and gas
industry training and homeland
security.
The defense and aerospace sector, according to BlackRock,
prior to the COVID-19 pandemic, “remains the purest way
to play any change in defence spending outlook.” Boeing
prior to the pandemic, estimated a worldwide requirement
for 42,730 new jet airplanes, valued at $6.3 trillion,
attributing this to evolving aviation product offerings and
growth in emerging markets. According to Fortune Business
Insights, military aircraft market size was USD 40.22 billion
in 2018 and is projected to reach USD 58.03 billion by 2026.
The impact of the pandemic is unknown. This segment is
comprised of trainer aircraft, fighter aircraft, transport
aircraft and special mission aircraft. The military fixed-wing
aircraft market growth is expected to be driven by the
replacement of ageing military aircraft, increased internal
and external security threats, and modernization strategies.
lie
Further market opportunities
in the collaboration
announced by the FAA and USAF, working together to
ensure an aviation workforce for the future, and “address
any barriers to people realizing their dreams of becoming a
pilot or aircraft mechanic,” said Dan Elwell acting FAA
administrator. Brig. Gen. Mike Koscheski, USAF’s Aircrew
Crisis Task Force director, called the pilot shortage “a
wicked problem. The problem is not only ever-changing, it
fights back. You can’t
just fix one aspect. They’re
interrelated.”
The Unmanned Aircraft Vehicles (UAV) market was valued
at $20.71 billion in 2018. This segment is comprised of fixed
wing, multi-rotor, single rotor and Hybrid Vertical Takeoff
and Landing (VTOL) UAVs. The applications of UAVs
continue to diversify and grow for military, commercial,
homeland security, and consumers. The market is forecast
to reach $52.3 billion by 2025, with a growth rate of 14.15%
between 2018 to 2025. This estimate was made prior to the
pandemic. Air carriers, such as Wing, a drone delivery
spinoff of Google’s Alphabet, are beginning to receive
Government certifications to fly drones as a more cost-
effective way of delivering small, high-value orders such as
medicine. Diverse companies such as Amazon, UPS and
Domino’s, as well as traditional aerospace and defence
companies, are investing significantly in this market.
its
impact
long term
The global smart education & learning market, expected to
includes Learning
reach USD 680.1 billion by 2027,
Management Systems (LMS) and
Intelligent Tutoring
capabilities. The COVID-19 pandemic has increased the
adoption of e-learning solutions by schools, universities
and corporations to ensure continuity in imparting training
education and
is yet to be
determined. Prior to the pandemic, 17.9% market sector
growth was expected from 2020 to 2027. Improvements in
quality and accessibility has been leading to further growth
in corporate and academic sub-markets. Online learning
institutions are also witnessing a significant increase in the
number of students. 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. SimiGon’s high technology
training platform fulfills multiple roles in this market,
comprised of e-learning, virtual instructor-led training,
mobile learning, social learning, simulation-based learning,
and adaptive learning.
In the civilian aviation sector, prior to the pandemic,
Boeing’s 2019 Current Market Outlook (CMO) stated the
worldwide commercial aircraft fleet of 22,500 in 2017.
Boeing was projecting a demand for 42,000 new airplanes
over the next 20 years, worth $6.3 trillion. This type of
growth places an extraordinary demand for new airline
pilots and technicians. Boeing forecasts that by 2037 the
aviation industry will need to supply more than two million
new aviation personnel—635,000 commercial airline
pilots, 622,000 maintenance technicians, and 858,000
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
technologies, methodologies and
innovative
solutions, proven and successful in the military aviation
market, are fully transferable to commercial aviation
training. 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
simulation
management systems and services that high skills and
professional organizations demand.
advanced,
training
training
and
the
6
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
flexible platform, SIMbox has been deployed
and
successfully by
large training and simulation systems
providers, leading military contractors, and multiplied air
forces and commercial airlines worldwide. SIMbox
is
comprised of three main environments:
• SIMbox Toolkit development environment: SIMbox
Toolkit is an easy-to-use development 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.
Major Existing products under SIMbox
• XR Aircraft De-icing Simulation System
• XR-enabled F-15E Aircrew Training Device
• XR-enabled F-16 Maintenance Training Device
• XR-enabled F-16 Aircrew Training Device
• XR-enabled T-6A Desktop Training Device
• T-6A Level 5 Flight Training Device
• C-208 – Cessna Caravan Training Device
• Sensor Operator Training System
• UAS Training Device
• XR-enabled Driver Training System
• Air Traffic Control Training Device
• After Action Review/Playback System
• Simulation Development Environment
• Learning Management System
• Learning and Content Management System
• Image Generator
KnowBook™ Family
KnowBook is a family of PC-based training applications
used by leading organisations for training professional
for
users. KnowBook provides a common platform
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 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.
Debriefing Systems
advanced
post-mission
SimiGon offers
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-
Brief PC is used to support real-time air combat debriefing.
MDDS Pro is a digital debriefing solution incorporating
video with 3D simulation.
7
SHARING PERSONAL MESSAGE
FROM CORPORATE LEADERSHIP
Executive Chairman, President and Chief Executive Officer Review
Executive Chairman, President and Chief
Executive Officer Review
“The combination of contract wins and
created
ongoing R&D efforts have
significant future growth potential and a
return to profitability”
Amos (Ami) Vizer, Executive Chairman, President & Chief
Executive Officer
SimiGon made significant strides this year in delivering and
winning innovative training programs. While this did not
result in higher revenues for the Period as compared to year
2018, the combination of contract wins and ongoing R&D
efforts have created significant future growth potential and
a return to profitability.
The Company is executing its strategy to deliver program
milestones of long-term strategic contracts and continuing
to position itself in the market as a leading technology
provider for Extended Reality training solutions. SimiGon’s
ability to identify new markets and their need for cost
effective training is exemplified throughout the Period and
post-Period with multiple SIMbox-based XR training systems
contracts awarded to the Company by the USAF and other
customers. The Company entered 2020 with stronger
technology and greater utilization of our SIMbox technology
across more domains than before.
Though the overall impact of the coronavirus (COVID-19) on
the Company’s business is hard to assess at the moment,
the Company continues to position
itself to deliver
improved financial performance over the long term.
Overview
During the Period the Company achieved successful delivery
milestones of its strategic contracts.
In addition,
identify new markets and
This includes milestones on the IAF F-16 Maintenance
Trainer, C-130 virtual maintenance training solution and T-
6A Simulation Based Trainers programs, Onsite/Offsite and
logistics support provided to the USAF for the URT
program and continued support for the UK Military Flight
SimiGon’s
Training System program.
capabilities
their
to
requirements for cost effective personal training systems
was further demonstrated during the Period, as the
Company was able to secure new business and expand
product capabilities. Advanced proven technology together
with successful deliveries have
led SimiGon to be
contracted with strategic programs throughout the period
which has solidified SIMbox as a major training technology
platform.
SimiGon’s technology supports industry demand for more
realistic training and depth perception provided with XR
solutions.
Integrated with our Learning Management
System and Virtual Instructor, trainees receive high value,
self-paced training, saving end user organizations time and
money.
Over the Period, the Company continued its strategic focus
on its three main areas:
the baseline -
Sustain
Successfully delivering
Distributed Learning Solutions to our core strategic
partners worldwide. SimiGon, directly and through its
partners, now has training sites in North America,
Europe, Middle East and in the Asia Pacific markets.
Expand market reach - Expand the utilization of our
SIMbox technology to multiple domains. This was
successfully achieved by
targeting several high
opportunity markets such as maintenance training
providers, commercial equipment operators, as well as
training and research labs that utilize SIMbox as part
of their research.
SimiGon’s
technology
Strengthen
capabilities -
Improve the technological capabilities of the SIMbox
technology in order to enable the growth of the
Company as detailed above. Beyond the expansion of
our graphics engine,
learning
management system, we have added and delivered XR
solutions to multiple clients around the globe.
simulation and
•
•
•
8
SHARING PERSONAL MESSAGE
FROM CORPORATE LEADERSHIP (CONT.)
The R&D efforts in the Period have focused on utilizing
commercial consumer hardware to advance XR technologies
for advanced training and simulation, together with
continued development of the Company’s simulation
software development tools, high fidelity Image Generator,
user monitoring and performance tracking with simulation
data analytics.
The Company’s track record of delivering on time and
within budget has led to winning multiple military-related
contracts around the world, as well as serving to further
entrench the Company with existing customers into new
programs.
Civilian and Commercial vertical markets
This comprehensive solution developed by SimiGon not only
provides an immersive, high fidelity training environment, it
also provides organizations the ability to see trainee(s)
progression rate and areas of difficulty, enabling the
curriculum to be tweaked for better training results. SIMbox
technologies accelerating
the
Company’s opportunities and market penetration across
military and civilian training markets.
training are
increasing
Operational Review
solutions
SimiGon’s core technology platform, SIMbox, and support
services were developed for
large simulation training
programs for the Government and Commercial sectors. As
the Company evolves into a training systems integrator,
SimiGon remains at the forefront of designing, developing,
implementing and supporting advanced simulation and
Increased
to accelerate
training
learning.
operational proficiency
lowers safety risks and better
prepares operators for real operations, whether they are
flights, flight line maintenance tasks or deep sea oil rig
operations. Leveraging the robust SIMbox ecosystem,
SimiGon and its partners can deliver XR capable simulation-
based training content across unlimited domains and across
the hardware spectrum, from tablets and laptops/PCs to
high fidelity training devices.
SimiGon’s strategic, simulation-based training solutions
offer flexible licensing models with traditional software
licensing or SaaS. SimiGon’s technologies and capabilities
provide significant added value to multiple industries.
Markets:
Aerospace and defense related industry
SimiGon’s historical core market is aerospace and defense,
particularly military aviation, where the Company continues
to illustrate its position as a preferred technology supplier
to the world’s largest military training programs.
SimiGon’s significant capabilities, proven in the defense
sector, are being leveraged to pursue new civilian training
contracts. SimiGon’s civilian training market opportunities
range from maintenance, safety, energy and other
industrial operations skills. The Company’s efforts to grow
vertical Government and Civilian training are proceeding.
The Company recognizes the growth potential in XR
training solutions and is developing and marketing relevant
solutions to support this fundamental shift in the training
world.
The global smart education and learning market size is
expected to reach $423.2 billion by 2025 at a 15.2% CAGR,
offering extensive expansion opportunities for SimiGon.
The enterprise XR training market is expected to reach
$393 billion by 2025 with a CAGR of 69.4% between 2019-
2025.
Millennials and Generation Z users learning experience is
transforming the training industry as students are exposed
to digital devices from a young age. Adaptive learning,
simulation-based
and
collaborative learning, all part of SimiGon products, have
subsequently evolved to offer users enhanced learning
methodologies and experiences.
learning,
learning,
blended
The simulation-based learning segment is anticipated to
grow at a fast pace, enabling professional organizations
and educational institutions to virtually experience real
world environments for trainees to practice, navigate,
explore, and obtain more information through a virtual
medium before they start working on real-life tasks.
Growing awareness among people and rising popularity of
smart education are encouraging solution providers to
invest in research and development for creating more
reliable, better, and cost-effective solutions.
(“OSA”) software
As an Open System Architecture
integrate with new
framework, SimiGon’s ability to
technologies makes its viable long-term training simulation
software fully capable of leveraging the immersive training
needs of the XR civilian markets.
9
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
solution
software offers an advanced
to
SimiGon
organizations seeking to teach visual and
interactive
problem solving in far ranging markets such as civilian
aviation, technician training, language training, customer
service training and corporate leadership. The Company’s
technology, experience and personnel, place it in a unique
position
the cultural shifts
democratizing learning and training to reach the wider
consumer market.
take advantage of
to
Marketing
includes digital and print
SimiGon’s marketing mix
advertising, social media and booths at four industry
symposiums, including the ITEC in Europe, IITSEC, Air
Warfare Symposium and TSIS
in the US, as well as
participation in smaller industry demos for select end users.
General
The Company continues to further develop its disruptive,
baseline, commercial off-the-shelf (“COTS”) product with
additional top layer application content and capabilities to
reach more end users and vertical markets.
Targeted verticals such as commercial aviation maintenance
training, security training, language training and vocational
training have common requirements to the defense-related
industries the Company continues to target. Specifically,
they are highly regulated, require complex and specialized
skill training and have zero tolerance for error. SimiGon is
seeking to increase market share and broaden the end user
applications for its base line SIMbox software platform in
new domains.
Business Model
The Company's strategy, is to focus on long-term, high
value, stable Software as a Service (“SaaS”) license contracts
and services that provide better revenue and profit visibility
as a result of distributing over the Period in which they are
provided rather than lumpy license sales.
With SaaS-based contracts, the recurring maintenance and
support stream is already included in the contract terms.
In addition, the Company maintains flexibility with its
traditional perpetual license fee model where the Company
is paid for software license and support, as well as providing
turnkey solutions for customers and partners as a Prime
contractor or Sub-contractor.
Growth Strategy
The Company is focused on organic growth with its existing
customer base, offering continuous product developments
and services; leveraging its experience and IP developed
from existing contracts as a Prime Contractor and
Subcontractor to win new business and capture sales in
established segments; and expanding its core technology’s
applicability
for new market domains, directly and
indirectly.
SimiGon’s highly scalable, COTS technology training
management system makes it an ideal solution to address
new training domains with little customization required.
New projects and markets continue to utilize the product
infrastructure and developer tools to create the new
application content; once developed, they are leveraged to
target the wider market.
Long term contracts
The Company maintained its solid portfolio of long term
partnerships:
The Company has been awarded a $1.8 million contract
from a large international defense electronics company
(“Defense Company”) to design, develop and implement a
C-130 virtual maintenance training solution. The Contract
for the C-130 training system
is a new product
complementing SimiGon’s current range of VMT solutions,
including the F-16 training system which is already used by
the IAF. This Contract, along with other ground based
training systems using SimiGon technologies in the IAF,
including T-6A Virtual Reality systems and the M-346
Advanced
SimiGon
technologies as the IAF’s primary training technology
platform for aircrew academy members. The Contract’s
period of performance (excluding 12 months warranty and
support) is approximately eighteen (18) months.
Jet Trainer,
solidifies
further
The Company has been awarded with a BPA from the USAF
for the supply of Virtual and Mixed Reality Systems. The
BPA, has a contract ceiling of $6 million over a two-year
period. This allows the U.S. Government to rapidly order
Virtual Reality (VR) and Mixed Reality (MR) solutions.
SimiGon was one of four contractors awarded.
10
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
its successful support for UKMFTS as a
SimiGon continues
technology and services provider to Lockheed Martin. The
Company continues to deliver under this long term contract, now
in its ninth year of support, exceeding partner and end user
expectations of SimiGon's technologies and performance.
The increase in the cost of sales during the Period was
mainly as a result of the purchase of hardware and
equipment provided as part of SimiGon’s programs with
the USAF and IAF.
Ongoing USAF contracts for the continued maintenance and
support including onsite hardware and software support for the
sixteen SIMbox-based T-6A Level 5 FTDs.
Check-6 Inc., one of the leading providers of training solutions to
the energy and mining industries, is another example of SimiGon's
ability to help companies achieve new growth. Throughout this
its agreed
contract, SimiGon has successfully executed on
deliverables. This relationship continues to yield
long term
business prospects.
The Company continues to support and has further expanded its
long-term relationship with a major existing European customer
that it has been supplying with software and services since 2009.
SimiGon continues its successful support of the SIMbox-based T-6A
IAF Flight
Simulation Based Trainers units provided to the
Academy.
Financial Performance
Revenue for the year ended 31 December 2019 was $4.88
million, compared to $5.03 million in 2018. 41.5% of
SimiGon's revenues came from North America (2018: 29%),
58.44% from Europe, Middle East, South America and
Australia (2018: 69%) and 0.06% from the Far East (2018:
2%).
During the Period, loss before tax expenses were $1.45
million (2018: loss before tax expenses of $0.78 million).
The key contributor to the reported operating loss is the
purchase of hardware and equipment in a total of $0.6
million that was provided mainly as part of SimiGon’s
programs with the USAF and with IAF (F16 Maintenance
Trainer and IAF F16 T6A) and the continued investment in
research and development expenses. The Company
continues to maintain a strong balance sheet with liquid
cash balances of $6.04 million as at 31 December 2019.
Gross profit for the year ended 31 December 2019 was
$3.09 million, as compared to $4.06 million for the year
ended 31 December 2018. Accordingly, gross margins
decrease to 63% for the year ended 31 December 2019 as
compared to 81% for the year ended 31 December 2018.
Total operating expenses for the year ended 31 December
2019 decreased by 6% to $4.53 million as compared to
$4.82 million for the year ended 31 December 2018. R&D
expenses for year ended 31 December 2019 decreased by
8% to $2.18 million as compared to $2.34 million for the
year ended 31 December 2018. Without considering the
impact of the adoption of IFRS 16 on the financial reports
for year 2019, the decrease in the R&D expenses was
mainly due to reductions in salary expenses. Marketing
expenses for the year ended 31 December 2019 increased
by 16% to $1.19 million as compared to $1.02 million for
the year ended 31 December 2018 mainly due to salary
expenses. General and administration expenses for the
year ended 31 December 2019 decreased by 20% to $1.17
million as compared to $1.46 million the year ended 31
December 2018 mainly due to a provision for doubtful
debts recorded in year 2018 of $0.45 million.
Operating loss for the year ended 31 December 2019 was
$1.45 million, as compared to $0.76 million for the year
ended 31 December 2018.
The Company has recorded a non cash tax expense of
$0.22 million for the year ended 31 December 2018 mainly
as a result of a deferred tax asset in relation to the
losses against
expected utilization of carry forward
expected income in future years.
As a consequence of the factors above, the net loss for the
fiscal year was $1.45 million (2018: net loss of $1.01
million).
Net basic and diluted loss per share was $0.03 for the year
ended 31 December 2019 as compared to net basic and
diluted loss per share of $0.02 for the year ended 31
December 2018.
As at 31 December 2019 the Company had cash and cash
equivalents of $6.04 million as compared to $6.00 million
as at 31 December 2018, with trade receivables net of
$1.41 million, out of which, a total of $0.76 million has
been collected since the year end.
11
SHARING PERSONAL MESSAGES
FROM CORPORATE LEADERSHIP (CONT.)
Outlook
SimiGon’s outlook is positive primarily due to its current
technologies, R&D roadmap and the overwhelming need to
provide millennials and Generation Z with XR capable,
immersive training solutions. Government and Civilian
requirements for proficient operators in multiple domains
of zero risk tolerance such as aviation and energy, is a
challenge the Company looks forward to capturing, and
realizing the growth foreseen by investors. The latest
coronavirus (COVID-19) threatens to be a disruptor to
companies, supply chains and the world economy for at
least the first half of 2020. The overall impact of the virus on
the Company’s business is hard to assess at the moment. At
the same time, the Company remains agile and able to scale
rapidly to support new business and deliver its vision and
business strategy.
Amos Vizer
Executive Chairman, President and Chief Executive Officer
12
DISPLAYING PERSONAL COMMITMENT TO
ORGANIZATION SUCCESS
Board of Directors
(Ami) Vizer, Executive Chairman,
Amos
President & Chief Executive Officer
Ran Pappo,
Director
Independent Non-Executive
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.
Mr. Ran Poppo has 25 years of business
experience while delivering results worldwide.
Mr. Pappo is the Chief Executive Officer of Diva
Hirschthal Ltd. a large organization engaged in
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
focusing on
goals. Mr Pappo
organizational workflows,
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 Business
Administration, Finance and International Marketing, from the
College for Management in Israel.
is a strategic consultant
financial
Simon Bentley, Senior
Executive Director
Independent Non-
Ronit Schwartz Independent Non-Executive
Director
Mr. Bentley is currently Executive Chairman of
Dominion ATM Banking Systems Ltd, trading as
Cash on the Move, a UK mobile cash operator
and a Non-Executive Director of Premier Foods plc. Among
previous appointments, Mr Bentley was Chairman and Chief
Executive of Blacks Leisure Group plc from 1987 to 2002, Deputy
Chairman of law firm Mishcon de Reya from 2002 to 2009 and
Senior Independent Non-Executive Director of Sports Direct
International plc from 2007 to 2018. Mr Bentley is a certified FCA,
having previously been a senior partner at Landau Morley LLP.
Mrs. Schwartz has considerable experience at
board level of government and publicly-traded
companies, and has held a wide variety of
executive and non-executive roles during the course of her
career. Mrs. Schwartz is currently a director at Petroleum &
Energy Infrastructures, Ltd., Elad Canada and Amir Agricultural
Investments, Ltd. Mrs. Schwartz has 21 years' experience in
banking part of them as a financial executive and deputy director,
skilled in finance, credit risk, foreign currency trading, budgeting
and corporate governance. Mrs. Schwartz holds a BA
in
Economics and MBA in Marketing and Finance from Tel Aviv
University.
Efraim Manea, Chief Financial Officer
financial
including
Mr. Manea joined the Company as its finance
controller in June 2008, managing its financial
aspects
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.
13
DISPLAYING PERSONAL COMMITMENT TO
ORGANIZATION SUCCESS (CONT.)
Management
Amos (Ami) Vizer, Executive Chairman, President
& Chief Executive Officer
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.
Jack Sarnicki, Chief Operating Officer
Jack Sarnicki has 25 years of experience in the
United States Air Force ("USAFR") where he held
both operational and
technical engineering
positions, ending his military career as Chief
Evaluation Engineer at the USAF's Simulation &
Analysis Facility. Mr. Sarnicki is also an accomplished command pilot
having flown five different USAF aircraft types during his military
career. In his civilian career, Mr. Sarnicki has held multiple senior level
sales and management positions for various aerospace and defense
businesses. Before coming to SimiGon, Mr. Sarnicki held the position of
Chief Operating Officer of VT-Miltope, where he was responsible for
the daily management and operation of a $70 million ruggedized
computer manufacturer selling directly to the U.S. government and
commercial aerospace companies. Jack Sarnicki’s education includes a
BS in Mechanical Engineering, Masters of Business and the issuance of
three mechanical patents.
Efraim Manea, Chief Financial Officer
Mr Manea joined the Company as its finance
controller in June 2008, managing its financial
aspects including 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
for
Management in Israel.
from the College
Alon Shavit, EVP, 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. 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
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.
last role
Hagai Pichovich, VP Product Development
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
large scale project architecture and deep
with
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.
Koby Ben Yakar, VP Programs
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
leader and overseeing the architecture, design and
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 proven ability to manage
business and technical relationships for large-scale projects.
Ary Nussbaum, VP Business Development
(Americas)
Mr. Nussbaum has served in multiple roles with the
Company since joining in 2001 and was most
recently Director, Business Development. He has
built Government and Commercial business through
partnerships and direct customer sales in complex
business environments. His winning track record spearheading
strategic programs in the US, Latin America, Asia, Australia and Europe,
including SimiGon’s largest single award program, is part of Mr.
Nussbaum’s skillset. He leads the Company’s business development
and sales efforts to capture existing and vertical markets
in
Government and Commercial training sectors in the US, Canada and
Latin America. Mr. Nussbaum is an FAA certified pilot with an MBA
from Bar Ilan University and a BA from William Paterson University.
Merav Nahmani, Director of Human Resources
Ms. Nachmani, joined SimiGon 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.
14
FINANCIALS
CONSOLIDATED FINANCIAL STATEMENTS OF SIMIGON LTD.
AND ITS SUBSIDIARIES
AS OF DECEMBER 31, 2019
(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 - 29
30 – 77
78
15
CORPORATE GOVERNANCE FOR THE PERIOD ENDED 31 DECEMBER 2019
Introduction
SimiGon Ltd. commenced trading on the AIM Market operated by the London Stock Exchange on 2 November 2006.
Although the rules of the AIM Market 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, one Non- Executive Director and two independent Non-Executive Directors
nominated by the shareholders of the Company. The Board generally meets a minimum of five times a year and receives a
Board pack comprising a report from senior management together with any other materials deemed necessary for the
Board to discharge its duties. It is the Board’s responsibility for, amongst others, formulating, reviewing and approving the
Group’s business plan, strategy, budgets, corporate structure, compensation policy, dividend policy, major items of
expenditure, acquisitions and financial statements.
Audit Committee
The audit committee consists of Mr. Simon Bentley, Mrs. Ronit Schwartz and Mr. Ran Pappo and meets at least twice a
year. The role of the audit committee, includes reviewing 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 Mrs. Ronit Schwartz and Mr. Ran Pappo. The Remuneration Committee has
primary responsibility to review the performance of the Company’s executive directors and the senior employees and to
recommend and approve their remuneration and other terms of employment.
Shareholder Relations
The Company meets and communicate with its principal shareholders periodically to encourage communication with
shareholders. In addition, the Company intends to facilitate communication with shareholders through its annual report
and accounts, interim statements and press releases as required during the ordinary course of business as well as through
information available on the Company’s website (www.simigon.com).
Going Concern
In March 2020 the World Health Organization declared coronavirus COVID-19 a global pandemic. COVID-19 threatens to
be a disruptor to companies, supply chains and the world economy for at least the first half of 2020. In light of the
uncertainty as to the severity and duration of the pandemic, these consolidated financial statements have been prepared
on a going concern basis which assumes that the Company will continue its operations for the foreseeable future and be
able to realize its assets and discharge its liabilities and commitments in the normal course of business.
In arriving at this determination, the Company has undertaken a thorough review of the Company’s cash flow forecast
and potential liquidity risks. Cash flow projections have been prepared which show that the Company will have sufficient
funds to finance its operations and meet its obligations during the period of at least 12 months from the date of approval
of the consolidated financial statements.
16
CORPORATE GOVERNANCE FOR THE PERIOD ENDED 31 DECEMBER 2019
(CONT.)
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 and the Audit Committee are responsible for the system of internal controls and for reviewing their
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 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. The Group is subject to internal audit and the results of internal audits 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.
17
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 until October 2009 included
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
Omer C. Eyal ***
Mr. Ran Pappo
Deborah M. Bitman
Ronit Schwartz
Total
Total 2019
$
412,939
149,625
25,959
-
26,400
13,200
10,077
638,200
Total 2018
$
414,412
148,455
47,350
-
26,400
26,400
-
663,017
* Year 2019 does not include additional cost of $39,165 in respect of vacation days, additional $28,721 paid in respect
of severance allocation transfer and additional $38,759 paid in respect to health insurance.
Year 2018 does not include additional cost of $39,165 in respect of vacation days, additional $28,721 paid in
respect of severance allocation transfer and additional $37,675 paid in respect to health insurance.
** Year 2019 does not include the reimbursement of $49,200, paid in respect to Mr. Efraim Manea relocation costs for
his work at the Company’s subsidiary in USA and costs of $13,177 in respect of vacation days.
Year 2018 does not include the reimbursement of $49,200, paid in respect to Mr. Efraim Manea relocation costs for
his work at the Company’s subsidiary in USA and costs of $13,177 in respect of vacation days.
*** On a Board meeting held on September 20, 2018, Mr. Omer Eyal informed the Board that he is respectfully declined
any payment for his service to SimiGon as a director and that he has elected to make his membership on the
Company’s Board of Directors and Audit Committee as unpaid volunteer positions.
Please also see the Directors Report below for details of directors who have held office during the year, options and
shares granted to directors.
18
DIRECTORS REPORT
The directors submit their report and the financial statements of the Group for the period ended 31 December 2019.
Incorporation and Admission onto the AIM Market
The Company was incorporated on 1 October 1998. On November 2006 the Company commenced trading on the 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, 2019 the total numbers of Ordinary Shares Issued were 50,863,618 (net of 535,571 Ordinary shares
held in treasury).
Share Options
As of 31 December 2019, the outstanding balance of options granted to certain employees of SimiGon was approximately
1.3 percent of the Company’s issued and outstanding shares (net of treasury shares) at an average exercise price of
$0.281. The majority of the options vest over four years from the date of grant. The options expire 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 were
distributed to its shareholders:
• On 11 April 2017 an annual dividend 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 was paid to the Company’s shareholders with respect to 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 was 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 was 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 was 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.
19
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. Simon Bentley was appointed as Non-Executive Director and serves as Senior Independent Non-Executive
Director on August 1 2019, replacing Mr. Alistair Rae, who was appointed as a director and Chairman of the Board on
27 October 2006.
• Mr. Ran Pappo was appointed as an independent director on December 30, 2015.
• Mrs. Ronit Schwartz was appointed as an independent director, replacing Mrs. Deborah M Bitman, who was
appointed as an independent director on December 30, 2015.
• Mr. Omer C. Eyal was appointed a non-executive director on April 17, 2018 and held office until October 20, 2019.
Directors Interest in Shares and Share Options
The interest of directors in the issued share capital of the company at 31, December 2019 were as follows.
Directors
Ami Vizer
Efraim Manea
Number of Ordinary Shares
Capital
11,365,489
284,346
Percentage of Ordinary
Shares *
22.34
0.56
Shares to be issued
125,338 **)
32,564 **)
*) Calculated based on a total amount of 50,863,618 Ordinary Shares (net of 535,571 Ordinary shares held in treasury).
**) On September 8, 2017 the Company’s shareholders approved the conversion of the 2016 annual cash bonuses
approved by the Company’s Board of Directors on April 14, 2016 in accordance to the Company's Compensation
Policy Plan to Mr. Ami Vizer the Company's Chief Executive Officer and an executive director in a total amount of US
£21,934 and to Mr. Efi Manea the Company's Chief Financial Officer and an executive director in a total amount of
US £5,699, into 125,338 and 32,564 Ordinary Shares of 0.01 par value of the Company, respectively, such shares to
be issued under the Company's Employees' Share Option Plans.
Substantial Shareholdings
As of 31 December 2019 the following interests of 3% or more in its issued and outstanding ordinary shares were notified
to the Company:
Shareholder
A. Vizer / A. Vizer Holding Ltd.
Jeffrey Braun
Herald Investment Management Ltd.
Axxion S.A.
Green Venture Capital Ltd.
Shroder- euroclear nominees limited
Number Of Ordinary Shares
11,365,489
6,543,039
5,050,000
3,500,000
3,067,848
1,711,070
Percentage of issued *
22.35%
12.86%
9.93%
6.88%
6.03%
3.36%
*) Calculated based on a total amount of 50,858,618 Ordinary Shares (net of 535,571 Ordinary shares held in treasury).
Auditors
Kost Forer Gabbay & Kasierer
A member of Ernst & Young Global
144 Menachem Begin St.
Tel-Aviv 6492102, Israel
20
Kost Forer Gabbay & Kasierer
144 Menachem Begin St.
Tel-Aviv 6492102, 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, 2019 and
2018, and the consolidated statements of comprehensive income, changes in equity and cash flows for each of
the years ended December 31, 2019, 2018 and 2017, 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 auditors' 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, 2019 and 2018, and the results of its
operations and its cash flows for the each of the years ended December 31, 2019, 2018 and 2017, in
accordance with International Financial Reporting Standards as adopted by the European Union.
21
Emphasis of Matter – Subsequent Event
As more fully described in Note 21 to the consolidated financial statements, the latest coronavirus (COVID-
19) threatens to be a disruptor to companies, supply chains and the world economy for at least the first half of
2020. In light of the uncertainty as to the severity and duration of the pandemic, the impact on the Company’s
future revenues, profitability, liquidity and financial position is difficult to assess at this time. Our opinion is
not modified with respect to this matter.
22
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
SIMIGON LTD.
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Short-term bank deposit
Short-term investments
Short-term restricted cash
Trade receivables, net
Other accounts receivable and prepaid expenses
Total current assets
NON-CURRENT ASSETS:
Restricted cash
Long-term prepaid expenses
Property, plant and equipment
Right-of-use assets
Goodwill and intangible asset
Total non-current assets
Total assets
December 31,
2019
2018
Note
U.S. dollars in thousands
3
5
4
5
6
7
8
2,974
1,181
1,887
523
1,407
37
8,009
38
27
99
294
1,068
1,526
9,535
3,143
1,014
1,845
278
2,571
93
8,944
559
32
66
-
1,068
1,725
10,669
The accompanying notes are an integral part of the consolidated financial statements.
23
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
SIMIGON LTD.
EQUITY AND LIABILITIES
CURRENT LIABILITIES:
Trade payables
Current maturities of lease liabilities
Deferred revenues
Other accounts payable and accrued expenses
Total current liabilities
NON-CURRENT LIABILITIES:
Lease liabilities
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
Treasury shares
Accumulated deficit
Total equity attributable to equity holders of the Company
December 31,
2019
2018
Note
U.S. dollars in thousands
7
9
7
10
14a
11
86
245
236
845
159
-
327
691
1,412
1,177
31
362
708
1,101
-
287
712
999
2,513
2,176
125
16,651
(105)
(9,649)
7,022
125
16,647
(105)
(8,174)
8,493
Total equity
7,022
8,493
Total liabilities and equity
9,535
10,669
The accompanying notes are an integral part of the consolidated financial statements.
April 27, 2020
Date of approval of the
financial statements
Ran Pappo
Director
Ami Vizer
Chief Executive Officer
and Executive Chairman
of the Board of Directors
Efraim Manea
Chief Financial Officer
and Director
24
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SIMIGON LTD.
Year ended
December 31,
2018
U.S. dollars in thousands
(except share and per share amounts)
2017
2019
4,882
1,797
3,085
2,175
1,187
1,171
4,533
5,029
973
4,056
2,335
1,019
1,462
4,816
4,335
975
3,360
2,092
1,170
1,056
4,318
Note
16
15a
15b
15c
15d
(1,448)
(760)
(958)
15e
15f
215
215
134
157
126
125
Revenues
Cost of revenues
Gross profit
Operating expenses:
Research and development
Selling and marketing
General and administrative
Total operating expenses
Operating loss
Finance income
Finance expenses
Loss before income taxes
(1,448)
(783)
(957)
Income tax benefit (expense)
13
-
(224)
3
Net loss
(1,448)
(1,007)
(954)
The accompanying notes are an integral part of the consolidated financial statements.
25
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
SIMIGON LTD.
Year ended
December 31,
2018
U.S. dollars in thousands
(except share and per share amounts)
2017
2019
Note
Net loss
(1,448)
(1,007)
(954)
Other comprehensive income not to be
reclassified to profit or loss in subsequent
periods:
Remeasurement gain (loss) from defined benefit
plan
(27)
16
(11)
Total comprehensive loss
(1,475)
(991)
(965)
Net loss attributable to:
Equity holders of the Company
Non-controlling interests
Total comprehensive loss attributable to:
Equity holders of the Company
Non-controlling interests
Net basic and diluted loss 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)
(1,448)
(1,013)
-
6
(1,448)
(1,007)
(1,475)
-
(997)
6
(1,475)
(991)
(952)
(2)
(954)
(963)
(2)
(965)
(0.03)
(0.02)
(0.02)
17
51,020
51,259
51,444
17
51,020
51,259
51,444
The accompanying notes are an integral part of the consolidated financial statements.
26
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
SIMIGON LTD.
Attributable to equity holders of the Company
Number
of shares
Share
capital
Additional
paid-in
capital
Treasury
shares
Accumulated
deficit
Total
Non-
controlling
interests
Total equity
U .S. dollars in thousands (except share amounts)
Balance as of January 1, 2017
51,394,189
125
16,629
Total comprehensive income
Dividend distribution
Share-based compensation
Balance as of December 31,
2017
-
-
-
-
-
-
-
-
10
51,394,189
125
16,639
Total comprehensive loss
-
Purchase of Treasury shares
(see note 11 (f))
(535,571)
Shares-based compensation
-
-
-
-
-
-
8
-
-
-
-
-
-
(6,144)
10,610
(963)
(963)
(70)
-
(70)
10
(4)
(2)
-
-
10,606
(965)
(70)
10
(7,177)
9,587
(6)
9,581
(997)
(997)
(105)
-
-
-
(105)
8
6
-
-
(991)
(105)
8
Balance as of December 31,
2018
*) 50,858,618
125
16,647
(105)
(8,174)
8,493
-
8,493
Total comprehensive loss
-
-
Share issuance upon exercise
of options
Share-based compensation
Balance as of December 31,
5,000
**) -
-
-
1
3
-
-
-
(1,475)
(1,475)
-
1
3
2019
*) 50,863,618
125
16,651
(105)
(9,649)
7,022
-
-
-
(1,475)
1
3
7,022
*) Net of 535,571 shares held in treasury.
**) Represents an amount lower than $ 1 thousand.
The accompanying notes are an integral part of the consolidated financial statements.
- 27 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIMIGON LTD.
Year ended
December 31,
2018
U.S. dollars in thousands
2017
2019
Cash flows from operating activities:
Net loss
(1,448)
(1,007)
(954)
Adjustments to reconcile net income(loss) to net cash
provided by (used in) operating activities:
Adjustments to the profit or loss items:
Depreciation and amortization
Deferred tax
Finance expenses (income), net
Financial expenses lease liabilities
Share-based compensation
Change in employee benefit liabilities, net
Changes in asset and liability items:
Decrease (increase) in trade receivables
Decrease (increase) 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
308
-
(70)
20
3
47
46
226
64
-
8
15
55
(3)
(36)
-
10
57
1,164
(823)
1,171
61
(74)
(91)
146
59
26
(74)
-
1,514
(453)
(105)
35
(195)
5
994
40
Net cash provided by (used in) operating activities
66
(1,460)
The accompanying notes are an integral part of the consolidated financial statements.
- 28 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIMIGON LTD.
Cash flows from investing activities:
Decrease (increase) in restricted cash
Increase in short-term bank deposits
Increase in long-term deposits
Purchase of property, plant and equipment
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Repayment of lease liabilities
Proceeds from share issuance upon exercise of options
Dividend distribution
Purchase of treasury shares
Receipt of refundable grants
Net cash used in financing activities
Decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Year ended
December 31,
2018
U.S. dollars in thousands
2017
2019
278
(139)
-
(88)
51
(287)
1
-
-
-
(286)
(169)
3,143
(164)
-
(2)
(16)
(182)
-
-
-
(105)
22
(83)
(300)
-
-
(34)
(334)
-
-
(70)
-
11
(59)
(1,725)
4,868
(353)
5,221
Cash and cash equivalents at end of year
2,974
3,143
4,868
(a)
Supplemental disclosure of non-cash activities:
Right-of-use assets and corresponding lease
liabilities
59
-
-
The accompanying notes are an integral part of the consolidated financial statements.
- 29 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
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 a wholly-owned subsidiary in the United States, SimiGon Inc, which is
engaged in the marketing of the Company's products in the United States.
National Simulation Services Inc, which was a wholly-owned subsidiary of SimiGon Inc,
was dissolved on December 20, 2019.
SimiGon Pte Ltd., which was a wholly-owned subsidiary of SimiGon Ltd in Singapore
and was engaged in the marketing of the Company's products in the Far East, was
dissolved on November 1, 2019.
SimiGon S.A.S, in which 70% of its shares were held by SimiGon Inc and was located in
Colombia for the purpose of marketing the Company's products in South America, has
commenced its dissolvement on November 5, 2019.
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 subsidiary.
Subsidiaries
- Companies that are controlled by the Company, as defined in IFRS 10.
Related parties
- As defined in IAS 24.
Dollar/$
- U.S. dollar
e. Assessment of going concern as a result of coronavirus (COVID-19) (see also Note 21):
In March 2020 the World Health Organization declared coronavirus COVID-19 a global
pandemic. COVID-19 threatens to be a disruptor to companies, supply chains and the
world economy for at least the first half of 2020. In light of the uncertainty as to the
severity and duration of the pandemic, these consolidated financial statements have been
prepared on a going concern basis which assumes that the Company will continue its
operations for the foreseeable future and be able to realize its assets and discharge its
liabilities and commitments in the normal course of business.
In arriving at this determination, the Company has undertaken a thorough review of the
Company’s cash flow forecast and potential liquidity risks. Cash flow projections have
been prepared which show that the Company will have sufficient funds to finance its
operations and meet its obligations during the period of at least 12 months from the date
of approval of the consolidated financial statements.
- 30 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
SIMIGON LTD.
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.
Transactions, assets and liabilities in foreign currency:
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.
- 31 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
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.
e.
Short-term deposits:
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 (accounting policy applied until December 31, 2017):
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:
On January 1, 2018, the Company initially adopted IFRS 9, "Financial Instruments" ("the
Standard"). The Company elected to adopt the provisions of the Standard retrospectively
without restatement of comparative data.
The accounting policy for financial instruments applied until December 31, 2017, is as
follows:
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.
- 32 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
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.
2.
Financial liabilities:
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.
The accounting policy for financial instruments applied commencing from January
1, 2018, is as follows:
1.
Financial assets:
Financial assets are measured upon initial recognition at fair value plus transaction
costs that are directly attributable to the acquisition of the financial assets, except
for financial assets measured at fair value through profit or loss in respect of which
transaction costs are recorded in profit or loss.
- 33 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
The Company classifies and measures debt instruments in the financial statements
based on the following criteria:
-
-
The Company's business model for managing financial assets; and
The contractual cash flow terms of the financial asset.
a)
Debt instruments are measured at amortized cost when:
The Company's business model is to hold the financial assets in order to
collect their contractual cash flows, and the contractual terms of the financial
assets give rise on specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding. After initial
recognition, the instruments in this category are measured according to their
terms at amortized cost using the effective interest rate method, less any
provision for impairment.
b)
Equity instruments and other financial assets held for trading:
Investments in equity instruments do not meet the above criteria and
accordingly are measured at fair value through profit or loss.
Other financial assets held for trading such as derivatives, including
embedded derivatives separated from the host contract, are measured at fair
value through profit or loss unless they are designated as effective hedging
instruments.
Dividends from investments in equity instruments are recognized in profit or
loss when the right to receive the dividends is established.
2.
Impairment of financial assets:
The Company evaluates at the end of each reporting period the loss allowance for
financial debt instruments which are not measured at fair value through profit or
loss.
The Company has short-term financial assets such as trade receivables in respect of
which the Company applies a simplified approach and measures the loss allowance
in an amount equal to the lifetime expected credit losses. An impairment loss on
debt instruments measured at amortized cost is recognized in profit or loss with a
corresponding loss allowance that is offset from the carrying amount of the
financial asset.
3.
Financial liabilities:
a)
Financial liabilities measured at amortized cost:
Financial liabilities are initially recognized at fair value less transaction costs
that are directly attributable to the issue of the financial liability.
- 34 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
After initial recognition, the Company measures all financial liabilities at
amortized cost using the effective interest rate method.
4.
Derecognition of financial liabilities:
A financial liability is derecognized only when it is extinguished, that is when the
obligation specified in the contract is discharged or cancelled or expires. A
financial liability is extinguished when the debtor discharges the liability by paying
in cash, other financial assets, goods or services; or is legally released from the
liability.
h.
Leases:
As described in Note 2w regarding the initial adoption of IFRS 16, “Leases” (“the
Standard”), the Company elected to apply the provisions of the Standard using the
modified retrospective method, without restatement of comparative data).
The accounting policy for leases applied effective from January 1, 2019, is as follows:
The Company accounts for a contract as a lease when the contract terms convey the right
to control the use of an identified asset for a period of time in exchange for consideration.
For leases in which the Company is the lessee, at the commencement date of the lease,
the Company recognizes lease liabilities measured at the present value of lease payments
to be made over the lease term.
In calculating the present value of lease payments, the Company uses a single incremental
borrowing rate, to a portfolio of leases with reasonably similar characteristics. After the
commencement date, the amount of lease liabilities is increased to reflect the accretion of
interest and reduced for the lease payments made. In addition, the carrying amount of
lease liabilities is remeasured using a revised discount rate, with a corresponding
adjustment to the related right-of-use asset, if there is a modification, a change in the
lease term, a change in the in-substance fixed lease payments or a change in the
assessment to purchase the underlying asset.
The Company recognizes right-of-use assets at an amount equal to the lease liability.
Unless the Company is reasonably certain to obtain ownership of the leased asset at the
end of the lease term, the recognized right-of-use assets are amortized on a straight-line
basis over the shorter of their estimated useful life and the lease term. Right-of-use assets
are subject to impairment. The amortization periods of the right-of-use assets are as
follows; facilities – 5 years; Vehicles – 3 years.
The Company applies the short-term lease recognition exemption to its short-term leases
(i.e., those leases that have a lease term of 12 months or less from the commencement
date and do not contain a purchase option). It also applies the lease of low-value assets
recognition exemption to leases of office equipment that are considered of low value (i.e.,
below $5). Lease payments for short-term leases and leases of low-value assets are
recognized as expense on a straight-line basis over the lease term.
- 35 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
The Company determines the lease term as the non-cancellable term of the lease, together
with any periods covered by an option to extend the lease if it is reasonably certain to be
exercised, or any periods covered by an option to terminate the lease, if it is reasonably
certain not to be exercised.
In respect of lease payments that depend on the Consumer Price Index, on the
commencement date the Company uses the index prevailing on the commencement date
to calculate the future lease payments.
The aggregate changes in future lease payments resulting from a change in the index are
discounted (without a change in the discount rate applicable to the lease liability) and
recorded as an adjustment of the lease liability and the right-of-use asset, only when there
is a change in the cash flows resulting from the change in the index (that is, when the
adjustment to lease payments takes effect).
The accounting policy for leases applied until December 31, 2018 is as follows:
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.
i.
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
- 36 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
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.
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.
j.
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.
k.
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.
l.
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.
- 37 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
The following criteria are applied in assessing impairment of goodwill in respect of a
business combination:
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.
m. 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.
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 IFRS 9, "Financial Instruments". 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.
- 38 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
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 rate and recorded in profit or loss in accordance with the provisions of
IFRS 9.
Royalty payments are treated as a reduction of the liability.
n.
Revenue recognition:
On January 1, 2018, the Company initially adopted IFRS 15, "Revenue from Contracts
with Customers" ("the Standard"). The Company elected to adopt the provisions of the
Standard using the modified retrospective method with the application of certain practical
expedients and without restatement of comparative data.
The accounting policy for revenue recognition applied until December 31, 2017, is as
follows:
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. When the
Company acts as an agent and is not exposed to the risks and rewards associated with the
transaction, revenues are presented on a net basis. Revenues are measured at the fair
value of the consideration less any trade discounts, volume rebates and returns.
Following are the specific revenue recognition criteria which must be met before revenue
Revenues from software arrangements:
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 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
stage of completion cannot be determined reliably, revenues are recognized on a straight-
line basis over the agreement period.
Software arrangements generally contain multiple sale 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.
- 39 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
Revenue from software licensing arrangements:
SIMIGON LTD.
The Company recognizes revenue from software licensing transactions at a point in time
when the Company provides the customer a right to use the Company's intellectual
property as it exists at the point in time at which the license is granted to the customer.
The Company recognizes revenue from software licensing transactions over time when
the Company provides the customer a right to access the Company's intellectual property
throughout the license period.
The accounting policy for revenue recognition applied commencing from January 1,
2018, is as follows:
Revenue recognition:
Revenue from contracts with customers is recognized when the control over the goods or
services is transferred to the customer. The transaction price is the amount of the
consideration that is expected to be received based on the contract terms, excluding
amounts collected on behalf of third parties (such as taxes).
Revenue from rendering of services:
Revenue from rendering of services is recognized over time, during the period the
customer simultaneously receives and consumes the benefits provided by the Company's
performance. Revenue is recognized in the reporting periods in which the services are
rendered. The Company charges its customers based on payment terms agreed upon in
specific agreements. When payments are made before or after the service is performed,
the Company recognizes the resulting contract asset or liability.
Revenue from customization contracts:
At contract inception, the Company identifies the customization work as a performance
obligation. Since the Company's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced, the Company recognizes revenue
over time.
The Company applies a cost-based input method for measuring the progress of
performance obligations that are satisfied over time. The Company believes that the use
of this input method, according to which revenue is recognized based on the inputs
expended by the Company for fulfilling its performance obligations, best reflects the
actual revenue earned. In applying this input method, the Company estimates the costs to
complete contract performance in order to determine the amount of the revenue to be
recognized. These estimated costs include the direct costs and the indirect costs that are
directly attributable to a contract based on a reasonable allocation method. Moreover, in
measuring the percentage of completion, the Company does not consider costs that do not
contribute to the progress in satisfying performance obligations, such as (costs of
uninstalled materials, etc.).
- 40 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
In certain circumstances, the Company is unable to measure the outcome of a contract,
but the Company expects to recover the costs incurred in fulfilling the contract as of the
reporting date. In such circumstances, the Company recognizes revenue to the extent of
the costs incurred as of the reporting date until such time the outcome of the contract can
be reasonably measured.
If a loss is anticipated from a contract, the loss is recognized in full regardless of the
percentage of completion.
Contract balances:
The Company charges customers as the work progresses in accordance with the
contractual terms. Amounts billed are classified as trade receivables in the statement of
financial position. When revenues from performance of a contract are recognized in profit
or loss before the customer is charged, these amounts are recorded as contract
assets/income receivable.
Amounts received from customers in advance of performance by the Company are
recorded as contract liabilities/deferred revenues from customers and recognized as
revenue in profit or loss when the work is performed.
o.
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.
p.
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.
- 41 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
q.
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.
r.
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.
s.
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.
- 42 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
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.
t.
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.
u.
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.
2.
Estimates and assumptions:
The preparation of the financial statements requires management to make estimates
and assumptions that have an effect on the application of the accounting policies
and on the reported amounts of assets, liabilities, revenues and expenses. These
estimates and underlying assumptions are reviewed regularly. Changes in
accounting estimates are reported in the period of the change in estimate.
- 43 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
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 14.
-
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.
v.
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.
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.
- 44 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
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.
w.
Changes in accounting policies - initial adoption of new financial reporting and
accounting standards and amendments to existing financial reporting and accounting
standards
IFRS 16, "Leases"
In January 2016, the IASB issued IFRS 16, Leases. IFRS 16 supersedes IAS 17 Leases,
IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating
Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the
Legal Form of a Lease. The standard sets out the principles for the recognition,
measurement, presentation and disclosure of leases and requires lessees to account for all
leases under a single on-balance sheet model.
The Group adopted IFRS 16 using the modified retrospective method of adoption with
the date of initial application of January 1, 2019. Under this method, the standard is
applied retrospectively with the cumulative effect of initially applying the standard
recognized at the date of initial application. The Group elected to use the transition
practical expedient allowing the standard to be applied only to contracts that were
previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial
application. The Group also elected to use the recognition exemptions for lease contracts
that, at the commencement date, have a lease term of 12 months or less and do not
contain a purchase option ('short-term leases'), and lease contracts for which the
underlying asset is of low value ('low-value assets').
Nature of the effect of adoption of IFRS 16:
The Group has lease contracts for various facilities and
vehicles.
- 45 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
Upon adoption of IFRS 16, the Group applied a single recognition and measurement
approach for all leases, except for short-term leases and leases of low-value assets. The
standard provides specific transition requirements and practical expedients, which has
been applied by the Group.
As all of the Group's leases were previously classified as operating leases, the Group
recognized right-of-use assets and lease liabilities for these leases, except for short-term
leases and leases of low-value assets. The right-of-use assets were recognized based on
the amount equal to the lease liabilities. Lease liabilities were recognized based on the
present value of the remaining lease payments, discounted using the incremental
borrowing rate at the date of initial application.
The Group also applied the available practical expedients wherein it:
- Used a single discount rate to a portfolio of leases with reasonably similar
characteristics
- Relied on its assessment of whether leases are onerous immediately before the
date of initial application
- Applied the short-term leases exemptions to leases with lease term that ends
within 12 months at the date of initial application
- Used hindsight in determining the lease term where the contract contains options
to extend or terminate the lease
The weighted average rate of interest used to discount the liabilities was 4.82%.
The effect of adoption IFRS 16 as of January 1, 2019 is as follows:
Assets
Right-of-use assets
Liabilities
Short-term
Long-term
Total liabilities
485
265
220
485
IFRIC 23, "Uncertainty over Income Tax Treatments":
In June 2017, the IASB issued IFRIC 23, "Uncertainty over Income Tax Treatments"
("the Interpretation"). The Interpretation clarifies
the rules of recognition and
measurement of assets or liabilities in accordance with the provisions of IAS 12, "Income
Taxes", in situations of uncertainty involving income taxes. The Interpretation provides
guidance on considering whether some tax treatments should be considered collectively,
examination by the tax authorities, measurement to reflect uncertainty involving income
taxes in the financial statements and accounting for changes in facts and circumstances in
respect of the uncertainty.
- 46 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
SIMIGON LTD.
The Interpretation has been initially applied in these consolidated financial statements.
The initial application of the Interpretation did not have a material effect on the
consolidated financial statements.
NOTE 3:- SHORT-TERM INVESTMENTS
December 31,
2019
2018
U.S. dollars in thousands
Financial assets classified as held for trading at fair value
through profit or loss - Mutual Funds *)
1,887
1,845
*)
Short-term investments in mutual funds are considered as highly liquid low risk
investments.
As of March 31, 2020, the fair value of the financial assets classified as held for trading at fair
value through profit or loss was $1,739 thousand.
NOTE 4: - TRADE RECEIVABLES
Trade receivables (1)
December 31,
2019
2018
U.S. dollars in thousands
1,407
2,571
(1) Net of allowance for doubtful debts
446
705
Trade receivables are non-interest bearing and are generally on 30 - 90 days' terms.
The aging analysis of trade receivables is as follows:
Past due but not impaired
Neither past
due nor
impaired
< 30
days
30 - 60
days
60 - 90
day
U.S. dollars in thousands
> 90
days
Total
Year 2019 (before
allowance for doubtful
debts)
Allowance for doubtful
debts
Year 2019 (After
653
-
548
-
allowance for bad debts)
653
548
23
-
23
-
-
-
629
1,853
(446)
446
183
1,407
- 47 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 4: - TRADE RECEIVABLES (Cont.)
The aging analysis of trade receivables is as follows:
SIMIGON LTD.
Past due but not impaired
Neither past
due nor
impaired
< 30
days
30 - 60
days
60 - 90
day
U.S. dollars in thousands
> 90
days
Total
Year 2018 (before
allowance for doubtful
debts)
Allowance for doubtful
debts
2,289
-
Year 2018 (After
allowance for bad debts)
2,289
-
-
-
16
-
16
27
-
27
944
3,276
(705)
(705)
239
2,571
NOTE 5:- RESTRICTED CASH
a.
b.
c.
d.
e.
As part of the regulatory approval received for a $2 million contract with the Israeli Air
Force, on May 2, 2017 the Company issued a Performance Bond deposit in a total
amount of $ 299 thousand to secure deliveries and receiving payments from the
customer. On June 2018 the Performance Bond has been canceled and was replaced
with a Performance Bond issued in October 30, 2018 in a total amount of $ 521
thousand. The Performance Bond was held through a deposit bearing annual interest of
0.55% and its balance as of December 31, 2018 and December 31, 2019 amounted to $
521 thousand and$ 523 thousand, respectively.
On March 12, 2020, the Performance Bond has come to an end and expired.
On December 12, 2018 an additional Performance Bond was issued in a total amount of
$ 22 thousand to secure deliveries and receiving payments from the customer. The
Performance Bond was held through a deposit bearing annual interest of 0.56% and its
balance as of December 31, 2018 amounted to $ 22 thousand.
On September 23, 2019 the Performance Bond has come to an end and expired.
As part of the regulatory approval received for a $1.1 million contract with the Israeli
Air Force, on September 20, 2018 the Company issued a Performance Bond deposit in a
total amount of $ 256 thousand to secure deliveries and receiving payments from the
customer. The Performance Bond was held through a deposit bearing annual interest of
0.48% and its balance as of December 31, 2018 amounted to $ 257 thousand.
On May 2, 2019 the Performance Bond has come to an end and expired.
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 $ 23 thousand in favor of the landlord.
- 48 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 6:- PROPERTY, PLANT AND EQUIPMENT
Composition and movement:
SIMIGON LTD.
Cost:
Balance as of January 1, 2018
Disposal during the year
Acquisitions during the year
Balance as of December 31, 2018
Disposal during the year
Acquisitions during the year
Balance as of December 31, 2019
Accumulated depreciation:
Balance as of January 1, 2018
Disposal during the year
Depreciation during the year
Balance as of December 31, 2018
Disposal during the year
Depreciation during the year
Balance as of December 31, 2019
Depreciated cost as of December 31, 2019
Depreciated cost as of December 31, 2018
Computers
and
peripheral
equipment
Office
furniture
and
equipment
Leasehold
improvements
Total
U.S. dollars in thousands
778
(10)
13
781
(5)
84
860
745
(10)
22
757
(5)
30
782
78
24
213
-
3
216
-
3
219
181
-
14
195
-
17
212
7
21
97
-
-
97
-
1
98
68
-
8
76
-
8
84
14
21
1,088
(10)
16
1,094
(5)
88
1,177
994
(10)
44
1,028
(5)
55
1,078
99
66
NOTE 7:- RIGHT OF USE ASSETS AND LEASE LIABILITIES
Set out below, are the carrying amounts of the Group's right-of-use assets and lease liabilities
and the movements during the period:
Facilities
Total
ROU
assets
Vehicles
U.S. dollars in thousands
Lease
liabilities
$ 485
$ -
$ 485
$ 485
-
(235)
-
59
(19)
-
59
(252)
-
59
-
(287)
(1)
5
2
20
$ 249
$ 45
$ 294
$ 276
As of January 1, 2019
Additions and extensions
Depreciation
Payments
Interest, currency
exchange rate and
Consumer Price Index
As of December 31,
2019
- 49 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 7:- RIGHT OF USE ASSETS AND LEASE LIABILITIES (Cont.)
Information on leases:
SIMIGON LTD.
1. Premises occupied by the Company are rented under various non-cancelable lease
agreements. The latest rental agreement for the premises expires in October 2020 as
determined under a lease agreement signed on October 1, 2014.
2. The Company has leased various motor vehicles under cancelable operating lease
agreements, which expire on various dates, the latest of which is in January 2022.
3. 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.
The total expenses related to premises occupied by the Company for the years ended December
31, 2019 was $179 thousand.
The total expenses related to premises occupied by the subsidiaries for the years ended
December 31, 2019 was $77 thousand.
The total expenses related to various motor vehicles by the Company for the years ended
December 31, 2019 was $36 thousand.
NOTE 8:- GOODWILL AND INTANGIBLE ASSET
Goodwill *)
Technology **)
Total
Carrying amount as of
December 31,
2019
2018
U.S. dollars in thousands
1,068
-
1,068
1,068
-
1,068
*)
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 2019, the recoverable amount which was based on third-party indications
of the fair value of the Company, exceeded the carrying amount of the Company's net
assets (equity), and therefore, no provision for impairment was recorded.
**) During the years ended December 31, 2017 and 2016, the Company recorded
amortization in the amount of $ 4 thousand and $ 50 thousand, respectively, which was
recorded in cost of revenues.
- 50 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 9:- OTHER ACCOUNTS PAYABLE AND ACCRUED EXPENSES
SIMIGON LTD.
December 31,
2019
2018
U.S. dollars in thousands
388
457
845
422
269
691
Employees and payroll accruals
Accrued expenses
NOTE 10:- EMPLOYEE BENEFIT LIABILITIES, NET
a.
Post-employment benefits:
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
- 51 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 10:- EMPLOYEE BENEFIT LIABILITIES, NET (Cont.)
.
SIMIGON LTD.
Year ended
December 31,
2018
U.S dollars in thousands
2017
2019
Expenses in respect of defined
contribution plans under Section 14 to
the Severance Pay Law, 1963
126
126
145
b.
Amounts recognized in the statements of comprehensive income are as follows:
Current service cost
Interest cost
Exchange rate
Total expense included in profit or loss
58
12
26
96
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
287
12
26
58
(48)
27
362
56
10
(22)
44
289
10
(23)
56
(29)
(16)
287
53
9
26
88
222
9
26
53
(32)
11
289
d.
The actuarial assumptions used are as follows:
Discount rate
2.77%
4.05%
3.59%
Future salary increases
3.55%
3.57%
3.63%
Average expected remaining working
years
7.42
7.42
7.47
Remeasurement gain (loss) in respect of
defined benefit plan
(27)
17
(11)
- 52 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 11:- EQUITY
a.
Share issuance:
SIMIGON LTD.
1.
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 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.
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.
- 53 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 11:- EQUITY (Cont.)
SIMIGON LTD.
2.
3.
4.
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.
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.
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.
5. 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.
- 54 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 11:- EQUITY (Cont.)
SIMIGON LTD.
On September 8, 2017 the Company's shareholders approved the conversion of the
2016 annual cash bonuses approved by the Company's Board of Directors on April
14, 2016 in accordance with the Company's Compensation Policy Plan to Mr. Ami
Vizer the Company's Chief Executive Officer and an executive director in a total
amount of GBP £21,934 and to Mr. Efi Manea the Company's Chief Financial
Officer and an executive director in a total amount of GBP £5,699, into the
allotment of 125,338 and 32,564 Ordinary Shares of 0.01 par value of the
Company, respectively, such shares to be issued under the Company's Employees'
Share Option Plans.
As of the date of the approval of the financial statements, the shares have not been
issued yet.
6.
On March 14, 2019, a total of 5,000 options were exercised under the Company's
Stock Option Plan by a by a former employee at an average exercise price of $
0.12.
b.
Composition of share capital:
December 31,
2019, 2018
and 2017
Authorized
December 31,
2019
2018
2017
Issued and outstanding
Number of shares
Ordinary shares of
NIS 0.01 par value each
100,000,000
50,863,618 (*) 50,858,618 (*) 51,394,189
(*) Net of 535,571 Ordinary shares held in treasury.
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, 2018, an aggregate of 2,463,829
Ordinary shares of the Company are still available for future grant.
On April 14, 2016 the Board of Directors approved a total grant of 40,000 options to
purchase Ordinary shares of the Company to 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. Out of the total approval, the Company granted a total of 35,000 options.
- 55 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 11:- EQUITY (Cont.)
SIMIGON LTD.
On September 21, 2017 the Board of Directors approved a total grant of 170,000 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 $ 0.236.
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 (followed by a shareholder's approval), 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.
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, 2017 and 2016: risk-free interest rate ranging from 0.87% - 2.24%; a
dividend yield of 3%; expected volatility of 80%; and a weighted average expected life of
the options of 6.25 years. The weighted average fair values of the options granted in 2017
and 2016 were $0.127 and $ 0.13 respectively.
A summary of the activity in options to employees, consultants, and directors (including
the senior management, see d. below) for the years 2019, 2018 and 2017 is as follows:
2019
Year ended
December 31,
2018
2017
Number
of
options
Weighted
average
exercise
price
Number
of
options
Weighted
average
exercise
price
Weighted
average
exercise
price
Number
of options
Outstanding at
beginning of year
Granted
Exercised
Expired
Forfeited
Outstanding at end of
year
784,333
-
(5,000)
$ 0.247
-
$ 0.119
(110,000) $ 0.075
(30,000) $ 0.181
824,333
-
-
$ 0.265
-
-
(40,000) $ 0.605
-
-
907,833
170,000
-
$ 0.372
$ 0.236
-
(40,000) $ 1.716
(213,500) $ 0.428
639,333
$ 0.281
784,333
$ 0.247
824,333
$ 0.265
Exercisable options
505,165
$ 0.292
618,497
$ 0.250
523,607
$ 0.312
- 56 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 11:- EQUITY (Cont.)
SIMIGON LTD.
The options outstanding as of December 31, 2019, have been separated into ranges of
exercise price as follows:
Exercise price
$ 0.002 - $ 0.25
$ 0.335 - $ 1.2
Options
outstanding
as of
December 31,
2019
338,333
301,000
639,333
Weighted
average
remaining
contractual
life (years)
4.21
4.53
Options
exercisable
as of
December 31,
2019
209,165
296,000
505,165
d.
Options to the CEO and senior employees:
Further to Note 11a1, (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
e.
Shares to the CEO and senior employees:
Further to Note 11a1, (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.
- 57 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 11:- EQUITY (Cont.)
SIMIGON LTD.
For the year ended December 31, 2015, the Company recorded share-based compensation
expenses in a total of $ 28 thousand, in respect to the shares granted to the CEO.
f.
Shares buyback Program:
On September 8, 2017, the Company's shareholders approved that the Company be
generally and unconditionally authorised to make one or more irrevocable, non-
discretionary market purchases of its own ordinary shares of 0.01 NIS each in the capital
of the Company ("Ordinary Shares") (the "Repurchase Programme").
All purchases will be made by way of on-market purchases for the purposes of the rules
of the London Stock Exchange through a certified broker, in accordance with the
authority conferred by the Articles, the AIM Rules for Companies, this General Meeting
and all other applicable rules and regulations, and will be made subject to the following
limitations:
1.
2.
3.
4.
5.
6.
the absolute maximum value of Ordinary Shares acquired pursuant to the
Repurchase Programme shall not, in aggregate, exceed GBP £800,000;
there will be no minimum price which may be paid for an Ordinary Share;
the maximum price which may be paid for an Ordinary Share is 110 percent of the
average of the middle market quotations for an Ordinary Share (as derived from the
Daily Official List) for the 5 business days immediately preceding the day on
which the Ordinary Share is contracted to be purchased;
the minimum and maximum prices per Ordinary Share referred to in sub-
paragraphs (ii) and (iii) of this resolution are in each case exclusive of any
expenses payable by the Company;
any Ordinary Shares purchased under the Repurchase Programme will be held in
treasury and will be notified to a Regulatory Information Service in accordance
with the AIM Rules for Companies; and
the authority conferred by this resolution shall expire at the end of the General
Meeting in 2018.
- 58 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 11:- EQUITY (Cont.)
SIMIGON LTD.
A summary of the Company’s purchasing through finnCap Ltd (acting as the Company's
broker) of its Ordinary Shares for 2018 is as follows:
Date
March 2, 2018
June 6, 2018
August 17, 2018
September 7, 2018
October 10, 2018
Number of
Ordinary
Shares
Repurchased
Price per
Ordinary
Share of
0.01 NIS
Purchase
amount
(in
thousand)
225,000
30,000
100,000
117,000
63,571
535,571
$ 0.212
$ 0.229
$ 0.203
$ 0.212
$ 0.212
47
6
18
21
13
105
total
number of
Ordinary
Shares
outstanding
after the
Repurchase
51,169,189
51,139,189
51,039,189
50,922,189
50,858,618
The Repurchased shares, along with any other Ordinary Shares purchased by the
Company pursuant to the Programme, will be held in treasury.
NOTE 12:- JOINT VENTURES
1. 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.
The Joint Venture never commenced operations and on November 10 2016, it has been
dissolved.
2. 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.
The Joint Venture never commenced operations and on June 18, 2019, it has been dissolved.
- 59 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 13:- 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 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).
- 60 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 13:- 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.
- 61 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 13:- INCOME TAXES (Cont.)
c.
Carryforward losses:
Domestic:
SIMIGON LTD.
As of December 31, 2019, 2018 and 2017, the Company had accumulated losses for
Israeli tax purposes of approximately $ 4.5 million, $ 2.6 million and $ 1.9 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, 2019, 2018 and 2017, the federal tax loss carryforwards of the U.S.
subsidiaries amounted to approximately $ 4.1 million, $ 4.3 million and $ 5.1 million,
respectively. Such losses are available for offset against future U.S. taxable income of the
subsidiaries and will expire in the years 2024-2027.
As of December 31, 2018 and 2017, the tax loss carryforwards of the Singaporean
subsidiary amounted to approximately $ 87 thousand and $ 81 thousand, respectively,
which may be carried forward, in order to offset taxable income in the future, for an
indefinite period. As of December 31, 2019, the Singaporean subsidiary did not have tax
loss carryforwards, as it was dissolved on November 1, 2019.
As of December 31, 2018 and 2017, the tax loss carryforward of the Colombian
subsidiary amounted to approximately $ 35 thousand and $ 38 thousand, respectively,
which may be carried forward, in order to offset taxable income in the future, for an
indefinite period. As of December 31, 2019, the Colombian subsidiary did not have tax
loss carryforwards, as it was dissolved on November 5, 2019
As of December 31, 2018, no deferred tax assets have been recorded in respect of
carryforward operating losses due the uncertainty as to their realization.
d.
Tax rates applicable to the income of the Company and its subsidiaries:
Domestic:
The Israeli corporate income tax rate was 24% in 2017, 23% in 2018 and 23% in 2019.
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.
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.
- 62 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 13:- INCOME TAXES (Cont.)
SIMIGON LTD.
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 2014 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 2019 and 2017, the main reconciling item between the tax benefit assuming loss 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 for which no deferred taxes were provided. In
2018 the main reconciling item is the derecognition of prior years' deferred tax benefits
due to the uncertainty as to their realization.
NOTE 14:- OTHER LIABILITIES, COMMITMENTS AND CONTINGENCIES
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).
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.
- 63 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 14:- OTHER LIABILITIES, COMMITMENTS AND CONTINGENCIES (Cont.)
SIMIGON LTD.
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, 2019, 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, 2019 and 2018
was $ 196 thousand and $ 192 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.
As of December 31, 2019, 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,
technology, discoveries,
improvements, modifications, methods, software,
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.
- 64 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 14:- OTHER LIABILITIES, COMMITMENTS AND CONTINGENCIES (Cont.)
SIMIGON LTD.
The total non-current liability for the years ended December 31, 2019 and 2018
was $ 406 thousand and $ 413 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, 2019, 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, 2019 and 2018 was
$ 66 thousand and $ 66 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,
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 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.
As of December 31, 2019, the Company received a total amount of $ 57 thousand.
The total non-current liability for the year ended December 31, 2019 and 2018 was
$ 40 thousand and $ 41 thousand, respectively.
- 65 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 14:- OTHER LIABILITIES, COMMITMENTS AND CONTINGENCIES (Cont.)
SIMIGON LTD.
OCS liabilities (including current liabilities):
Balance as of the beginning of the year
Grants during the year
Paid during the year
Income Receivables
Interest and time value
Balance as of the year end
Year ended
December 31,
2019
2018
U.S. dollars in thousands
754
-
(1)
-
(13)
740
746
22
-
(2)
(12)
754
b.
Litigation:
On January 13, 2020 D.D Goldstein Real Estates and Investment Ltd., which to the
Company's knowledge acquired 1,500,000 shares in the Company during 2019, has
filed two legal actions in the Tel Aviv District Court - a petition for leave to file a
monetary claim concerning salaries on behalf of the Company and an action for
prerogative relief concerning resolutions approved at the Company's annual general
meeting held on December 30, 2019 regarding the appointment of directors and the
determination of their compensation.
Upon review of the claims and based on the opinion of its attorneys, the Company
does not foresee any potential material financial obligation to the Company even if
the court was to decide that these claims have merit.
The Company has notified its insurers with respect to allegations against directors and
has recorded in its financial statements for the year ended December 31, 2019, a
provision of $75 thousand for Corporate Retention to be paid to its insurers.
- 66 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIMIGON LTD.
NOTE 15:- SUPPLEMENTARY INFORMATION TO THE STATEMENT OF COMPREHENSIVE
INCOME
Year ended
December 31,
2018
U.S. dollars in thousands
2019
2017
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
Government grants
c.
Selling and marketing expenses:
Salaries and related benefits
Lease and office maintenance
Advertising and sales promotion
Travel expenses
Depreciation and amortization
Share-based compensation
Commission and Consultant fees
d.
General and administrative expenses:
Salaries and related benefits
Lease and office maintenance
Travel expenses
Professional fees and public company
expenses
Depreciation and amortization
Doubtful debt provision
Other
790
48
74
74
*) -
811
1,797
1,982
59
184
2
(52)
2,175
1,024
22
42
51
32
1
15
1,187
655
16
37
419
23
-
31
581
71
111
12
1
194
973
2,092
246
21
4
(28)
2,335
852
47
45
66
7
2
-
689
101
69
22
1
94
975
1,892
219
22
2
(43)
2,092
948
50
38
61
7
2
64
1,019
1,170
666
33
13
284
5
446
15
626
28
34
356
4
-
8
1,171
1,462
1,056
*)
Represents an amount lower than $ 1 thousand.
- 67 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIMIGON LTD.
NOTE 15:- SUPPLEMENTARY INFORMATION TO THE STATEMENT OF COMPREHENSIVE
INCOME (Cont.)
e.
Finance income:
Exchange rate differences
Interest income from banks and short
term investments
f.
Finance cost:
Exchange rate differences
Government grants
Right of use assets
Bank loans and fees
Year ended
December 31,
2018
U.S. dollars in thousands
2019
2017
66
149
215
121
56
18
20
215
128
6
134
108
32
-
17
157
56
70
126
104
13
-
8
125
NOTE 16:- REVENUES
The Company manages its business on the basis of one reportable segment.
a.
Revenues:
Software licenses
Customization
Recurring Maintenance & Support
Training
Year ended
December 31,
2018
U.S. dollars in thousands
2019
2017
1,981
2,111
790
-
4,882
2,975
1,300
656
98
5,029
2,473
1,000
862
-
4,335
- 68 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 16:- REVENUES (Cont.)
b.
Geographical information:
Revenues classified by geographical destinations based on the end-users location:
SIMIGON LTD.
North America
Asia Pacific
Rest of the world (1)
Year ended
December 31,
2018
U.S. dollars in thousands
2019
2017
2,026
3
2,853
4,882
4,094
107
828
5,029
1,750
797
1,788
4,335
(1) Europe, South America, Middle East and Australia.
The carrying amounts of non-current assets (property, plant and equipment, Right-of-use
assets and intangible assets) based on the location of the assets are as follows:
Asia Pacific and rest of the world
North America
2019
December 31,
2018
U.S. dollars in thousands
2017
199
1,262
1,461
24
1,110
1,134
26
1,136
1,162
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
Year ended
December 31,
2018
23%
13%
18%
33%
2019
13%
38%
27%
18%
2017
45%
7%
4%
10%
- 69 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 17:- 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,
2018
U.S. dollars in thousands
2019
2017
Net income (loss) for the year
(1,448)
(1,007)
(952)
Share data (in thousands):
Weighted average number of Ordinary shares
for computing basic earnings (loss) per share
(*) 51,020
(*) 51,259
(*) 51,444
Effect of dilution:
Share options
(**)
(**)
(**)
Weighted average number of Ordinary shares
adjusted for the effect of dilution
51,020
51,259
51,444
*) Weighted average number of shares includes shares in respect of the Company's
obligation to issue approximately 157,902 Ordinary shares to two officers of the
Company in lieu of cash bonus – see Note 11a5.
Weighted average number of shares is net of 535,571 Ordinary shares of the Company
held in treasury under the Repurchase Programme as described in Note 11f.
**) All share options are excluded from the calculation of diluted earnings per share because
their effect on the calculation is antidilutive.
NOTE 18:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES
Year ended
December 31,
2018
U.S. dollars in thousands
2017
2019
37
14
15
11
77
3
3
42
6
17
12
77
3
3
37
15
15
8
75
3
3
a.
Expenses to related party of a
shareholder:
Cost of revenues *)
Research and development *)
Selling and marketing *)
General and administration *)
b.
Balances to related party of a
shareholder:
Other accounts receivable and prepaid
expenses *)
- 70 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 18:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
SIMIGON LTD.
*)
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.
b.
Compensation of key management
personnel of the Company:
Non- Executive directors benefits
Employee benefits *)
Share-based payments
Year ended
December 31,
2018
U.S. dollars in thousands
2017
2019
98
1,687
**) -
1,785
100
1,540
2
1,642
124
1,574
3
1,701
*)
Includes long-term employee benefits in the amount of $68 thousand, of $67
thousand and $ 67 thousand for the years ended December 31, 2019, 2018 and
2017, respectively.
Years 2019 and 2018 include bonus to EVP Biasness Development in the amount
of $ 32 thousand and $ 7 thousand, respectively.
Years 2019, 2018 and 2017 include bonus to VP R&D in the amount of $ 13
thousand $7 thousand and $ 3 thousand, respectively.
Year 2018 and year 2017 include bonus provision to VP Products in the amount of
$ 1 thousand and $8 thousands, respectively.
**) Represents an amount lower than $ 1 thousand.
- 71 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 18:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
c.
Balances with Directors and Officers:
SIMIGON LTD.
The Company's liability balances to directors and officers as of December 31, 2019, 2018
and 2017 amount to $312 thousand, $ 308 thousand and $ 333 thousand; respectively, out
of which, a total of $ 188 thousand, $ 180 thousand and $ 208 thousand is related to
severance, vacation and recovery liabilities for key employees as of December 31, 2019,
2018 and 2017; 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.
The Compensation Policy Plan has been re- approved on the Annual General Meeting
held on December 29, 2016 and on the General Meeting held on April 16, 2020.
e.
Agreement with CFO:
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.
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. For the year ended December 31, 2016, the Company recorded
share based compensation of $ 9 thousand in respect of its CEO annual bonus for year
2016.
- 72 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 18:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
SIMIGON LTD.
On September 8, 2017 the Company's shareholders approved the conversion of the 2016
annual cash bonuses to Mr. Efi Manea the Company's Chief Financial Officer and an
executive director in a total amount of GBP £5,699, into the allotment of 32,564 Ordinary
Shares of 0.01 par value of the Company, such shares to be issued under the Company's
Employees' Share Option Plans. As of the date of the approval of the financial statements,
the shares have not been issued yet.
Commencing August 1 2017, the Company is reimbursing Mr. Efraim Manea for his
children's education expenses as part of his relocation together with his family to work at
the Company's subsidiary in USA.
In the annual meeting held on December 7, 2018, the shareholders approved an additional
monthly compensation of $ 4,100 commencing August 1, 2017, to Mr. Efraim Manea, the
Company's Chief Financial Officer who also serves as a director of the Company, for his
relocation costs as part of his work for the Company’s subsidiary in the USA.
f.
Significant agreements with shareholders:
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.
- 73 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 18:- BALANCES AND TRANSACTIONS WITH RELATED PARTIES (Cont.)
SIMIGON LTD.
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.
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, 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. The total office lease costs in year 2018 amounted to $77 thousand.
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. For the year ended December 31,
2016, the Company recorded share based compensation of $ 37 thousand in respect of its
CEO annual bonus for year 2016.
On September 8, 2017 the Company's shareholders approved the conversion of the 2016
annual cash bonuses to Mr. Ami Vizer the Company's Chief Executive Officer and an
executive director in a total amount of GBP £21,934, into the allotment of 125,338
Ordinary Shares of 0.01 par value of the Company, respectively, such shares to be issued
under the Company's Employees' Share Option Plans. As of the date of the approval of
the financial statements, the shares have not been issued yet.
Total salary including employer tax of Mr. Ami Vizer during year 2019 amounted to an
annual salary of $ 360 thousand, annual social benefits of $ 43 thousand (12.5% of his
annual salary), expenses allowance and car insurance of $ 9 thousand, recovery fees of
$ 1 thousand, severance pay of $ 29 thousand, vacation days of $ 39 thousand and health
insurance of $ 39 thousand.
- 74 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 19:- DIVIDEND DISTRIBUTION
SIMIGON LTD.
a.
b.
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).
In May 2017 the Company paid a dividend in an amount of $70 thousand ($ 0.136 cents
per share, equating to approximately 19% of the Company's earnings per share and to
approximately 19% of the Company's net income for the year ended December 31, 2016).
NOTE 20:- 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.
a.
Foreign exchange risk:
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,
2018, 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.
- 75 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 20:- FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Cont.)
SIMIGON LTD.
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, 2019, cash and cash equivalents together with the Company's short-
term bank deposits and short-term investments amounted to $ 6,042 thousand.
c.
Liquidity risk:
The table below presents the maturity profile of the Company's financial liabilities based
on contractual undiscounted payments:
December 31, 2019:
Less than
one year
Between 2 to
4 years
U.S. dollars in thousands
More than 4
years
Government grants
Lease liability
Trade payables
Other accounts payable
and accrued expenses
29
251
86
816
1,173
192
39
-
-
227
December 31, 2018:
Total
737
290
86
816
516
-
-
516
1,929
Less than
one year
Between 2 to
4 years
U.S. dollars in thousands
More than 4
years
Government grants
Trade payables
Other accounts payable
and accrued expenses
30
159
661
850
155
-
-
155
557
-
-
557
Total
742
159
661
1,562
- 76 -
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTE 21: SUBSEQUENT EVENT
SIMIGON LTD.
In March 2020 the World Health Organization declared coronavirus COVID-19 a global
pandemic. COVID-19 threatens to be a disruptor to companies, supply chains and the world
economy for at least the first half of 2020. As of the date of approval of these financial
statements, there has not been a significant impact on the Company’s operations resulting from
the COVID-19 outbreak and the Company had not received any cancelation notices from its
customers in respect of active purchase orders as a result of COVID-19. In light of the
uncertainty as to the severity and duration of the pandemic, the overall impact of COVID-19 on
the Company’s future revenues, profitability, liquidity and financial position is difficult to
assess at this time.
- - - - - - - - - - - - - - - - - -
- 77 -
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:
SimiGon Ltd.
1 Sapir St.
PO Box 12050
Herzliya, Israel 46733
Tel: +972-9-956-1777
Fax: +972-9-951-3566
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
ADVISERS
Nominated Adviser and Broker
finnCap
1 Bartholomew Close,
London, UK
EC1A 7BL
Registrar
Computershare Investor Services (Jersey) Limited
Queensway House
Hilgrove Street
St Helier
Jersey
JE1 1ES
Auditors and Reporting Accountants
Kost Forer Gabbay & Kasierer
A member of Ernst & Young Global
144 Menachem Begin St.
Tel-Aviv 6492102
Israel
Counsel of the Company
Amit, Pollak, Matalon & Co. Advocates and Notary
Nitsba Tower, 19th Floor, 17 Yitzhak Sadeh St.,
Tel Aviv 67775
Israel
- 78 -
WWW.SIMIGON.COM