UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of: September 2019 (Report No. 8)
Commission file number: 001-37600
NANO DIMENSION LTD.
(Translation of registrant’s name into English)
2 Ilan Ramon
Ness Ziona 7403635 Israel
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(1):_____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(7):_____
CONTENTS
This Report of Foreign Private Issuer on Form 6-K consists of (i) the Registrant’s Unaudited Condensed Consolidated Interim Financial Statements as of June 30, 2019, which is attached hereto as Exhibit 99.1; and (ii) the Registrant’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2019, which is attached hereto as Exhibit 99.2.
This Form 6-K (including exhibits thereto) are incorporated by reference into the registration statements on Form F-3 (File No. 333-217173) and Form S-8 (File No. 333-214520) of the Registrant, filed with the Securities and Exchange Commission, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Nano Dimension Ltd. | ||
(Registrant) | ||
Date: September 23, 2019 | By: | /s/ Yael Sandler |
Name: | Yael Sandler | |
Title: | Chief Financial Officer |
2
Exhibit 99.1
Nano-Dimension Ltd.
Unaudited Condensed Consolidated Interim Financial Statements as of June 30, 2019
Table of Contents
Page | |
Unaudited Condensed Consolidated Interim Financial Statements: | |
Unaudited Condensed Consolidated Interim Statements of Financial Position | F-2 |
Unaudited Condensed Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income | F-3 |
Unaudited Condensed Consolidated Interim Statements of Changes in Equity | F-4 |
Unaudited Condensed Consolidated Interim Statements of Cash Flow | F-5 |
Notes to the Unaudited Condensed Consolidated Interim Financial Statements | F-6 - F-13 |
F-1
Unaudited Condensed Consolidated Interim Statements of Financial Position as at
June 30, | December 31, | |||||||||||
2018 | 2019(**) | 2018(***) | ||||||||||
Assets | ||||||||||||
Cash and cash equivalents | 11,601 | 5,290 | 3,753 | |||||||||
Restricted deposits | 20 | 31 | 21 | |||||||||
Trade receivables | 628 | 1,174 | 1,313 | |||||||||
Other receivables | 653 | 573 | 570 | |||||||||
Inventory | 2,488 | 3,967 | 3,116 | |||||||||
Total current assets | 15,390 | 11,035 | 8,773 | |||||||||
Restricted deposits | 329 | 351 | 347 | |||||||||
Property plant and equipment, net | 5,248 | 5,350 | 5,200 | |||||||||
Right of use asset | - | 1,640 | - | |||||||||
Intangible assets | 6,369 | 5,597 | 5,983 | |||||||||
Total non-current assets | 11,946 | 12,938 | 11,530 | |||||||||
Total assets | 27,336 | 23,973 | 20,303 | |||||||||
Liabilities | ||||||||||||
Trade payables | 1,162 | 819 | 1,414 | |||||||||
Other payables | 1,929 | 3,153 | 2,178 | |||||||||
Total current liabilities | 3,091 | 3,972 | 3,592 | |||||||||
Liability in respect of government grants | 934 | 867 | 895 | |||||||||
Lease liability | - | 1,273 | - | |||||||||
Liability in respect of warrants and rights to purchase | - | 2,804 | - | |||||||||
Other long-term liabilities | 272 | - | 244 | |||||||||
Total non-current liabilities | 1,206 | 4,944 | 1,139 | |||||||||
Total liabilities | 4,297 | 8,916 | 4,731 | |||||||||
Equity | ||||||||||||
Share capital | 3,291 | 5,559 | 3,291 | |||||||||
Share premium and capital reserves | 63,841 | (*) | 63,850 | 63,969 | ||||||||
Treasury shares | (1,509 | ) | (1,509 | ) | (1,509 | ) | ||||||
Presentation currency translation reserve | 1,431 | 1,431 | 1,431 | |||||||||
Accumulated loss | (44,015 | ) | (54,274 | ) | (51,610 | ) | ||||||
Total equity | 23,039 | 15,057 | 15,572 | |||||||||
Total liabilities and equity | 27,336 | 23,973 | 20,303 |
(*) | Reclassified, See note 2.C |
(**) | As from January 1, 2019, the Group applies IFRS 16, see note 3A. |
(***) | The December 31, 2018 balances were derived from the Company’s audited annual financial statements. |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
F-2
Unaudited Condensed Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income
(In thousands of USD, except per share amounts)
For the Six-Month
Period Ended June 30, |
||||||||
2018 | 2019(*) | |||||||
Revenues | 1,723 | 2,850 | ||||||
Cost of revenues | 1,124 | 1,959 | ||||||
Cost of revenues - amortization of intangible | 386 | 386 | ||||||
Total cost of revenues | 1,510 | 2,345 | ||||||
Gross profit | 213 | 505 | ||||||
Research and development expenses, net | 4,611 | 4,474 | ||||||
Sales and marketing expenses | 1,872 | 2,871 | ||||||
General and administrative expenses | 1,494 | 1,590 | ||||||
Operating loss | (7,764 | ) | (8,430 | ) | ||||
Finance income | 47 | 7,317 | ||||||
Finance expense | 176 | 1,551 | ||||||
Total comprehensive loss | (7,893 | ) | (2,664 | ) | ||||
Basic and diluted loss per share (USD) | (0.09 | ) | (0.02 | ) |
(*) | As from January 1, 2019, the Group applies IFRS 16, see note 3A. |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
F-3
Unaudited Condensed Consolidated Interim Statements of Changes in Equity
(In thousands of USD)
Share
capital |
Share premium | Treasury shares | Presentation currency translation reserve | Accumulated loss |
Total
equity |
|||||||||||||||||||
For the six months ended June 30, 2019: | ||||||||||||||||||||||||
Balance as of January 1, 2019 | 3,291 | 63,969 | (1,509 | ) | 1,431 | (51,610 | ) | 15,572 | ||||||||||||||||
Issuance of ordinary shares, net | 2,216 | (632 | ) | -- | -- | -- | 1,584 | |||||||||||||||||
Exercise of rights to purchase | 52 | 311 | -- | -- | -- | 363 | ||||||||||||||||||
Share-based payments | -- | 202 | -- | -- | -- | 202 | ||||||||||||||||||
Net loss | -- | -- | -- | -- | (2,664 | ) | (2,664 | ) | ||||||||||||||||
Balance as of June 30, 2019 | 5,559 | 63,850 | (1,509 | ) | 1,431 | (54,274 | ) | 15,057 | ||||||||||||||||
For the six months ended June 30, 2018 (*): | ||||||||||||||||||||||||
Balance as of January 1, 2018 | 2,307 | 52,059 | (1,509 | ) | 1,431 | (36,122 | ) | 18,166 | ||||||||||||||||
Issuance of ordinary shares, net | 981 | 11,490 | -- | -- | -- | 12,471 | ||||||||||||||||||
Exercise of options | 3 | (3 | ) | -- | -- | -- | -- | |||||||||||||||||
Share-based payments | -- | 295 | -- | -- | -- | 295 | ||||||||||||||||||
Net loss | -- | -- | -- | -- | (7,893 | ) | (7,893 | ) | ||||||||||||||||
Balance as of June 30, 2018 | 3,291 | 63,841 | (1,509 | ) | 1,431 | (44,015 | ) | 23,039 |
(*) | Reclassified, See note 2.C |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
F-4
Unaudited Condensed Consolidated Interim Statements of Cash Flow
(In thousands of USD)
For the six months ended
June 30, |
||||||||
2018 | 2019(*) | |||||||
Cash flow from operating activities | ||||||||
Net loss | (7,893 | ) | (2,664 | ) | ||||
Adjustments: | ||||||||
Depreciation and amortization | 969 | 1,336 | ||||||
Changes in liability in respect of government grants | 78 | (2 | ) | |||||
Changes in liability in respect of warrants and rights to purchase | - | (7,316 | ) | |||||
Issuance expenses recognized as finance expense | - | 1,224 | ||||||
Financing expenses (income) | (42 | ) | 268 | |||||
Loss from disposal and sale of fixed assets | 162 | 17 | ||||||
Share-based payments | 284 | 193 | ||||||
1,451 | (4,280 | ) | ||||||
Changes in assets and liabilities: | ||||||||
Increase in inventory | (798 | ) | (1,223 | ) | ||||
Increase in other receivables | (70 | ) | (3 | ) | ||||
Decrease (increase) in trade receivables | (534 | ) | 139 | |||||
Increase in other payables | 251 | 333 | ||||||
Increase (decrease) in trade payables | 833 | (599 | ) | |||||
Decrease in other long term liabilities | (30 | ) | - | |||||
(348 | ) | (1,353 | ) | |||||
Net cash used in operating activities | (6,790 | ) | (8,297 | ) | ||||
Cash flow from investing activities | ||||||||
Decrease (increase) in restricted bank deposits | 87 | (14 | ) | |||||
Acquisition of property plant and equipment | (349 | ) | (316 | ) | ||||
Proceeds from sale of fixed assets | 1 | - | ||||||
Net cash used in investing activities | (261 | ) | (330 | ) | ||||
Cash flow from financing activities | ||||||||
Proceeds from issuance of ordinary shares, warrants and rights to purchase, net | 12,471 | 10,561 | ||||||
Lease payments | - | (534 | ) | |||||
Exercise of rights to purchase | - | 282 | ||||||
Amounts recognized in respect of government grants liability, net | 19 | (96 | ) | |||||
Net cash provided by financing activities | 12,490 | 10,213 | ||||||
Increase in cash and cash equivalents | 5,439 | 1,586 | ||||||
Cash and cash equivalents at beginning of the period | 6,103 | 3,753 | ||||||
Effect of exchange rate fluctuations on cash | 59 | (49 | ) | |||||
Cash and cash equivalents at end of period | 11,601 | 5,290 | ||||||
Non-cash transactions: | ||||||||
Property plant and equipment acquired on credit | 68 | 3 |
(*) | As from January 1, 2019, the Group applies IFRS 16, see note 3A. |
The accompanying notes are an integral part of these unaudited condensed consolidated interim financial statements.
F-5
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Note 1 - General
a. |
Reporting entity
Nano Dimension Ltd. (the “Company”) is an Israeli resident company incorporated in Israel. The address of the Company’s registered office is 2 Ilan Ramon St., Ness Ziona, Israel. The unaudited condensed consolidated interim financial statements of the Company as of June 30, 2019, comprise the Company and its subsidiaries in Israel, in the United States and in Hong Kong (together referred to as the “Group”). The Company engages, by means of the subsidiary Nano Dimension Technologies Ltd. (“Nano–Technologies”), in the development and commercialization of a three-dimensional (3D) printer and nanotechnology based conductive and dielectric inks, which are supplementary products to the 3D printer. The ordinary shares of the Company are registered for trade on the Tel Aviv Stock Exchange. In addition, since March 2016, American Depositary Shares (“ADSs”) representing the Company’s ordinary shares have been trading on the Nasdaq Capital Market. |
b. |
Since August 25, 2014, the Company has devoted substantially all of its financial resources to develop its products and has financed its operations primarily through the issuance of equity securities. The amount of the Company’s future net profits or losses will depend, in part, on the rate of its future expenditures, its ability to generate significant revenues from the sale of its products, and its ability to obtain funding through the issuance of securities, strategic collaborations or grants. Starting in the fourth quarter of 2017, the Group began to commercialize its products and has generated revenues, mainly from sales of its 3D printers. The Group’s ability to generate revenue and achieve profitability depends on its ability to successfully commercialize its products.
Based on the projected cash flows, cash and cash equivalents balance as of June 30, 2019 and the funds raised after the reporting period (see note 8b), management is of the opinion that without further fund raising it will not have sufficient resources to enable it to continue its operating activities, including the development, manufacturing and marketing of its products for a period of at least 12 months from the sign-off date of these interim condensed consolidated financial statements. As a result, there is a substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans include continuing commercialization of the Group’s products and securing sufficient funding through the sale of additional equity securities and debt. There are no assurances however, that the Group will be successful in obtaining the level of financing needed for its operations. If the Group is unsuccessful in commercializing its products and securing sufficient funding, it may need to reduce activities, curtail or even cease operations.
The interim condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of assets and the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
Note 2 - Basis of Presentation
a. |
Statement of Compliance
These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 Interim Financial Reporting and do not include all of the information required for full annual financial statements. They should be read in conjunction with the financial statements as of and for the year ended December 31, 2018 (the “Annual Financial Statements”).
These condensed consolidated interim financial statements as at and for the six months ended 30 June, 2019 were authorized for issuance by the Company’s Board of Directors on September XX, 2019. |
F-6
Nano Dimension Ltd.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Note 2 - Basis of Presentation (Cont’d)
b. |
Use of Estimates and Judgments
The preparation of financial statements in conformity with International Financial Reporting Standards (“IFRS”) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Except as described below and in addition to the significant estimations and judgements as mentioned in Note 3, the significant judgments made by management in applying the Group’s accounting policies and the principal assumptions used in the estimation of uncertainty were the same as those that applied to the Annual Financial Statements. |
Estimate/judgment |
Principal assumptions |
Possible effects |
|||
Determining the fair value of rights to purchase and warrants |
The fair value of the rights to purchase and warrants is determined by using the Black-Scholes model (see note 6).
|
An increase or decrease in the amounts allocated to the financial liabilities and equity and an increase or decrease in financing expenses. |
c. | Reclassification |
In its annual financial statements for the year ended December 31, 2018, the Company changed the equity presentation in the Consolidated Statements of Financial Position. In order to simplify presentation, warrants, capital reserves for share based payments and from transactions with controlling shareholders, were consolidated into the share premium section. This classification did not have any effect on the total equity. | |
Comparative figures as of June 30, 2018, have been reclassified accordingly. |
Note 3 - Significant Accounting Policies
Except as described below, the accounting policies of the Group in these condensed consolidated interim financial statements are the same as those applied in the Annual Financial Statements.
a. | Application of a new standard effective January 1, 2019 |
IFRS 16, Leases | |
As from January 1, 2019 (hereinafter: “the date of initial application”) the Group applies International Financial Reporting Standard 16, Leases (hereinafter: “IFRS 16” or “the standard”), which replaced International Accounting Standard 17, Leases (hereinafter: “IAS 17” or “the previous standard”).
The main effect of the standard’s application is reflected in annulment of the existing requirement from lessees to classify leases as operating (off-balance sheet) or finance leases and the presentation of a unified model for lessees to account for all leases similarly to the accounting treatment of finance leases in the previous standard. Until the date of application, the Group classified most of the leases in which it is the lessee as operating leases, since it did not substantially bear all the risks and rewards from the assets. |
F-7
Nano Dimension Ltd.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Note 3 - Significant Accounting Policies (Cont’d)
In accordance with IFRS 16, for agreements in which the Group is the lessee, the Group recognizes a right-of-use asset and a lease liability at the inception of the lease contract for all the leases in which the Group has a right to control identified assets for a specified period of time, other than exceptions specified in the standard. Accordingly, the Group recognizes depreciation and amortization expenses in respect of a right-of-use asset, tests a right-of-use asset for impairment in accordance with IAS 36 and recognizes financing expenses on a lease liability. Therefore, as from the date of initial application, lease payments relating to assets leased under an operating lease, which were presented as part of research and development, general and administrative and sales and marketing expenses in the income statement, are capitalized to assets and written down as depreciation and amortization expenses.
The Group elected to apply the standard using the cumulative effect method as at January 1, 2019, and without a restatement of comparative data.
In respect of all the leases, the Group elected to apply the transitional provisions such that on the date of initial application it recognized a liability at the present value of the balance of future lease payments discounted at its incremental borrowing rate at that date calculated according to the average duration of the remaining lease period as from the date of initial application, and concurrently recognized a right-of-use asset at the same amount of the liability, adjusted for any prepaid or accrued lease payments that were recognized as an asset or liability before the date of initial application. Therefore, application of the standard did not have an effect on the Group’s equity at the date of initial application. |
|
Furthermore, as part of the initial application of the standard, the Group has chosen to apply the following expedients: |
(1) | Excluding initial direct costs from measurement of the right-of-use asset at the date of initial application; |
(2) | Using hindsight when determining the lease term if the contract includes an extension or termination option; |
(3) | Not separating non-lease components from lease components and instead accounting for all the components as a single lease component. |
The table below presents the cumulative effects of the items affected by the initial application on the consolidated statement of financial position as at January 1, 2019: |
According to IAS 17 | The change | IFRS 16 | ||||||||||
USD thousands | USD thousands | USD thousands | ||||||||||
Right-of-use asset | - | 1,891 | 1,891 | |||||||||
Other Payables | (57 | ) | 57 | - | ||||||||
Liability in respect of IFRS 16 | (2,192 | ) | (2,192 | ) | ||||||||
Other long-term liabilities | (244 | ) | 244 | - |
In measurement of the lease liabilities, the Group discounted lease payments using the nominal incremental borrowing rate at January 1, 2019. The discount rates used to measure the lease liability range between 11.2% and 39.16%, while the discount rates that were used to measure the majority of the lease liability were in a range of between 11.2% and 15%. This range is affected by differences in the lease term, differences between asset groups, and so forth. | |
Impact of the application of IFRS 16 in the reporting period | |
As a result of applying IFRS 16, in relation to the leases that were classified as operating leases according to IAS 17, the Group recognized right-of-use assets and lease liabilities as at June 30, 2019 in the amount of US$ 2,042 thousand. Amount of US$769 thousand was classified to short time liabilities under Other payables. |
F-8
Nano Dimension Ltd.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Note 3 - Significant Accounting Policies (Cont’d)
Furthermore, instead of recognizing lease expenses in relation to those leases, during the six month period ended June 30, 2019 the Group recognized additional depreciation expenses in the amount of US$ 420 thousand, and additional financing expenses in the amount of US$ 219 thousand. | |
Presented hereunder are the main changes in accounting policies following the application of IFRS 16 as from January 1, 2019: |
(1) | Leased assets and lease liabilities |
Contracts that award the Group control over the use of a leased asset for a period of time in exchange for consideration, are accounted for as leases. Upon initial recognition, the Group recognizes a liability at the present value of the balance of future lease payments (these payments do not include certain variable lease payments), and concurrently recognizes a right-of-use asset at the same amount of the lease liability, adjusted for any prepaid or accrued lease payments, plus initial direct costs incurred in respect of the lease. | |
Since the interest rate implicit in the Group’s leases is not readily determinable, the incremental borrowing rate of the lessee is used. Subsequent to initial recognition, the right-of-use asset is accounted for using the cost model, and depreciated over the shorter of the lease term or useful life of the asset. |
(2) | The lease term |
The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the lessee will or will not exercise the option, respectively. |
(3) | Depreciation of right-of-use asset |
After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability. Depreciation is calculated on a straight-line basis over the useful life or contractual lease period, whichever earlier, as follows: |
● |
Buildings | 1 year | |
● | Motor vehicles | 3 years |
F-9
Nano Dimension Ltd.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Note 4 – Material Events During the Reporting Period
a. |
In February 2019, the Company issued, pursuant to a public offering in the U.S., an aggregate of 80,000,000 Ordinary Shares (16,000,000 ADSs), 80,000,000 non-tradable warrants (exercisable into 80,000,000 Ordinary Shares) and 60,000,000 non-tradable rights to purchase shares (exercisable into 60,000,000 Ordinary Shares), according to the exercise terms determined.
In certain cases, the rights to purchase and the warrants may be exercised on a cashless basis.
Therefore, the rights to purchase and the warrants are accounted as derivative instruments which are classified as a liability and measured at fair value through profit or loss. The total gross consideration was $12,000,000 and was initially attributed to the financial liability for the rights to purchase and warrants based on their fair value in the amount of $10,201,000 and the remaining amount was attributed to the ADSs issued and recognized as an equity component in the amount of $1,799,000.
Applicable issuance costs, amounting to $1,440,000, have been allocated in the same proportion as the allocation of the gross proceeds. An amount of $1,224,000 was considered as issuance costs allocated to the rights to purchase and the warrants and has been recorded in profit or loss as finance expense, while costs allocated as issuance costs of ADSs in the amount of $216,000 have been recorded in equity as a reduction of the share premium.
See also Note 6 for the methodology and assumptions used to measure the fair value of the rights to purchase and warrants as of their issuance date and as of June 30, 2019. |
Note 5 - Share-Based Payments
a. | In March 2019, the Company issued options to purchase 270,000 Ordinary Shares to employees of the Company at an exercise price of $0.17 per share. In addition, the Company issued 309,000 restricted share units to employees of the Company. |
b. |
In May 2019, the Company issued options to purchase 5,407,000 Ordinary Shares to employees, consultants and officers of the Company at an exercise prices ranging from $0.14 to $0.15 per share. In addition, the Company issued 2,935,000 restricted share units to employees of the Company. |
c. |
The fair value of the aforesaid share options was estimated on the granting date using the Black-Scholes-Merton option pricing model. The following is the data used in determining the fair value of the share options: |
Options- Employees | RSU- Employees | Options- Employees, Officers, Consultants | RSU- Employees | |||||||||||||
Grant Month | March | March | May | May | ||||||||||||
Number of share options granted | 270,000 | 309,000 | 5,407,000 | 2,935,000 | ||||||||||||
Fair value in the grant date (thousands of USD) | 23 | 45 | 340 | 365 | ||||||||||||
Range of share price (USD) | 0.17 | 0.15 | 0.14 | 0.14 | ||||||||||||
Range of exercise price (USD) | 0.17 | 0 | 0.14-0.15 | 0 | ||||||||||||
Range of expected share price volatility | 59.64%-62.93 | % | NA | 58.54%-61.49 | % | NA | ||||||||||
Range of estimated life (years) | 4.81-6.92 | NA | 5.00-7.00 | NA | ||||||||||||
Range of weighted average of risk-free interest rate | 1.16%-1.60 | % | NA | 1.25%-1.60 | % | NA | ||||||||||
Expected dividend yield | -- | -- | -- | -- |
Expenses in the amount of $193 thousand were recognized as a salary expense in the six month period ended June 30, 2019 ($291 thousand in the six month period ended June 30, 2018). |
d. | Regarding additional share-based payment transactions after the reporting date, see Note 8. |
F-10
Nano Dimension Ltd.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Note 6 - Financial Instruments
(1) Fair value
The carrying amounts of certain financial assets and liabilities, including cash and cash equivalents, trade and other receivables, bank deposits, trade and other payables are the same as or approximate to their fair value.
(2) Level 3 financial instruments carried at fair value
The table hereunder presents a reconciliation from the opening balance to the closing balance of financial instruments carried at fair value level 3 of the fair value hierarchy:
Financial
liabilities- derivatives measured at fair value through profit or loss
Thousands USD |
||||
Balance as of January 1, 2019 | -- | |||
Issuances | 10,201 | |||
Exercises | (81 | ) | ||
Total gains recognized in profit or loss (*) | (7,316 | ) | ||
Balance as of June 30, 2019 | 2,804 |
(*) | Under financing income and expenses. |
(3) Details regarding fair value measurements at Level 3
Issuance of rights to purchase and warrants
The fair value of the rights to purchase and warrants as at their issuance date and as at June 30, 2019 was determined by using the Black-Scholes model.
The assumptions used to calculate the fair value of the rights to purchase and warrants as at their issuance date and as at June 30, 2019 were as follows:
February 2019 | ||||||||
(Issuance date) |
June
30,
2019 |
|||||||
ADS price (in US$) | 0.87 | 0.48 | ||||||
Exercise price (in US$- rights to purchase-warrants) | 0.75-0.8625 | 0.75-0.8625 | ||||||
Expected term (in years- rights to purchase-warrants) | 0.5-5 | 0.1-4.6 | ||||||
Expected volatility (rights to purchase-warrants) | 63.1-62.4 | % | 57.1-61.7 | % | ||||
Risk-free interest rate (rights to purchase-warrants) | 2.51-2.55 | % | 1.97-1.80 | % | ||||
Dividend yield | 0 | % | 0 | % |
Fair value sensitivity analysis of level 3 financial instruments carried at fair value
As regards fair value measurements classified in level 3 of the fair value hierarchy, a reasonably possible change in one unobservable inputs would have increased (decreased) profit or loss as follows:
June 30, 2019 | ||||||||
Increase | Decrease | |||||||
Profit or loss | ||||||||
Thousands USD | ||||||||
Change in volatility of 5% | (315 | ) | 321 | |||||
Change in volatility of 10% | (622 | ) | 647 |
F-11
Nano Dimension Ltd.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Note 7 – Revenues
The table below provides information regarding receivables, contract assets and contract liabilities deriving from contracts with customers.
June 30, | ||||||||
2018 | 2019 | |||||||
Thousands USD | Thousands USD | |||||||
Open balances | 543 | 1,174 | ||||||
Income receivables | 85 | - | ||||||
Contract liabilities | 264 | 766 |
The contract liabilities primarily relate to the advance consideration received from customers for contracts containing yearly warranty services. The revenue is recognized on a straight line basis over the contract period.
In the following tables, the Group’s revenue is disaggregated by major products, primary geographical market and timing of revenue recognition.
Revenues per major products:
For
the six-month Ended
June 30 |
||||||||
2018 | 2019 | |||||||
Thousands USD | Thousands USD | |||||||
Consumables | 13 | 222 | ||||||
Sales of printers | 1,583 | 2,577 | ||||||
Total | 1,596 | 2,799 | ||||||
Printers rental | 127 | 51 | ||||||
Total revenues | 1,723 | 2,850 |
F-12
Nano Dimension Ltd.
Notes to the Unaudited Condensed Consolidated Interim Financial Statements
Note 7 – Revenues (Cont’d)
Revenues per geographical locations:
For
the six-month Ended
June 30 |
||||||||
2018 | 2019 | |||||||
Thousands USD | Thousands USD | |||||||
USA | 775 | 1,040 | ||||||
Asia Pacific | 526 | 639 | ||||||
Europe and Israel | 422 | 1,171 | ||||||
Total revenues | 1,723 | 2,850 |
Revenues per timing of revenue recognition:
For
the six-month Ended
June 30 |
||||||||
2018 | 2019 | |||||||
Thousands USD | Thousands USD | |||||||
Goods and services transferred over time | 179 | 327 | ||||||
Goods transferred at a point in time | 1,544 | 2,523 | ||||||
Total revenues | 1,723 | 2,850 |
Note 8 - Events after the Reporting Date
a. | On July 3, 2019, the Company granted options to purchase 3,691,000 Ordinary Shares to officers and directors of the Company at exercise price of US$ 0.15 per share. One third of the share options will vest after one year from commencement of employment, and the remaining will vest in eight equal quarterly batches over a period of two years. The share options will be exercisable during the earlier of a period of four years from the vesting date, or 90 days from the end of employment date. |
b. | On September 4, 2019, the Company closed a private placement of convertible promissory notes with an aggregate original principal amount of approximately $4,300,000 and an additional approximately $2,700,000 to be received in two subsequent closings, bringing the expected total gross proceeds from this funding to approximately $7,000,000. The notes are convertible into the Company’s ADS, together with warrants to purchase ADS in a ratio of 0.85 warrant per 1 ADS. The Company issued an aggregate of 62,668,850 non-tradable warrants (exercisable 62,668,850 Ordinary Shares), according to the exercise terms determined. In case the Company will not have an effective registration statement in time of exercising of the rights to purchase or the warrants, they include a cashless exercise mechanism. The gross proceeds from the first closing were $4,276,227 before deducting placement agent fees, escrowed amounts and other expenses. The gross proceeds will be recorded as a financial liability. |
The convertible promissory notes will be unsecured, will have a maturity date of March 4, 2021, will bear no interest except in an event of default and may be converted, at the election of the holder, into ADS of the Company at an initial per share conversion price of $0.29, subject to adjustments, including in connection with note issuances in subsequent tranches. The convertible promissory notes will include a mandatory conversion provision for part or all of the notes in the event that the volume weighted average price of the Company’s ADS reaches certain thresholds, subject to certain limitations. The warrants will have an exercise price equal to 125% of the conversion price of the convertible promissory notes, will be exercisable upon the six-month anniversary of issuance and will expire five years from the date of issuance.
F-13
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Six Months Ended June 30, 2019
Cautionary Statement Regarding Forward-Looking Statements
Certain information included herein may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” “project” or other similar words, but are not the only way these statements are identified. These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, expansion of marketing and channel activities, converting prospects to customers, statements that contain projections of expected market size, results of operations or of financial condition, expected capital needs and expenses, statements relating to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future. Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.
Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:
● | the overall global economic environment; | |
● | the impact of competition and new technologies; | |
● | general market, political and economic conditions in the countries in which we operate; | |
● | projected capital expenditures and liquidity; | |
● | changes in our strategy; and | |
● | litigation. |
The foregoing list is intended to identify only certain of the principal factors that could cause actual results to differ. For a more detailed description of the risks and uncertainties affecting our company, reference is made to our Annual Report on Form 20-F for the year ended December 31, 2018, or our Annual Report, which is on file with the Securities and Exchange Commission, or the SEC, and the other risk factors discussed from time to time by our company in reports filed or furnished to the SEC.
Except as otherwise required by law, we undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
General
Introduction
Unless indicated otherwise by the context, all references in this report to “Nano Dimension”, the “Company”, “we”, “us” or “our” are to Nano Dimension Ltd. and its subsidiaries. When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:
● | “dollars” or “$” means United States dollars; and | |
● | “NIS” means New Israeli Shekels. |
You should read the following discussion and analysis in conjunction with our unaudited consolidated financial statements for the six months ended June 30, 2019 and notes thereto, and together with our audited consolidated financial statements for the year ended December 31, 2018 and notes thereto filed with the SEC as part of our Annual Report.
Overview
We are a leading additive electronics provider. We believe our flagship proprietary DragonFly system is the first and only precision system that produces professional multilayer circuit-boards (PCB), RF antennas, sensors, conductive geometries, and molded connected devices for rapid prototyping through custom additive manufacturing. We have been actively developing our additive manufacturing technology since 2014, and since that time we have listed our securities on the Tel Aviv Stock Exchange and Nasdaq, and have spent approximately $70 million to build our additive electronics company. With our unique additive manufacturing technology for 3D printed electronics, we are targeting the growing market for smart electronic devices that rely on printed circuit boards, connected devices, RF components and antennas, sensors, and smart products, including IoT.
We began commercializing our first professional grade DragonFly 3D printer during the fourth quarter of 2017. The first of its kind 3D printer uses our proprietary inks and integrated software to quickly create functional electronics such as multilayered printed circuit boards (PCBs), sensors, conductive geometries, antennas, molded connected devices and other devices for rapid prototyping and custom additive manufacturing of smart products.
Financial Highlights
● | Total revenues for the six months ended June 30, 2019 were $2,850,000, compared to $1,723,000 in the six months ended June 30, 2018. The increase was attributed to commercial sales of the DragonFly Pro 3D printer. | |
● | Net loss for the six months ended June 30, 2019 was $2,664,000, or $0.02 per share, compared to $7,893,000, or $0.09 per share, in the six months ended June 30, 2018. The decrease is mainly attributed to an increase in finance income as a result of the change in the fair value of warrants and rights to purchase that were issued in our February 2019 public offering. | |
● | Cash and cash equivalents totaled $5,290,000 as of June 30, 2019, compared to $3,753,000 on December 31, 2018. The increase compared to December 31, 2018, mainly reflects proceeds received from the sale of American Depositary Shares representing the Company’s ordinary shares in the first quarter of 2019, less cash used in operations during the six months ended June 30, 2019. | |
● | Shareholders’ equity totaled $15,057,000 as of June 30, 2019, compared to $15,572,000 as of December 31, 2018. |
Critical Accounting Policies
The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. A comprehensive discussion of our critical accounting policies is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our Annual Report and in note 2A in our unaudited condensed financial statements for the six months ended June 30, 2019 regarding adoption of IFRs 16, Leases, as from January 1, 2019.
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Results of Operations
The following discussion of our unaudited results of operations for the six month periods ended June 30, 2019 and 2018, included in the following table, which presents selected financial information data, is based upon our unaudited statements of operations contained in our financial statements for those periods, and the related notes.
For the Six-Month Period Ended
June 30, |
||||||||
2018 | 2019 | |||||||
Revenues | 1,723 | 2,850 | ||||||
Cost of revenues | 1,124 | 1,959 | ||||||
Cost of revenues - amortization of intangible | 386 | 386 | ||||||
Total cost of revenues | 1,510 | 2,345 | ||||||
Gross profit | 213 | 505 | ||||||
Research and development expenses, net | 4,611 | 4,474 | ||||||
Sales and marketing expenses | 1,872 | 2,871 | ||||||
General and administrative expenses | 1,494 | 1,590 | ||||||
Operating loss | (7,764 | ) | (8,430 | ) | ||||
Finance income | 47 | 7,317 | ||||||
Finance expense | 176 | 1,551 | ||||||
Total comprehensive loss | (7,893 | ) | (2,664 | ) | ||||
Basic loss per share | (0.09 | ) | (0.02 | ) | ||||
Basic loss per American Depositary Shares | (0.45 | ) | (0.08 | ) |
Six Months Ended June 30, 2019 Compared with Six Months Ended June 30, 2018
Revenues. Our revenues are derived primarily from sales of printers to customers and sale of ink and other consumables to those customers. Total revenues for the six months ended June 30, 2019, were $2,850,000, compared to $1,723,000 in the six months ended June 30, 2018. The increase was attributed to commercial sales of the DragonFly Pro 3D printer.
Cost of Revenues. Cost of revenues consists mainly of cost of printers sold, cost of maintenance, and ink and other consumables costs, as well as amortization of intangible assets. In the fourth quarter of 2016, we began to amortize the intangible asset arising from capitalization of development expenses. The estimated useful lives of the capitalized development costs for the current period is 10 years. Our cost of revenues for the six months ended June 30, 2019, were $2,345,000, compared to $1,510,000 in the six months ended June 30, 2018. Cost of revenues for the six months ended June 30, 2019, consists of $1,405,000 in respect of cost of printers sold, $467,000 in respect of warranty cost, $62,000 for ink and other consumables, $25,000 in respect of depreciation of leased printers, and an additional $386,000 in respect of amortization of intangible assets.
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Research and Development. Research and Development, or R&D, expenses consist primarily of salaries of employees engaged in on-going R&D activities, materials, depreciation, rent, and other related costs. R&D expenses for the six months ended June 30, 2019 were $4,474,000, compared to $4,611,000 in the six months ended June 30, 2018. The decrease resulted primarily from a decrease in payroll and related expenses as a result of shifting resources from R&D to S&M to reflect our focus on accelerating our sales.
Sales and marketing. Sales and marketing expenses consist primarily of salaries of sales and marketing employees, marketing and advertising expenses, travel and related expenses, and other sales and marketing costs. Sales and marketing expenses for the six months ended June 30, 2019, were $2,871,000, compared to $1,872,000 in the six months ended June 30, 2018. The increase was mainly attributed to an increase in payroll and related expenses and marketing and advertising expenses as a result of shifting resources from R&D to S&M to reflect our focus on accelerating our sales.
General and administrative. General and administrative, or G&A, expenses consist primarily of expenses for fundraising, professional services expenses, salaries of general and administrative employees, directors’ fees, and other administrative costs. G&A expenses for the six months ended June 30, 2019 were $1,590,000, compared to $1,494,000 in the six months ended June 30, 2018. The increase is mainly attributed to increase in payroll and related expenses.
Operating Loss. Based on the foregoing, we recorded an operating loss of $8,430,000 for the six months ended June 30, 2019, compared to $7,764,000 in the six months ended June 30, 2018.
Finance income and Finance expense. Finance income and expenses consist of finance income as a result of the change in the fair value of warrants and rights to purchase that were issued in our February 2019 public offering, issuance expenses that were recognized as finance expense, bank fees, revaluation of liability in respect of government grants and lease liability, and exchange rate differences. Finance income, net, for the six months ended June 30, 2019, were $5,766,000, compared to finance expense, net, of $129,000 in the six months ended June 30, 2018. The increase resulted primarily from finance income as a result of the change in the fair value of warrants and rights to purchase that were issued in our February 2019 public offering.
Net Loss. Net loss for the six months ended June 30, 2019, was $2,664,000, or $0.02 per share, compared to $7,893,000, or $0.09 per share, in the six months ended June 30, 2018.
Liquidity and Capital Resources
From August 2014 through June 30, 2019, we have funded our operations principally with $63,513,000 from the issuance of ordinary shares and warrants. As of June 30, 2019, we had $5,290,000 in cash and cash equivalents.
The table below presents our cash flows:
Six Month Periods Ended
June 30, |
||||||||
(in thousands of U.S. dollars) | 2018 | 2019 | ||||||
Operating activities | (6,790 | ) | (8,297 | ) | ||||
Investing activities | (261 | ) | (330 | ) | ||||
Financing activities | 12,490 | 10,213 | ||||||
Net increase in cash | 5,439 | 1,586 |
Net cash used in operating activities of $8,297,000 during the six months ended June 30, 2019, consists primarily of net loss, less adjustments for depreciation and amortization expenses and revaluation of liability in respect of warrants and rights of purchase, as well as an increase in inventory. The increase compared to $6,790,000 in the six months ended June 30, 2018, is mainly as a result of increase in operating loss and increase in working capital.
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Net cash used in investing activities of $330,000 during the six months ended June 30, 2019, primarily reflects acquisition of property plant and equipment. The increase compared to $261,000 in the six months ended June 30, 2018 is mainly as a result of increase in restricted bank deposits
Net cash provided by financing activities of $10,213,000 during the six months ended June 30, 2019, consisted primarily of $10,561,000 of net proceeds from the issuance of ordinary shares, rights to purchase and warrants. The net cash provided by financing activities in the six months ended June 30, 2018 of $12,490,000 consisted primarily of net proceeds from the issuance of ordinary shares.
Outlook
To date, we have not achieved profitability and have sustained net losses in every fiscal year since our inception, and we have financed our operations primarily through proceeds from issuance of our ordinary shares.
Based on the projected cash flows and our cash balance as of June 30, 2019, together with the fundraising on September 2019, our management is of the opinion that without further fund raising it will not have sufficient resources to enable us to continue advancing our activities including the development, manufacturing and marketing of our products for a period of at least 12 months from the date of sign-off date of our interim financial statements. As a result, there is substantial doubt about our ability to continue as a going concern.
Until we can generate significant recurring revenues and achieve profitability, we will need to seek additional sources of funds through the sale of additional equity securities, debt or other securities. Any required additional capital, whether forecasted or not, may not be available on reasonable terms, or at all. If we are unable to obtain additional financing or are unsuccessful in commercializing our products and securing sufficient funding, we may be required to reduce activities, curtail or even cease operations.
In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:
● | the progress and costs of our R&D activities; | |
● | the progress in the launch of the commercial DragonFly Pro system; | |
● | the costs of manufacturing our DragonFly Pro system and ink products; | |
● | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; | |
● | the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and | |
● | the magnitude of our G&A expenses. |
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