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Section 1: 6-K (REPORT OF FOREIGN PRIVATE ISSUER)

 

 

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: February 2018 (Report No. 5)

 

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 September 30, 2017, 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 nine months ended September 30, 2017, 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and Exchange Commission, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.

 

Exhibit No.    
     
99.1   Nano Dimension Ltd.’s Unaudited Condensed Consolidated Interim Financial Statements as of September 30, 2017.
     
99.2   Nano Dimension Ltd.’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the nine months ended September 30, 2017.

  

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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: February 15, 2018 By: /s/ Yael Sandler
  Name: Yael Sandler
  Title: Chief Financial Officer

 

 

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Section 2: EX-99.1 (UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 2017)

Exhibit 99.1

 

Unaudited Condensed Consolidated Interim

Financial Statements

as of September 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nano Dimension

 

Unaudited Condensed Consolidated Interim Financial Statements as of September 30, 2017

 

 

Table of Contents

 

  Page
   
Unaudited condensed consolidated interim financial statements  
   
Unaudited condensed consolidated interim statements of financial position 3
   
Unaudited condensed consolidated interim statements of profit or loss and other comprehensive income 4
   
Unaudited condensed consolidated interim statements of changes in equity 5
   
Unaudited condensed consolidated interim statements of cash flows 6
   
Notes to the unaudited condensed consolidated interim financial statements 7

 

 

 

 

Nano Dimension Ltd.

Unaudited Condensed Consolidated Interim Statements of Financial Position

 

   September 30,   Convenience
translation
into
US dollars
(NIS 3.529 = $1)
September 30,
   December 31, 
   2016   2017   2017   2016 
   Thousand
NIS
   Thousand
NIS
   Thousand
USD
   Thousand
NIS
 
Assets                
Cash   53,524    42,265    11,976    47,599 
Restricted deposits   --    1,146    325    500 
Inventory   --    6,874    1,948    -- 
Trade receivables   --    6    1    149 
Other receivables   1,173    2,042    579    2,979 
Total current assets   54,697    52,333    14,829    51,227 
                     
Restricted deposits   425    425    120    425 
Property plant and equipment, net   5,321    16,469    4,667    7,712 
Intangible assets   27,717    24,087    6,825    26,095 
Total non-current assets   33,463    40,981    11,612    34,232 
Total assets   88,160    93,314    26,441    85,459 
                     
Liabilities                    
Trade payables   1,328    6,857    1,943    2,612 
Other payables   4,527    5,937    1,682    4,954 
Total current liabilities   5,855    12,794    3,625    7,566 
                     
Liability in respect of government grants   2,234    2,921    828    2,420 
Other long-term liabilities   --    1,098    311    1,255 
Total non-current liabilities   2,234    4,019    1,139    3,675 
Total liabilities   8,089    16,813    4,764    11,241 
                     
Equity                    
Share capital   5,304    6,662    1,888    5,446 
Share premium   112,402    167,572    47,483    118,820 
Treasury shares   (5,260)   (5,260)   (1,491)   (5,260)
Warrants   3,435    1,167    331    4,375 
Capital reserve from transactions with controlling shareholders   1,866    1,866    529    1,866 
Capital reserve for share-based payments   18,091    23,535    6,669    19,575 
Accumulated loss   (55,767)   (119,041)   (33,732)   (70,604)
Total equity   80,071    76,501    21,677    74,218 
Total liabilities and equity   88,160    93,314    26,441    85,459 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

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Nano Dimension Ltd.

Unaudited Condensed Consolidated Interim Statements of Profit or Loss and Other Comprehensive Income

  

   For the nine months ended September 30, 
   2017   2017   2016 
   Thousand
NIS
   Thousand USD Convenience
translation
into US dollars (NIS 3.529 = $1)
   Thousand
NIS
 
             
Revenues   1,459    414    -- 
                
Cost of revenues   492    140    -- 
                
Cost of revenues - amortization of intangible   2,006    568    -- 
                
Total cost of revenues   2,498    708    -- 
                
Gross loss   (1,039)   (294)   -- 
                
Research and development expenses, net   30,930    8,765    6,108 
Sales, marketing and general and administrative expenses   13,621    3,860    12,975 
Operating loss   (45,590)   (12,919)   (19,083)
                
Finance income   44    12    -- 
Finance expense   2,891    819    550 
                
Total comprehensive loss   (48,437)   (13,726)   (19,633)
                
Basic and diluted loss per share (in NIS/USD)   (0.88)   (0.25)   (0.52)

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

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Nano Dimension Ltd.

Unaudited Condensed Consolidated Interim Statements of Changes in Equity

 

   Share
capital
   Share premium   Treasury shares   Warrants   Capital reserve from transactions with controlling shareholders   Capital reserve for share- based payments   Accumulated loss   Total
equity
 
   Thousand NIS   Thousand NIS   Thousand NIS   Thousand NIS   Thousand NIS   Thousand NIS   Thousand NIS   Thousand NIS 
                                 
For the nine months ended September 30, 2017:                                
Balance as of January 1, 2017   5,446    118,820    (5,260)   4,375    1,866    19,575    (70,604)   74,218 
Issuance of ordinary shares, net   1,168    43,596    --    --    --    --    --    44,764 
Exercise of warrants and options   48    1,952    --    (11)   --    (1,256)   --    733 
Expiration of warrants and options   --    3,204    --    (3,197)   --    (7)   --    -- 
Share-based payments   --    --    --    --    --    5,223    --    5,223 
Net loss   --    --    --    --    --    --    (48,437)   (48,437)
                                         
Balance as of September 30, 2017   6,662    167,572    (5,260)   1,167    1,866    23,535    (119,041)   76,501 
                                         

Balance as of September 30, 2017-
Convenience translation into US dollars (NIS 3.529 = $1)
Thousand USD

   1,888    47,483    (1,491)   331    529    6,669    (33,732)   21,677 

 

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    Share
capital
    Share premium     Treasury shares     Warrants     Capital reserve from transactions with controlling shareholders     Capital reserve for share- based payments     Accumulated loss     Total
equity
   
    Thousand NIS     Thousand NIS     Thousand NIS     Thousand NIS     Thousand
NI
    Thousand NIS     Thousand NIS     Thousand
NIS
   
For the nine months ended September 30, 2016:                                                  
Balance as of January 1, 2016     3,863       63,054       (5,260 )     6,934       1,866       12,681       (36,134 )     47,004    
Issuance of ordinary shares, net      925       39,184       -       -       -       -       -       40,109    
Exercise of warrants and options     516       10,164       -       (3,499 )     -       (1,529 )     -       5,652    
Share-based payments     -       -       -       -       -       6,939       -       6,939    
Net loss     -       -       -       -       -       -       (19,633 )     (19,633 )  
                                                                   
Balance as of September 30, 2016     5,304       112,402       (5,260 )     3,435       1,866       18,091       (55,767 )     80,071    

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

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Nano Dimension Ltd.

Unaudited Condensed Consolidated Interim Statements of Cash Flows

 

   For the nine months ended September 30, 
   2017   2017   2016 
   Thousand
NIS
   Thousand USD
(Unaudited)
Convenience translation
into US dollars
(NIS 3.529 = $1)
   Thousand
NIS
 
             
Cash flow from operating activities:            
Net loss   (48,437)   (13,726)   (19,633)
Adjustments:               
Depreciation and amortization   3,204    908    496 
Financing expenses   2,821    799    580 
Revaluation of liability in respect of government grants   (45)   (13)   36 
Loss from disposal of property plant and equipment   -    -    21 
Share-based payments   5,733    1,625    5,115 
Changes in assets and liabilities:               
Increase in inventory   (6,874)   (1,948)   - 
Decrease (increase) in other receivables   705    200    (286)
Decrease in trade receivables   143    41    - 
Increase in other payables   259    73    2,406 
Increase (decrease) in trade payables   5,052    1,431    (52)
Decrease in other long term liabilities   (160)   (45)   - 
Net cash used in operating activities   (37,599)   (10,655)   (11,317)
                
Cash flow from investing activities:               
Decrease (increase) in restricted bank deposits   (646)   (183)   503 
Development expenditure capitalized as intangible assets   -    -    (13,975)
Acquisition of property plant and equipment   (10,735)   (3,042)   (2,200)
Net cash used in investing activities   (11,381)   (3,225)   (15,672)
                
Cash flow from financing activities:               
Proceeds from issuance of ordinary shares, net   44,228    12,532    40,109 
Exercise of warrants and options   733    208    5,652 
Amounts recognized in respect of government grants liability, net   1,506    427    1,521 
Net cash provided by financing activities   46,467    13,167    47,282 
                
Increase (decrease) in cash and cash equivalents   (2,513)   (713)   20,293 
Cash and cash equivalents at beginning of the period   47,599    13,488    33,811 
Effect of exchange rate fluctuations on cash and cash equivalents   (2,821)   (799)   (580)
Cash and cash equivalents at end of period   42,265    11,976    53,524 
                
Non-cash transactions:               
Property plant and equipment acquired on credit   206    58    49 
Intangible assets acquired on credit   -    -    135 

 

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

 

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Nano Dimension Ltd.

 

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 September 30, 2017, comprise the Company and its subsidiaries in Israel and in the United States (together referred to as the “Group”). The Company engages, by means of the subsidiary Nano Dimension Technologies Ltd. (“Nano–Technologies”), in the development 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, the Company’s American Depositary Shares (“ADSs”) 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 losses will depend, in part, on completing the development of its products, 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. To date, the Group has just begun to commercialize its products and has generated insignificant revenues, mainly from operating leases of its 3D printers. The Group’s ability to generate revenue and achieve profitability depends on its ability to successfully complete the development of, and to commercialize, its products. The Group was able to obtain funding thus far and believes it has enough resources to fund its operations in the foreseeable future.

 

C.    Material events in the reporting period

 

On May 17, 2017, the Company announced that it signed a private placement agreement with Ayalim Trust Funds, an Israeli institutional investor. As a part of these transactions, the Company issued an aggregate of 3,430,000 ordinary shares at a price per share of NIS 4.2. The total (gross) consideration to the Company was approximately NIS 14.4 million (approximately $4 million).

 

On June 1, 2017, the Company announced that it signed private placement agreements with Israeli and other non-U.S. investors. As a part of these transactions, the Company issued an aggregate of 4,044,050 ordinary shares at a price per share of NIS 4.2. The total (gross) consideration to the Company was approximately NIS 17 million (approximately $4.7 million).

 

On June 14, 2017, the Company announced that it signed private placement agreements with several Israeli investors. As a part of these transactions, the Company issued an aggregate of 4,078,759 ordinary shares at a price per share of NIS 4.2. The total (gross) consideration to the Company was approximately NIS 17.13 million (approximately $4.8 million).

 

The total (net) consideration to the Company for the above mentioned placements was approximately NIS 44.2 million (approximately $12.5 million).

 

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Nano Dimension Ltd.

 

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

 

Note 2 - Basis of Preparation

 

A.       Statement of compliance

 

These unaudited condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 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, 2016 (the “Annual Financial Statements”).

 

These condensed consolidated interim financial statements were authorized for issue by the Company’s Board of Directors on February 13, 2018.

 

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.

 

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.

 

C.       Convenience translation into U.S. dollars

 

For the convenience of the reader, the reported NIS figures as of September 30, 2017 and for the nine month period then ended, have been presented in dollars, translated at the representative rate of exchange as of September 30, 2017 (NIS 3.529 = $1.00). The dollar amounts presented in these financial statements should not be construed as representing amounts that are receivable or payable in dollars or convertible into dollars, unless otherwise indicated.

 

Below are details regarding the exchange rate of the U.S. dollar (“Dollar” or “$”):

 

   Dollar 
     
September 30, 2017   3.529 
December 31, 2016   3.845 
September 30, 2016   3.758 
      
Change in percentages:     
Nine month ended September 30, 2017   (8.22)
Year ended December 31, 2016   (1.46)
Nine month ended September 30, 2016   (3.69)

 

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Nano Dimension Ltd.

 

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

 

 

Note 3 - Significant Accounting Policies

 

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied by the Group in its annual financial statements.

 

Presented hereunder is a description of the changes in accounting policies applied in these condensed consolidated interim financial statements:

 

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the first-in first-out (FIFO) principle, and includes expenditure incurred in acquiring the inventories and the costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

 

A.       New standards and interpretations not yet adopted

 

IFRS 16, Leases

Further to that mentioned in the disclosure on new standards and interpretations not yet adopted in the note regarding significant accounting policies in the Annual Financial Statements, the Group has not yet commenced examining the effects of adopting IFRS 16 on the financial statements and has no plans for early application.

 

Note 4 - Contingent Liabilities

 

Presented hereunder are details of material changes in contingent liabilities and provisions, if any.

 

On March 19, 2015, a claim was filed seeking damages in the amount of NIS 20,000,000 against the Company, Nano-Technologies, shareholders of the Company, officers and employees of the Group (together, the “Defendants”). The claim was filed by a third party (the “Plaintiff”) alleging that commercial secrets and technology that were developed by the Original Defendents in the field of 3-D printing were misappropriated, allegedly, through an officer and an additional employee of the Group that were employed by the Plaintiff in the past. In addition, the Plaintiff sought, among others, to order the Defendants, if the claim was accepted, to cease to make use of the allegedly misappropriated know-how and technology, and assign the rights to certain patents and patent applications owned by the Group to the Plaintiff.

 

On March 20, 2017, the Company announced that the Company and the Plaintiff reached a settlement agreement. As a part of the settlement agreement, the parties agreed that the legal proceedings will end, and the lawsuit against the Company will be dismissed, without any material effect on the Company’s activity. On March 19, 2017, the court approved the dismissal of the lawsuit.

 

Note 5 - Share-Based Payments

 

During the reporting period, the Company issued 125,000 restricted ordinary shares (25,000 ADSs) to service providers and options to purchase 1,457,334 ordinary shares to employees, directors and service providers. The total aggregate fair value of the ordinary shares and options as of the grant date was NIS 4,803,776.

 

The grant date fair value of the options granted was measured based on the Black-Scholes option pricing model.

 

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Nano Dimension Ltd.

 

Notes to the Unaudited Condensed Consolidated Interim Financial Statements

 

 

Note 5 - Share-Based Payments (cont'd)

 

The following are the data used in determining the fair value of the options:

 

Range of share price (NIS)     4.66 – 4.77  
Range of exercise price (NIS)     1.65 - 7.63  
Range of expected share price volatility     40.30% - 55.29 %
Range of estimated life (years)     1.5 – 7  
Range of vesting period (years)     0 - 3  
Range of weighted average of risk-free interest rate     0.98% - 1.55 %
Expected dividend yield     --  

 

Note 6 – Events after the Reporting Period

 

After the reporting period, in November 2017, the Company issued options to purchase 710,000 ordinary shares to employees at exercise prices between NIS 3.43 and NIS 5.5 per share.

 

After the reporting period, in January 2018, the Company issued options to purchase 825,000 ordinary shares to officers of the Company at an exercise price of NIS 5.5 per share.

 

 

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Section 3: EX-99.2 (MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS)

Exhibit 99.2

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

For the Nine Months Ended September 30, 2017

 

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, 2016, 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 nine months ended September 30, 2017 and notes thereto, and together with our audited consolidated financial statements for the year ended December 31, 2016 and notes thereto filed with the SEC as part of our Annual Report.

 

 

Overview

 

We are a leading additive electronics provider. We manufacture proprietary three dimensional, or 3D, printers and inks. With our unique 3D printing technology, we are targeting the growing demand for electronic devices that require increasingly sophisticated features and rely on encapsulated sensors, antennas and printed circuit boards. Additive manufacturing industry analysts predict that 3D printed electronics is likely to be the next high-growth application for product innovation, with its market size forecasted to reach $2.8 billion by 2025.

 

We began commercializing our first professional grade DragonFly 2020 Pro 3D printer during the fourth quarter of 2017, after successfully completing a year-long beta program with tier-1 users and partners. 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.

 

Traditionally, electronic circuitry is developed through a back-and-forth process that involves design, trial and error and third-party manufacturer outsourcing. We believe that the traditional process for developing complex and advanced electronics is outdated and in need of a modern technological solution. Until now, 3D printing technology has been unable to offer a solution for the electronics and professional PCB prototype market, mainly because of the difficulty of printing multiple layers of electrically conductive and dielectric materials at high resolution that is suitable for professional electronics. We are the first to develop an integrated solution that includes a 3D printer, inkjet technology and software, that together delivers groundbreaking nano-technology. Our integrated solution is redefining and shaping how connected products are designed and made.

 

Our DragonFly 2020 Pro 3D printer uses proprietary liquid nano-conductive and dielectric inks that are designed specifically to print multilayered circuitry and 3D electronics. We believe that our DragonFly 2020 Pro 3D printer will obviate the reliance on third-party manufacturers during the development, short run manufacturing and prototyping of smart products, such as multilayered PCBs, sensors, conductive geometries, antennas, molded connected devices and other devices.

 

As a part of scaling our sales operations, we have recently opened two Customer Experience Centers (CECs), one in Israel and one in the United States. The new CECs are designed to accelerate the adoption of additive manufacturing for electronics development and will also serve as customer and reseller training facilities and sales support centers. We also intend to expand our marketing and channel activities in 2018, including doubling our resellers network and forming alliances with industry leaders.

 

Financial Highlights

 

  Total revenues for the nine months ended September 30, 2017 were NIS 1,459,000 ($414,000), compared to zero in the nine months ended September 30, 2016. The fourth quarter of 2016 was the first quarter in which Nano Dimension generated revenues.
     
 

Net loss for the nine months ended September 30, 2017 was NIS 48,437,000 ($13,726,000), or NIS 0.88 ($0.25) per ordinary share, compared to NIS 19,633,000 ($5,224,000), or NIS 0.52 ($0.14) per ordinary share, in the nine months ended September 30, 2016. The increase is mainly attributed to the increase in research and development, or R&D, expenses as a result of the cessation of the capitalization of development costs in the fourth quarter of 2016. During the fourth quarter of 2016, we started delivering our products to beta customers and as such, we started to amortize the intangible assets arising from capitalization of development expenses. In subsequent periods, capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment losses. The estimated useful lives of the capitalized development costs for the current period is 10 years.

     
  Cash totaled NIS 42,265,000 ($11,976,000) as of September 30, 2017, compared to NIS 47,599,000 ($12,379,000) on December 31, 2016. The decrease compared to December 31, 2016 mainly reflects the cash used during the nine months ended September 30, 2017 for operations and acquisition of property plant and equipment, less the proceeds received from private placements that occurred in the second quarter of 2017.
     
 

Shareholders’ equity totaled NIS 76,501,000 ($21,677,000) as of September 30, 2017, compared to NIS 74,218,000 ($19,302,000) as of December 31, 2016.

 

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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.

 

Results of Operations

 

The following discussion of our unaudited results of operations for the nine month periods ended September 30, 2017 and 2016, 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.

 

Unless otherwise indicated, U.S. dollar convenience translations of NIS amounts presented hereunder for the nine month periods ended September 30, 2017 are translated using the rate of NIS 3.529 to $1.00, the exchange rate reported by the Bank of Israel on September 30, 2017.

 

   Nine months ended September 30, 
   2017   2017   2016 
   Thousands NIS (Unaudited)  

Thousands USD (Unaudited)

Convenience

translation

into US dollars (NIS 3.529 = $1)

   Thousands NIS (Unaudited) 
             
Revenues   1,459    414    -- 
Cost of revenues   492    140    -- 
Cost of revenues - amortization of intangible   2,006    568    -- 
                
Total cost of revenues   2,498    708    -- 
                
Gross loss   (1,039)   (294)   -- 
                
Research and development expenses, net   30,930    8,765    6,108 
Sales, marketing and general and administrative expenses   13,621    3,860    12,975 
Operating loss   (45,590)   (12,919)   (19,083)
                
Finance income   44    12    -- 
Finance expense   2,891    819    550 
                
Total comprehensive loss   (48,437)   (13,726)   (19,633)
                
Basic and diluted loss per share (in NIS/USD)   (0.88)   (0.25)   (0.52)
                
Basic and diluted loss per ADS (in NIS/USD)   (4.42)   (1.25)   (2.6)

 

Nine Months Ended September 30, 2017 Compared with Nine Months Ended September 30, 2016

 

Revenues. Our revenues are derived primarily from lease of printers to beta customers and from ink deliveries to those customers. Total revenues for the nine months ended September 30, 2017 were NIS 1,459,000 ($414,000), compared to zero in the nine months ended September 30, 2016. The fourth quarter of 2016 was the first quarter in which Nano Dimension generated revenues.

 

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Cost of Revenues.  Cost of revenues consists of depreciation of the leased printers, cost of maintenance, and ink 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 nine months ended September 30, 2017 were NIS 2,498,000 ($708,000), compared to zero in the nine months ended September 30, 2016. Cost of revenues for the nine months ended September 30, 2017 consists of NIS 492,000 ($140,000) in respect of depreciation of the leased printers, cost of maintenance, and ink costs, and an additional NIS 2,006,000 ($568,000) in respect of amortization of intangible assets. We did not have cost of revenues in prior years.

 

Research and Development.  R&D, expenses consist primarily of salaries of employees engaged in on-going research and development activities, materials, rent, and other related costs. R&D expenses for the nine months ended September 30, 2017 were NIS 30,930,000 ($8,765,000), compared to NIS 6,108,000 ($1,625,000) in the nine months ended September 30, 2016. The increase is mostly a result of the cessation of the capitalization of development costs in the fourth quarter of 2016. The R&D expenses for the nine months ended September 30, 2017 are presented net of government grants in the amount of NIS 535,000 ($152,000).

 

Sales, marketing and general and administrative.  Sales, marketing and general and administrative expenses consist primarily of professional services expenses, salaries of sales, marketing and general and administrative employees, travel and related expenses, directors fees, and other administrative costs. Sales, marketing and general and administrative expenses for the nine months ended September 30, 2017 were NIS 13,621,000 ($3,860,000), compared to NIS 12,975,000 ($3,453,000) in the nine months ended September 30, 2016. The increase resulted primarily from an increase in payroll and related expenses.

 

Finance income and Finance expense. Finance income and expenses consist of bank fees, revaluation of liability in respect of government grants, and exchange rate differences. Finance expenses, net, for the nine months ended September 30, 2017 were NIS 2,847,000 ($807,000), compared to NIS 550,000 ($146,000) in the nine months ended September 30, 2016. The increase resulted primarily from an increase in exchange rate differences.

 

Operating Loss. Based on the foregoing, we recorded an operating loss of NIS 45,590,000 ($12,919,000) for the nine months ended September 30, 2017, compared to NIS 19,083,000 ($5,078,000) in the nine months ended September 30, 2016.

 

Net Loss. Net loss for the nine months ended September 30, 2017 was NIS 48,437,000 ($13,726,000), or NIS 0.88 ($0.25) per ordinary share, compared to NIS 19,633,000 ($5,224,000), or NIS 0.52 ($0.14) per ordinary share, in the nine months ended September 30, 2016. The increase is mainly attributed to the increase in R&D expenses as described above.

 

Liquidity and Capital Resources

 

From August 2014 through September 30, 2017, we have funded our operations principally with NIS 150,828,000 ($40,256,000) from the issuance of ordinary shares and warrants. As of September 30, 2017, we had NIS 42,265,000 ($11,976,000) in cash and cash equivalents.

 

The table below presents our cash flows:

 

   Nine Month Periods Ended September 30, 
   2017   2017   2016 
   Thousands NIS (Unaudited)  

Thousands USD
(Unaudited)
Convenience
translation

into US dollars (NIS 3.529 = $1)

   Thousands NIS (Unaudited) 
Net cash used in operating activities   (37,599)   (10,655)   (11,317)
Net cash used in investing activities   (11,381)   (3,225)   (15,672)
Net cash provided by financing activities   46,467    13,167    47,282 

 

Net cash used in operating activities of NIS 37,599,000 ($10,655,000) during the nine months ended September 30, 2017 consists primarily of net loss, increase in trade payables and increase in inventory. The increase compared to NIS 11,317,000 ($3,011,000) in the nine months ended September 30, 2016 is mainly as a result of the cessation of the capitalization of development costs in the fourth quarter of 2016 and increase in inventory during the nine months ended September 30, 2017.

 

Net cash used in investing activities of NIS 11,381,000 ($3,225,000) during the nine months ended September 30, 2017 primarily reflects acquisition of property plant and equipment. The decrease compared to NIS 15,672,000 ($4,170,000) in the nine months ended September 30, 2016 is mainly as a result of as a result of the cessation of the capitalization of development costs in the fourth quarter of 2016.

 

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Net cash provided by financing activities of NIS 46,467,000 ($13,167,000) during the nine months ended September 30, 2017 consisted primarily of NIS 44,228,000 ($12,532,000) of net proceeds from the issuance of ordinary shares. The net cash provided by financing activities in the nine months ended September 30, 2016 of NIS 47,282,000 ($12,582,000) consisted primarily of net proceeds from the issuance of ordinary shares.

 

Outlook

 

We have financed our operations to date primarily through proceeds from issuance of our ordinary shares. We have incurred losses and generated negative cash flows from operations since 2012. To date, we have generated insignificant revenues from the sale and lease of our products. In the second half of 2017, we ended our beta plan and started commercial sales of our 3D printer and ink products.

 

In light of our cash balances and other factors, including our ability to generate cash from operations, we believe that our existing capital resources will be adequate to satisfy our working capital and capital expenditure requirements for a period of no less than the next 12 months. However, we expect that we will require additional capital to support our commercialization efforts.

 

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 research and development activities;
     
  the progress in the launch of the commercial version of our DragonFly 2020 3D printer;

 

  the costs of manufacturing our 3D printer 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 general and administrative expenses.

 

Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through debt or equity financings. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to our products. This may raise substantial doubts about our ability to continue as a going concern.

 

 

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