Nano Dimension Ltd. — FY2019 Form 20-F
Reporting period: Fiscal year ended December 31, 2019; this is an annual report, not a standalone Q4 filing. Figures are in U.S. dollars and the financial statements are prepared under IFRS. Comparisons below are primarily with FY2018.
Business context
Nano Dimension develops and sells the DragonFly LDM additive electronics printer, proprietary conductive and dielectric inks, and related software and services. The company was still in early commercialization, with limited revenue and continued substantial investment in R&D and sales infrastructure. It reported selling 27 systems in 2019 versus 30 in 2018; the filing also says 57 systems were sold across the two years.
Financial performance and position
| Metric | FY2019 / Dec. 31, 2019 | FY2018 / Dec. 31, 2018 |
|---|---|---|
| Revenue | $7.070 million | $5.100 million |
| Gross profit | $1.986 million; 28.1% margin | $0.734 million; 14.4% margin |
| Operating loss | $14.835 million | $15.150 million |
| Net/comprehensive loss | $8.353 million | $15.488 million |
| Basic and diluted loss per share | $0.05 | $0.17 |
| Operating cash flow | $(12.684) million | $(13.447) million |
| Cash | $3.894 million | $3.753 million |
| Total assets / total liabilities | $22.858 million / $11.256 million | $20.303 million / $4.731 million |
| Total equity | $11.602 million | $15.572 million |
Revenue increased 39%, while gross profit rose to $1.986 million. Cost of revenue, including intangible amortization, was $5.084 million. R&D expense declined 6% to $8.082 million; sales and marketing expense increased 28% to $5.469 million, and general and administrative expense rose 9% to $3.270 million. Gross margin improved, but the company remained substantially loss-making at the operating level.
Net loss narrowed largely because of $6.482 million of net finance income, principally fair-value remeasurement gains on warrants and other financial liabilities following a decline in the share price. This was not an improvement in operating profitability. EBITDA was $(12.143) million and adjusted EBITDA was $(11.704) million; both are non-IFRS measures.
Investing cash flow was $(0.641) million and financing cash flow was $13.441 million, producing a $0.116 million net increase in cash. Current assets were $9.854 million and current liabilities $4.425 million. The balance sheet included a $3.698 million fair-value liability for convertible notes, warrants and derivatives, and $3.144 million of lease liabilities, of which $1.055 million was current. These categories include instruments with different terms and should not be treated as a single conventional debt balance.
Material changes and financing
- The February 2019 offering generated approximately $10.6 million in net proceeds and included ADSs, warrants and rights. In September 2019, the company issued convertible promissory notes with $4.276 million aggregate principal in the initial closing; subsequent closings were later terminated substantially.
- Outstanding ordinary shares increased from 97.1 million at year-end 2018 to 209.5 million at year-end 2019. The weighted-average share count used for loss per share rose from 91.8 million to 175.6 million.
- In February 2020, the company raised approximately $3.88 million gross through an offering of 2.588 million ADSs, representing approximately 129.4 million ordinary shares, before underwriting and other offering costs. This post-year-end issuance materially increased the share count.
- IFRS 16 was adopted in 2019. At year-end the company reported $2.673 million of right-of-use assets and $3.144 million of lease liabilities; 2018 comparative figures were not restated.
Outlook, risks and unusual items
- Going concern: The auditor’s report and management state there is substantial doubt about the company’s ability to continue as a going concern. Management said that cash at year-end plus the February 2020 offering would not fund operations for at least 12 months from March 9, 2020 without further fundraising. The statements contain no adjustments for the outcome of this uncertainty.
- Outlook: The filing provides no quantified revenue or earnings guidance. Management planned to continue commercialization and seek additional funding; without financing or sufficient commercialization, the company could reduce or cease operations.
- Commercial execution: Success depends on scaling sales of DragonFly systems and recurring ink, maintenance and service revenue. The company planned to expand direct sales and work with resellers, but reported limited revenue and continuing losses.
- Key risks: Additional financing may be unavailable or dilutive; product adoption, competition, long sales cycles, supplier concentration and dependence on a single manufacturing facility could affect results. The filing also highlights intellectual-property, product-liability, cyber, foreign-exchange, Israeli geopolitical and public-health risks, including coronavirus-related disruption.
- Other exposures: The company had approximately $1.547 million of remaining estimated royalty commitments to Israel’s Innovation Authority at year-end, subject to sales and grant terms. Transferring funded know-how or manufacturing outside Israel may require approval and could trigger additional payments. The company reported no material off-balance-sheet arrangements and no dividend payments.
Most important facts for investors to verify
- Current cash, operating burn and the actual funding runway after the February 2020 offering, including subsequent financing and spending.
- Share count, potential dilution from warrants, rights, convertible instruments and employee options, and the terms or settlement of the September 2019 financing.
- Whether system sales are translating into repeat consumables, service and maintenance revenue, and what the installed base and customer retention look like.
- The sustainability of reported losses: in particular, the extent to which net results depend on fair-value gains rather than operating performance.
- Remaining lease, grant-royalty and other contractual obligations, and any approvals or costs associated with moving IIA-funded technology or manufacturing.