Nano Dimension Ltd. — FY2018 Form 20-F
Reporting period: Fiscal year ended December 31, 2018; filed March 14, 2019. This is an annual report, not a standalone fourth-quarter filing, and the supplied text does not provide separate Q4 results. Financial statements are prepared under IFRS as issued by the IASB, in U.S. dollars. The company changed its functional and presentation currency to the U.S. dollar effective January 1, 2018.
Business context
Nano Dimension develops and commercializes the DragonFly Pro system for additive manufacturing of printed electronics, proprietary conductive and dielectric inks, and related software. It began commercial sales in late 2017 and reported selling 30 systems worldwide in 2018. The company was still in an early commercialization and development stage, with revenue primarily from printer sales and related inks and services.
Financial performance and liquidity
| Metric (USD millions, except per-share data) | FY2018 | FY2017 |
|---|---|---|
| Revenue | 5.100 | 0.829 |
| Total cost of revenue | 4.366 | 1.152 |
| Gross profit (loss) | 0.734 | (0.323) |
| Gross margin | 14.4% | (39.0%) |
| Operating loss | (15.150) | (16.688) |
| Net loss | (15.488) | (17.503) |
| Basic and diluted loss per ordinary share | (0.17) | (0.31) |
| Operating cash flow | (13.447) | (15.797) |
| Investing cash flow | (1.232) | (3.691) |
| Financing cash flow | 12.480 | 13.108 |
| Cash at year-end | 3.753 | 6.103 |
FY2018 R&D expense was $8.623 million, sales and marketing $4.259 million, and general and administrative expense $3.002 million. EBITDA was negative $12.669 million and adjusted EBITDA negative $12.267 million; both are non-IFRS measures. Total assets were $20.303 million, total liabilities $4.731 million, and equity $15.572 million. Current assets were $8.773 million and current liabilities $3.592 million. The filing reports government-grant liabilities of $1.445 million; it does not identify material conventional borrowings.
Changes versus the prior comparable period
- Revenue rose 515% to $5.1 million, principally from increased product sales; printer sales accounted for $4.32 million in the revenue note, with additional consumables, support, and rental revenue.
- Gross result improved from a $323,000 loss to $734,000 profit, although gross margin remained modest.
- Net loss narrowed 12% and operating loss narrowed 9%. R&D expense declined 20%, while sales and marketing expense increased 95% as the company expanded commercialization efforts.
- Operating cash use improved but remained substantial. Cash fell by $2.199 million during the year, and year-end cash was $3.753 million.
- Ordinary shares outstanding increased from 62.5 million at year-end 2017 to 97.1 million at year-end 2018, primarily reflecting equity financing.
Outlook, risks, and unusual items
- Going concern: Management and the auditor reported substantial doubt about the company’s ability to continue as a going concern. Based on projected cash flows, December 2018 cash, and the February 2019 offering, management said further fundraising would be needed to fund operations for at least 12 months from the financial-statement sign-off date. The statements contain no adjustments for a possible failure to continue as a going concern.
- Post-period financing: In February 2019 the company raised approximately $10.6 million net through an offering of 16 million units at $0.75 each. Each unit included one ADS, a warrant to purchase one ADS, and a right to purchase 0.75 ADS. The financing added substantial potential dilution; the filing describes 80 million ordinary shares underlying the ADSs, plus warrants and rights exercisable for additional shares.
- Business risks: Commercial success depends heavily on DragonFly Pro and its inks. Risks include limited market acceptance, competition and rapid technology change, scaling and manufacturing constraints, reliance on some single-source suppliers, product liability, recruitment and retention of key personnel, and the need for additional capital.
- Other exposures: The company is exposed to NIS/U.S.-dollar currency movements and does not hedge foreign-exchange risk. Israeli Innovation Authority grants entail royalties and restrictions on transferring funded know-how or manufacturing outside Israel. Israeli political and security conditions may disrupt operations or logistics.
- Leases and related parties: The company expected IFRS 16 adoption in 2019 to add approximately $1.891 million of right-of-use assets and $2.192 million of lease liabilities. A related-party services agreement with a company controlled by the chairman provided for a monthly fee of $8,000, alongside a separate innovation-services arrangement involving printer access.
- Other disclosures: Management concluded disclosure controls and internal control over financial reporting were effective as of year-end; the auditor did not provide an internal-control attestation because of the emerging-growth-company exemption. Routine legal proceedings were not believed to have a significant financial effect. No cash dividends were paid or anticipated in the foreseeable future.
Most important facts for investors to verify
- Whether revenue growth, system placements, repeat ink purchases, and support revenue continued after FY2018, and whether sales translate into sustainable positive gross margins.
- The company’s current cash runway, subsequent cash burn, and dependence on further fundraising, given the explicit going-concern warning.
- The actual and potential dilution from the February 2019 offering’s shares, warrants, and purchase rights, and any later capital raises.
- Manufacturing capacity, supplier concentration, warranty and service costs, and customer adoption of DragonFly Pro.
- Cash-flow and working-capital developments, including the increase in trade receivables and inventory during 2018.
- Compliance with Innovation Authority grant terms, including royalties and approvals required for transfer of funded technology or manufacturing.