Business Context and Reporting Period
Company: Nano Dimension Ltd.
Filing Type: Form 20-F (Annual Report)
Reporting Period: Fiscal year ended December 31, 2015
Business Overview: Nano Dimension is a development-stage company engaged in the research and development of a 3D printer (Dragonfly) capable of printing multi-layer printed circuit boards (PCBs) and proprietary nano-technology inks. The company has not yet commercialized its products or generated revenue from product sales. It operates as a foreign private issuer under Israeli law and reports under International Financial Reporting Standards (IFRS).
Key Financial Metrics (Year Ended Dec 31, 2015)
| Metric | Amount (NIS '000s) | Amount (USD '000s) |
|---|---|---|
| Revenues | 0 | 0 |
| Research & Development Expenses (Net) | 11,153 | 2,858 |
| General & Administrative Expenses | 11,229 | 2,878 |
| Operating Loss | (22,376) | (5,735) |
| Net Comprehensive Loss | (20,992) | (5,380) |
| Cash and Cash Equivalents (Ending) | 33,811 | 8,665 |
| Total Assets | 51,538 | 13,208 |
| Total Liabilities | 4,534 | 1,161 |
| Shareholders' Equity | 47,004 | 12,047 |
| Accumulated Deficit | (36,134) | (9,260) |
Note: USD translations are based on the exchange rate of NIS 3.902 to $1.00 as of December 31, 2015.
Material Changes vs. Prior Period
- Revenue: Remained at zero; the company has not generated revenue from product sales.
- Expenses: Operating expenses increased significantly. R&D expenses rose 234% (from NIS 3.3M to NIS 11.2M) and G&A expenses rose 687% (from NIS 1.4M to NIS 11.2M) compared to 2014. This was driven by increased headcount (R&D staff grew from 5 to 34) and professional services related to the NASDAQ listing process.
- Loss: Net loss increased 46% to NIS 21.0M (approx. $5.4M) compared to NIS 14.2M in 2014.
- Liquidity: Cash and cash equivalents increased substantially from NIS 806,000 in 2014 to NIS 33.8M in 2015, primarily due to net proceeds of NIS 56.4M from the issuance of ordinary shares and warrants.
- Intangible Assets: The company began capitalizing development costs in August 2015, recognizing NIS 11.5M in intangible assets, whereas prior periods expensed all development costs.
Guidance, Outlook, and Risks
Outlook and Guidance:
- The company expects to complete the development of its beta-version Dragonfly 3D printer in the first half of 2016, with production readiness for delivery expected in the second half of 2016.
- Commercial production of printers and supplementary ink products is anticipated to begin in the second half of 2016.
- Management estimates it has sufficient capital to fund operations until at least the end of 2016 but expects to require substantial additional capital for mass production.
Management Commentary:
- The company has entered into collaborations with Fortune 100 and key Israeli companies (including Israel Aerospace Industries) for beta testing.
- Capital expenditures in 2015 were NIS 10.1M, primarily for fixed assets and capitalized development.
Risks and Contingencies:
- Legal Proceedings: XJet Ltd. filed a lawsuit in March 2015 alleging misappropriation of trade secrets and technology, seeking NIS 20 million in damages and an injunction. The company denies the allegations; the outcome is uncertain, and an injunction could delay product development.
- Capital Requirements: As a development-stage company with no revenue, the company faces significant risk if it cannot raise additional funding on acceptable terms.
- Government Grants: The company received grants from the Israeli Office of the Chief Scientist (OCS). These grants require royalty payments on future sales and restrict the transfer of know-how or manufacturing outside Israel without OCS approval.
- Intellectual Property: The company relies on a portfolio of patent applications and a license from the Hebrew University. Failure to secure patents or defend against third-party claims could harm competitiveness.
Key Facts for Investor Verification
- Zero Revenue Status: Verify the timeline for commercialization; the company has generated no revenue to date and expects sales only in H2 2016.
- Cash Burn Rate: Confirm the sufficiency of the NIS 33.8M cash balance against the projected NIS 11.2M+ annual operating burn rate and capital expenditure needs.
- XJet Litigation: Monitor the status of the XJet lawsuit, as an injunction could materially delay the Dragonfly printer launch.
- Capitalization of R&D: Review the criteria used to capitalize NIS 11.5M of development costs as intangible assets versus expensing them, as this significantly impacts reported net loss.
- Dilution Risk: Note the significant issuance of shares and warrants in 2015 to fund operations; future fundraising will likely result in further dilution.