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: August 2024 (Report No. 2)
Commission
file number: 001-38610
ALARUM
TECHNOLOGIES LTD.
(Translation
of registrant’s name into English)
30
Haarba’a Street Tel-Aviv (P.O. Box 174)
Tel-Aviv,
6473926 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 ☐
CONTENTS
This Report of Foreign Private Issuer on Form 6-K (this “Report”) consists of (i) Alarum Technologies Ltd.’s (the “Registrant”)
press release issued on August 26, 2024, announcing its financial results for the three- and six-month periods ended June 30, 2024, which
is attached hereto as Exhibit 99.1; (ii) the Registrant’s unaudited Interim Condensed Consolidated Financial Statements (Unaudited)
as of and for the period ended June 30, 2024, which are attached hereto as Exhibit 99.2; and (iii) the Registrant’s Management’s
Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2024, which is attached hereto
as Exhibit 99.3
The
paragraphs titled “Recent Business Highlights”, “Second Quarter and First Half
2024 Financial Analysis”, “Financial Outlook”, “Forward-Looking Statements” and the IFRS financial statements in the press release
attached as Exhibit 99.1, the Interim Condensed Consolidated Financial Statements (Unaudited) as of June 30, 2024 attached as Exhibit
99.2, and the Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June
30, 2024 attached as Exhibit 99.3, are incorporated by reference into the registration statements on Form S-8 (File Nos. 333-233510,
333-239249, 333-250138, 333-258744, 333-267586 and 333-274585) and Form F-3 (File Nos. 333-233724, 333-235368, 333-236030, 333-233976,
333-237629, 333-267580 and 333-274604) 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the date on which this Report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
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.
|
Alarum
Technologies Ltd.
(Registrant) |
|
|
|
Date: August 26, 2024 |
By |
/s/ Omer
Weiss |
|
Name: |
Omer Weiss |
|
Title: |
Corporate Legal Counsel |
2
Exhibit
99.1
Alarum
Technologies Announces Second Quarter 2024 Results
Concludes
strong first half of 2024 with record revenues of $17.3 million, progressing profitability metrics,
solid cash generation and $21.6 million
in cash and equivalents
TEL AVIV, Israel, Aug. 26, 2024 (GLOBE
NEWSWIRE) -- Alarum Technologies Ltd. (Nasdaq, TASE: ALAR) (“Alarum” or the “Company”), a
global provider of internet access and web data collection solutions, today announced financial results for the second quarter
ended June 30, 2024.
“Today
we announced the results of yet another strong record-breaking quarter, marking the first year since we announced our shift to focusing
on Enterprise Internet Access through our NetNut data collection product line,” said Mr. Shachar Daniel, Chief Executive Officer
of Alarum. “As we intend to establish the broadest data collection and insights offering in the market, we continued to increase
our market share in the IP Proxy Network (IPPN) segment, won initial sales in the data collection and labelling market with our new Web-Unblocker
and continued to make progress towards providing our customers with artificial intelligence (AI) and analysis capabilities. Our cash
balance positions us well to invest in prospects that will provide the foundation for sustained growth.”
Mr.
Daniel concluded: “Looking into the third quarter of 2024, I am extremely proud that NetNut revenues are expected to surpass the
full year 2023 revenue-bar within the first three quarters of 2024. The market we operate in is an ever evolving and nascent market and
as we continue to expand our customer base, enhance our offerings and grow the business we may experience some short-term variances.
In the third quarter of 2024, we estimate continued year-over-year growth. While third quarter revenues are assumed to be impacted by
market dynamics that some of our customers have been experiencing since June, our main growth KPIs are positive: consistent growth in
the monthly revenue rates from June to July and into August. We evaluate the value created by new customers over their lifecycle. Our
new customer-indicator shows enhanced growth in the second quarter compared to the first quarter, and to the last four quarters’
average. Furthermore, we will maintain strong net customer retention rates in the third quarter, in line with our growth strategy and
strong balance sheet. These are all clear indicators of the strength and resilience of our business, as Alarum is in it for the long
run.”
Recent
Business Highlights
As
the Company focuses on expanding its presence in the Data Collection Market, it:
- | Added
major and highly regarded brand names to the NetNut customer base, including a Fortune 100
customer in Q3 2024 |
- | Onboarded
in Q2 2024 dozens of new customers who generated approximately $400,000 in the first month
of activity, 60% higher than the revenue generated from those that onboarded in Q1 2024 and
about 35% higher than the last four quarters’ average |
- | To
date, NetNut customers have been generating revenues at an average rate of about 15-18 times
higher than their initial month’s activity over a period of approximately three years |
- | Net
Retention Rate (“NRR”)1 reached 1.59 as of June 30, 2024 |
- | Continued
to expand and further the Company’s network ; its infrastructure is now capable of
handling significantly higher traffic, supporting larger and a growing number of customers
that can drive scalable and profitable growth |
- | Continued
to invest in and make substantial progress into the Data Collection and Labelling Market
with the new Web-Unblocker and the AI Data Collection products |
- | Generated
initial revenues from new customers who placed orders for the Web-Unblocker in Q2 2024 |
- | Continued
to advance towards adding AI and analysis capabilities to the Company’s Data Products |
1 | NRR
represents the average growth rate for the preceding four quarters compared to the equivalent period in the prior year, of current customers
only, while excluding revenues generated from new customers but including up-sales and cross-sales as well as churn. |
Summary
of Financial Results2
(in
millions of U.S. dollars, rounded, except per share amounts and margins)
| |
For
the Six Months Ended
June 30, | | |
For
the Three Months Ended
June 30, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | |
| |
| | |
| | |
| | |
| |
Total
Revenue | |
| 17.3 | | |
| 12.7 | | |
| 8.9 | | |
| 7.0 | |
of
which, NetNut Revenue was | |
| 16.7 | | |
| 8.4 | | |
| 8.7 | | |
| 5.0 | |
Gross
profit | |
| 13.4 | | |
| 8.3 | | |
| 6.8 | | |
| 4.5 | |
Gross
margin (in percentage) | |
| 77.7 | % | |
| 65.3 | % | |
| 76.9 | % | |
| 64.7 | % |
Non-IFRS
gross margin (in percentage) | |
| 79.9 | % | |
| 69.9 | % | |
| 78.5 | % | |
| 71.0 | % |
Total
operating expenses | |
| 8.1 | | |
| 17.0 | | |
| 4.2 | | |
| 12.8 | |
Finance
income (expense), net | |
| (3.3 | ) | |
| 0.1 | | |
| (2.5 | ) | |
| 0.3 | |
Tax
benefit (expense) | |
| (0.8 | ) | |
| 0.2 | | |
| (0.5 | ) | |
| 0.2 | |
Net
profit (loss) for the period | |
| 1.1 | | |
| (8.4 | ) | |
| (0.4 | ) | |
| (7.7 | ) |
Adjusted
EBITDA | |
| 6.6 | | |
| 1.2 | | |
| 3.4 | | |
| 1.1 | |
Basic
earnings (loss) per ADS (in U.S. Dollars) | |
$ | 0.16 | | |
$ | (2.51 | ) | |
$ | (0.05 | ) | |
$ | (2.26 | ) |
Non-IFRS
basic earnings per ADS (in U.S. Dollars) | |
$ | 0.86 | | |
$ | 0.42 | | |
$ | 0.41 | | |
$ | 0.45 | |
| |
| | | |
| | | |
| | | |
| | |
Cash,
cash equivalents3 | |
| 21.6 | | |
| 3.8 | | |
| 21.6 | | |
| 3.8 | |
Shareholders’
equity4 | |
| 20.4 | | |
| 6.1 | | |
| 20.4 | | |
| 6.1 | |
Second
Quarter and First Half 2024 Financial Analysis
● | Revenues
grew 27% year-over-year to a Company record $8.9 million in Q2 2024 (Q2 2023: $7.0 million).
The increase is attributed to the growth of the enterprise internet access business, NetNut,
which increased to $8.7 million in Q2 2024, up from $5.0 million in Q2 2023. H1 2024 revenues
increased to a record $17.3 million (H1 2023: $12.7 million). NetNut’s revenues reached
a record $16.7 million in H1 2024, achieving 99% year-over-year growth (H1 2023: $8.4 million). |
● | Operating
expenses totaled $4.2 million (Q2 2023: $12.8 million), and H1 2024 operating expenses totaled
$8.1 million (H1 2023: $17.0 million). The quarterly and six-month year-over-year decrease
resulted mainly from impairment of goodwill and intangible assets following the Company’s
shift to enterprise internet access (NetNut) from consumer internet access (CyberKick). In
addition, CyberKick’s operation expenses were reduced, while NetNut’s operation
expenses increased in line with its growth. |
● | Finance
expenses in Q2 2024 were $2.5 million (Q2 2023: finance income of $0.3 million), and approximately
$3.4 million in H1 2024 (H1 2023: financial income of $0.1 million). The year-over-year differences
were mainly from expenses resulting from the fair value increase of derivative financial
instruments (warrants issued in 2019 to 2020) due to the increase in the Company’s
share price. The increase was partially offset by interest income on short-term bank deposits. |
| 2 | The
table below contains certain non-IFRS financial measures. See “Use of non-IFRS Financial Results” for additional information
regarding these measures and reconciliations to the most comparable IFRS measures. |
| 3 | As
of the last day of the period. |
| 4 | As
of the last day of the quarter. |
● | Income
tax expenses totaled $0.8 million in H1 2024 (H1 2023: tax benefit of $0.2 million), following
the first-time NetNut was profitable for tax purposes. |
● | H1
2024 cash flow from operating activities reached $6.3 million (H1 2023: $(0.1) million) |
● | As
of June 30, 2024, shareholders’ equity totaled $20.4 million, compared to $6.1 million
as of June 30, 2023, and $13.2 million as of December 31, 2023. The increase was driven by
the H1 2024 net profit as well as warrants and options exercises. |
● | Outstanding
ordinary share count as of June 30, 2024, was approximately 68.4 million, or 6.8 million
in ADSs. |
Financial
Outlook
“Alarum
ended Q2 2024 with growing revenues, enhanced profitability, strong cash generation and a solid balance sheet, which provides the flexibility
and resources to invest in the areas that will drive future growth,” said Mr. Shai Avnit, Chief Financial Officer of Alarum. “Today,
for the first time, we are providing quarterly guidance, as we aim to enhance transparency. We anticipate Q3 2024 revenue to demonstrate
year-over-year growth, and in fact, NetNut revenues are expected to cross the full-year 2023 revenue-bar of $21.2 million within the
first nine months of 2024. Q3 2024 revenues are estimated at $7 million ±3% and Adjusted EBITDA for Q3 2024 is expected to range
from $0.8 to $1.0 million.”
Second
Quarter 2024 Financial Results Conference Call
Mr.
Shachar Daniel, Chief Executive Officer of Alarum, and Mr. Shai Avnit, Chief Financial Officer of Alarum, will host a conference call
today, August 26, 2024, at 8:30 a.m. ET, 5:30 a.m. Pacific time to discuss the second quarter 2024 results and the third quarter 2024
outlook, followed by a Q&A session. To attend, please dial one of the following numbers, at least five minutes before the call starts:
1-877-407-0789 or 1-201-689-8562. If you are unable to connect using the toll-free number, please try the international dial-in number.
An Israeli toll-free number is: 1 809 406 247.
Participants
will be required to state their name and company upon dialing in. If you have any difficulty connecting, please contact Michal Efraty
on behalf of Alarum at +972-(0)-52-3044404. Replay: The conference call will be broadcast live and available for replay here, after 11:30
a.m. ET on August 26, 2024, through September 24, 2024. Toll-free replay numbers: 1-844-512-2921 or 1-412-317-6671, ID: 13748415.
Forward-Looking
Statements
This
press release contains forward-looking statements within the meaning of the “safe harbor” words such as “expects,”
“anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates”
and similar expressions or variations of such words are intended to identify forward-looking statements. For example, Alarum is using
forward-looking statements in this press release when it discusses its guidance regarding revenue and Adjusted EBITDA, potential due
to its cash position and resources, growth, profitability, AI and analysis capabilities, customer retention, prospect, flexibility, market
expansion and 2024 NetNut revenues, as well as the expected benefits and impacts of its existing and future products and services. Because
such statements deal with future events and are based on Alarum’s current expectations, they are subject to various risks and uncertainties
and actual results, performance or achievements of Alarum could differ materially from those described in or implied by the statements
in this press release. The forward-looking statements contained or implied in this press release are subject to other risks and uncertainties,
including those discussed under the heading “Risk Factors” in Alarum’s annual report on Form 20-F filed with the Securities
and Exchange Commission (“SEC”) on March 14, 2024, and in any subsequent filings with the SEC. Except as otherwise required
by law, Alarum undertakes 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. References and links to websites have been provided as a
convenience, and the information contained on such websites is not incorporated by reference into this press release. Alarum is not responsible
for the contents of third-party websites.
Condensed
Consolidated Statements of Financial Position
(in
thousands of U.S. dollars)
| |
June 30, | | |
December 31, | |
| |
2024 | | |
2023 | | |
2023 | |
| |
(Unaudited) | | |
(Audited) | |
Assets | |
| | |
| | |
| |
Current assets: | |
| | |
| | |
| |
Cash and cash equivalents | |
| 21,626 | | |
| 3,813 | | |
| 10,872 | |
Short-term restricted deposits | |
| - | | |
| 500 | | |
| - | |
Trade receivables, net | |
| 2,471 | | |
| 2,279 | | |
| 1,994 | |
Other receivables | |
| 961 | | |
| 481 | | |
| 399 | |
| |
| 25,058 | | |
| 7,073 | | |
| 13,265 | |
| |
| | | |
| | | |
| | |
Non-current assets: | |
| | | |
| | | |
| | |
Long-term restricted deposits | |
| - | | |
| 111 | | |
| - | |
Long-term deposit | |
| 102 | | |
| 119 | | |
| 104 | |
Other non-current assets | |
| 94 | | |
| 111 | | |
| 145 | |
Property and equipment, net | |
| 119 | | |
| 92 | | |
| 88 | |
Right-of-use assets | |
| 638 | | |
| 605 | | |
| 779 | |
Deferred tax assets | |
| 298 | | |
| - | | |
| 181 | |
Goodwill | |
| 4,118 | | |
| 4,118 | | |
| 4,118 | |
Intangible assets, net | |
| 1,082 | | |
| 1,901 | | |
| 1,386 | |
Total non-current assets | |
| 6,451 | | |
| 7,057 | | |
| 6,801 | |
Total assets | |
| 31,509 | | |
| 14,130 | | |
| 20,066 | |
| |
| | | |
| | | |
| | |
Liabilities and equity | |
| | | |
| | | |
| | |
Current liabilities: | |
| | | |
| | | |
| | |
Trade payables | |
| 570 | | |
| 963 | | |
| 369 | |
Other payables | |
| 3,058 | | |
| 2,312 | | |
| 2,439 | |
Current maturities of long-term loan | |
| 564 | | |
| 497 | | |
| 290 | |
Short-term bank loans | |
| - | | |
| 1,601 | | |
| - | |
Contract liabilities | |
| 2,285 | | |
| 1,289 | | |
| 1,983 | |
Derivative financial instruments | |
| 3,409 | | |
| 2 | | |
| 109 | |
Short-term lease liabilities | |
| 362 | | |
| 227 | | |
| 370 | |
Total current liabilities | |
| 10,248 | | |
| 6,891 | | |
| 5,560 | |
| |
| | | |
| | | |
| | |
Non-current liabilities: | |
| | | |
| | | |
| | |
Long-term loans | |
| 398 | | |
| 647 | | |
| 802 | |
Long-term lease liabilities | |
| 439 | | |
| 405 | | |
| 523 | |
Deferred tax liabilities | |
| - | | |
| 63 | | |
| - | |
Total non-current liabilities | |
| 837 | | |
| 1,115 | | |
| 1,325 | |
Total liabilities | |
| 11,085 | | |
| 8,006 | | |
| 6,885 | |
| |
| | | |
| | | |
| | |
Equity: | |
| | | |
| | | |
| | |
Ordinary shares | |
| - | | |
| - | | |
| - | |
Share premium | |
| 108,963 | | |
| 95,754 | | |
| 100,576 | |
Other equity reserves | |
| 12,705 | | |
| 15,567 | | |
| 14,938 | |
Accumulated deficit | |
| (101,244 | ) | |
| (105,197 | ) | |
| (102,333 | ) |
Total equity | |
| 20,424 | | |
| 6,124 | | |
| 13,181 | |
Total liabilities and equity | |
| 31,509 | | |
| 14,130 | | |
| 20,066 | |
Condensed
Consolidated Statements of Profit or Loss
(in
thousands of U.S. dollars, except per share amounts)
|
|
For the Six Months Ended
June 30, | | |
For the Three Months Ended
June 30, | | |
For the
Year Ended
December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2023 | |
| |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Unaudited) | | |
(Audited) | |
Continuing operations | |
| | |
| | |
| | |
| | |
| |
Revenue | |
| 17,260 | | |
| 12,664 | | |
| 8,884 | | |
| 6,985 | | |
| 26,521 | |
Cost of revenue | |
| 3,854 | | |
| 4,390 | | |
| 2,051 | | |
| 2,463 | | |
| 7,711 | |
Gross profit | |
| 13,406 | | |
| 8,274 | | |
| 6,833 | | |
| 4,522 | | |
| 18,810 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Operating expenses: | |
| | | |
| | | |
| | | |
| | | |
| | |
Research and development | |
| 2,143 | | |
| 1,948 | | |
| 1,121 | | |
| 886 | | |
| 3,557 | |
Sales and marketing | |
| 3,372 | | |
| 6,472 | | |
| 1,647 | | |
| 4,289 | | |
| 10,035 | |
General and administrative | |
| 2,626 | | |
| 2,286 | | |
| 1,386 | | |
| 1,291 | | |
| 4,406 | |
Impairment of goodwill | |
| - | | |
| 6,311 | | |
| - | | |
| 6,311 | | |
| 6,311 | |
Total operating expenses | |
| 8,141 | | |
| 17,017 | | |
| 4,154 | | |
| 12,777 | | |
| 24,309 | |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Operating profit (loss) | |
| 5,265 | | |
| (8,743 | ) | |
| 2,679 | | |
| (8,255 | ) | |
| (5,499 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Finance income (expense), net | |
| (3,345 | ) | |
| 116 | | |
| (2,497 | ) | |
| 313 | | |
| (590 | ) |
Profit (loss) from continuing operations before income tax | |
| 1,920 | | |
| (8,627 | ) | |
| 182 | | |
| (7,942 | ) | |
| (6,089 | ) |
Tax benefit (expense) | |
| (831 | ) | |
| 238 | | |
| (533 | ) | |
| 242 | | |
| 482 | |
Profit (loss) from continuing operations, net of income tax | |
| 1,089 | | |
| (8,389 | ) | |
| (351 | ) | |
| (7,700 | ) | |
| (5,607 | ) |
Profit from discontinued operations, net of income tax | |
| - | | |
| - | | |
| - | | |
| - | | |
| 82 | |
Net profit (loss) for the period | |
| 1,089 | | |
| (8,389 | ) | |
| (351 | ) | |
| (7,700 | ) | |
| (5,525 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Basic
and diluted profit (loss) per share: | |
| | | |
| | | |
| | | |
| | | |
| | |
Continuing operations | |
$ | 0.02 | | |
$ | (0.25 | ) | |
$ | (0.01 | ) | |
$ | (0.23 | ) | |
$ | (0.14 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Discontinued operations | |
| - | | |
| - | | |
| - | | |
| - | | |
| * | |
| |
$ | 0.02 | | |
$ | (0.25 | ) | |
$ | (0.01 | ) | |
$ | (0.23 | ) | |
$ | (0.14 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Basic profit (loss) per ADS: | |
| | |
| | |
| | |
| | |
| |
| |
| | |
| | |
| | |
| | |
| |
Continuing operations | |
$ | 0.16 | | |
$ | (2.51 | ) | |
$ | (0.05 | ) | |
$ | (2.26 | ) | |
$ | (1.35 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Discontinued operations | |
| - | | |
| - | | |
| - | | |
| - | | |
| * | |
| |
$ | 0.16 | | |
$ | (2.51 | ) | |
$ | (0.05 | ) | |
$ | (2.26 | ) | |
$ | (1.35 | ) |
Use
of non-IFRS Financial Results
In
addition to disclosing financial results calculated in accordance with International Financial Reporting Standards (IFRS), as issued
by the International Accounting Standards Board, this press release contains non-IFRS financial measures of EBITDA (EBITDA loss), Adjusted
EBITDA (Adjusted EBITDA loss), non-IFRS net profit (loss), non-IFRS gross profit, non-IFRS gross margin and non-IFRS basic earnings (loss)
per share or ADS for the periods presented. The Company defines EBITDA (EBITDA loss) as net profit (loss) from continuing operations
before depreciation, amortization and impairment of intangible assets, finance income (expense) and income tax; defines Adjusted EBITDA
(Adjusted EBITDA loss) as EBITDA (EBITDA loss) as further adjusted to remove the impact of (i) impairment of goodwill (if any); and (ii)
share-based compensation; defines non-IFRS net profit (loss) as net profit (loss) from continuing operations before depreciation, amortization
and impairment of intangible assets, impairment of goodwill, finance income (expense) effects primarily related to derivative financial
instruments as well as long-term loan, deferred tax effects and share-based compensation; defines non-IFRS gross profit as gross profit
from continuing operations adjusted to remove the impact of depreciation, amortization and impairment of intangible assets and share-based
compensation recorded under cost of revenues; defines non-IFRS gross margin as the percentage of the non-IFRS gross profit out of revenues;
and defines non-IFRS basic earnings (loss) per share or ADS as non-IFRS net profit (loss) divided by the weighted average number of ordinary
shares or ADSs. The Company’s management believes the non-IFRS financial information provided in this press release is useful to
investors’ understanding and assessment of the Company’s ongoing operations. Management also uses both IFRS and non-IFRS
information in evaluating and operating its business internally, and as such deemed it important to provide this information to investors. The
non-IFRS financial measures disclosed by the Company should not be considered in isolation, or as a substitute for, or superior
to, financial measures calculated in accordance with IFRS, and the financial results calculated in accordance with IFRS and reconciliations
to those financial statements should be carefully evaluated. Investors are encouraged to review the reconciliations of these non-IFRS
measures to their most directly comparable IFRS financial measures provided in the financial statement tables herein.
Other
Metrics
Net
retention rate (NRR) represents the average growth rates for the preceding four quarters compared to the equivalent period a year earlier,
of current customers only, without the revenues generated from new customers, but including up-sales and cross-sales on one hand and
churn on the other hand. NRR greater than 1.00 indicates that the Company experiences revenue growth from its existing customer base
in the specific period even after accounting for lost revenue due to customers’ churn. Conversely, an NRR lower than 1.00 suggests
that the Company loses revenue from existing customers in the specific period due to churn which is higher than revenue gain through
up-sells or cross-sells.
Non-IFRS
Financial Measures
(in
millions of U.S. dollars, rounded)
The
following tables present the reconciled effect of the above on the Company’s Adjusted EBITDA (EBITDA loss); non-IFRS net profit
(loss); and non-IFRS gross profit for the six and three months ended June 30, 2024 and 2023, and for the year ended December 31, 2023:
| |
For
the
Six Months Ended
June 30, | | |
For
the Three Months Ended
June 30, | | |
For
the
Year Ended
December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2023 | |
| |
| | |
| | |
| | |
| | |
| |
Net profit (loss) from continuing operations | |
| 1.1 | | |
| (8.4 | ) | |
| (0.3 | ) | |
| (7.7 | ) | |
| (5.6 | ) |
Adjustments: | |
| | | |
| | | |
| | | |
| | | |
| | |
Depreciation, amortization and impairment of intangible assets | |
| 0.3 | | |
| 3.0 | | |
| 0.1 | | |
| 2.7 | | |
| 3.5 | |
Finance expense (income), net | |
| 3.4 | | |
| (0.1 | ) | |
| 2.5 | | |
| (0.3 | ) | |
| 0.6 | |
Tax expense (tax benefit) | |
| 0.8 | | |
| (0.2 | ) | |
| 0.5 | | |
| (0.2 | ) | |
| (0.5 | ) |
EBITDA (EBITDA loss) | |
| 5.6 | | |
| (5.7 | ) | |
| 2.8 | | |
| (5.5 | ) | |
| (2.0 | ) |
Adjustments: | |
| | | |
| | | |
| | | |
| | | |
| | |
Impairment of goodwill | |
| - | | |
| 6.3 | | |
| - | | |
| 6.3 | | |
| 6.3 | |
Share-based compensation | |
| 1.0 | | |
| 0.6 | | |
| 0.6 | | |
| 0.3 | | |
| 0.9 | |
Adjusted EBITDA for the period | |
| 6.6 | | |
| 1.2 | | |
| 3.4 | | |
| 1.1 | | |
| 5.2 | |
| |
For
the
Six Months Ended
June 30, | | |
For
the Three Months Ended
June 30, | | |
For
the
Year Ended December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2023 | |
Net profit (loss) from continuing operations | |
| 1.1 | | |
| (8.4 | ) | |
| (0.3 | ) | |
| (7.7 | ) | |
| (5.6 | ) |
Adjustments: | |
| | | |
| | | |
| | | |
| | | |
| | |
Depreciation, amortization and impairment of intangible assets | |
| 0.3 | | |
| 3.0 | | |
| * | | |
| 2.7 | | |
| 3.5 | |
Finance expense, net effects | |
| 3.3 | | |
| 0.1 | | |
| 2.5 | | |
| 0.1 | | |
| 0.1 | |
Deferred tax effects | |
| (0.1 | ) | |
| (0.2 | ) | |
| * | | |
| (0.2 | ) | |
| (0.5 | ) |
Impairment of goodwill | |
| - | | |
| 6.3 | | |
| - | | |
| 6.3 | | |
| 6.3 | |
Share-based compensation | |
| 1.0 | | |
| 0.6 | | |
| 0.6 | | |
| 0.3 | | |
| 0.9 | |
Non-IFRS net profit for the period | |
| 5.6 | | |
| 1.4 | | |
| 2.8 | | |
| 1.5 | | |
| 4.7 | |
| |
For
the
Six Months Ended
June 30, | | |
For
the Three Months Ended
June 30, | | |
For
the
Year Ended December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | | |
2023 | |
Gross profit from continuing operations | |
| 13.4 | | |
| 8.3 | | |
| 6.8 | | |
| 4.5 | | |
| 18.8 | |
Adjustments: | |
| | | |
| | | |
| | | |
| | | |
| | |
Depreciation, amortization and impairment of intangible assets | |
| 0.3 | | |
| 0.6 | | |
| 0.1 | | |
| 0.4 | | |
| 0.9 | |
Share-based compensation | |
| * | | |
| * | | |
| * | | |
| * | | |
| * | |
Non-IFRS gross profit for the period | |
| 13.7 | | |
| 8.9 | | |
| 6.9 | | |
| 4.9 | | |
| 19.7 | |
About
Alarum Technologies Ltd.
Alarum
Technologies Ltd. (Nasdaq, TASE: ALAR) is a global provider of internet access and web data collection solutions. The solutions by NetNut,
our enterprise internet access and web data collection arm, are based on our world’s fastest and most advanced and secured hybrid
proxy network, enabling our customers to collect data anonymously at any scale from any public sources over the web. Our network comprises
both exit points based on our proprietary reflection technology and hundreds of servers located at our ISP partners around the world.
The infrastructure is optimally designed to guarantee privacy, quality, stability, and the speed of the service.
For
more information about Alarum and its internet access and web data collection solutions, please visit www.alarum.io.
Follow
us on Twitter
Subscribe
to our YouTube channel
Investor
Relations Contacts:
Michal
Efraty
+972-(0)52-3044404
investors@alarum.io
Exhibit 99.2
ALARUM TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2024
ALARUM TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 2024
TABLE OF CONTENTS
ALARUM TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
(UNAUDITED)
| |
June 30,
2024 | | |
December 31,
2023 | |
| |
U.S. dollars in thousands | |
Assets | |
| | |
| |
Current assets: | |
| | |
| |
Cash and cash equivalents | |
| 21,626 | | |
| 10,872 | |
Accounts receivable: | |
| | | |
| | |
Trade, net | |
| 2,471 | | |
| 1,994 | |
Other | |
| 961 | | |
| 399 | |
| |
| 25,058 | | |
| 13,265 | |
Non-current assets: | |
| | | |
| | |
Long-term deposits | |
| 102 | | |
| 104 | |
Property and equipment, net | |
| 119 | | |
| 88 | |
Right-of-use assets | |
| 638 | | |
| 779 | |
Deferred tax assets | |
| 298 | | |
| 181 | |
Intangible assets, net | |
| 1,082 | | |
| 1,386 | |
Goodwill | |
| 4,118 | | |
| 4,118 | |
Other non-current assets | |
| 94 | | |
| 145 | |
| |
| 6,451 | | |
| 6,801 | |
Total assets | |
| 31,509 | | |
| 20,066 | |
| |
| | | |
| | |
Liabilities and equity | |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable and accruals: | |
| | | |
| | |
Trade | |
| 570 | | |
| 369 | |
Other | |
| 3,058 | | |
| 2,439 | |
Current maturities of long-term loans | |
| 564 | | |
| 290 | |
Contract liabilities | |
| 2,285 | | |
| 1,983 | |
Derivative financial instruments | |
| 3,409 | | |
| 109 | |
Short-term lease liabilities | |
| 362 | | |
| 370 | |
| |
| 10,248 | | |
| 5,560 | |
Non-current liabilities: | |
| | | |
| | |
Long-term lease liabilities | |
| 398 | | |
| 523 | |
Long-term loans, net of current maturities | |
| 439 | | |
| 802 | |
| |
| 837 | | |
| 1,325 | |
Total liabilities | |
| 11,085 | | |
| 6,885 | |
| |
| | | |
| | |
Equity: | |
| | | |
| | |
Ordinary shares | |
| - | | |
| - | |
Share premium | |
| 108,963 | | |
| 100,576 | |
Other equity reserves | |
| 12,705 | | |
| 14,938 | |
Accumulated deficit | |
| (101,244 | ) | |
| (102,333 | ) |
Total equity | |
| 20,424 | | |
| 13,181 | |
Total liabilities and equity | |
| 31,509 | | |
| 20,066 | |
The accompanying notes are an integral part
of these condensed consolidated financial statements.
ALARUM TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF PROFIT OR
LOSS
(UNAUDITED)
| |
Six months ended June 30 | |
| |
2024 | | |
2023 | |
| |
U.S. dollars in thousands
(except per share amounts) | |
| |
| | |
| |
Revenue | |
| 17,260 | | |
| 12,664 | |
Cost of revenue | |
| 3,854 | | |
| 4,390 | |
Gross profit | |
| 13,406 | | |
| 8,274 | |
| |
| | | |
| | |
Operating expenses: | |
| | | |
| | |
Research and development | |
| 2,143 | | |
| 1,948 | |
Selling and marketing | |
| 3,372 | | |
| 6,472 | |
General and administrative | |
| 2,626 | | |
| 2,286 | |
Impairment of goodwill | |
| - | | |
| 6,311 | |
Total operating expenses | |
| 8,141 | | |
| 17,017 | |
| |
| | | |
| | |
Operating profit (loss) | |
| 5,265 | | |
| (8,743 | ) |
| |
| | | |
| | |
Finance expense | |
| 3,612 | | |
| 177 | |
Finance income | |
| (267 | ) | |
| (293 | ) |
Finance expense (income), net | |
| 3,345 | | |
| (116 | ) |
| |
| | | |
| | |
Profit (loss) before income tax | |
| 1,920 | | |
| (8,627 | ) |
Tax benefit (expense) | |
| (831 | ) | |
| 238 | |
Net profit (loss) for the period | |
| 1,089 | | |
| (8,389 | ) |
| |
| | | |
| | |
Basic and diluted profit (loss) per share: | |
| | | |
| | |
Basic profit (loss) per share | |
| 0.02 | | |
| (0.25 | ) |
Diluted profit (loss) per share | |
| 0.02 | | |
| (0.25 | ) |
The accompanying notes are an integral part
of these condensed consolidated financial statements.
ALARUM TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
EQUITY
(UNAUDITED)
| |
Ordinary shares | | |
| | |
Other | | |
| | |
| |
| |
Number of
shares | | |
Amount | | |
Share premium | | |
equity reserves | | |
Accumulated deficit | | |
Total | |
| |
U.S. dollars in thousands (except share data) | |
| |
| | |
| | |
| | |
| | |
| | |
| |
Balance at January 1, 2024 | |
| 59,681,632 | | |
| - | | |
| 100,576 | | |
| 14,938 | | |
| (102,333 | ) | |
| 13,181 | |
Changes during the six months ended June 30, 2024: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of ordinary shares upon exercise of options and vesting of RSUs | |
| 2,638,521 | | |
| - | | |
| 4,740 | | |
| (1,795 | ) | |
| - | | |
| 2,945 | |
Issuance of ordinary shares upon exercise of warrants | |
| 6,035,860 | | |
| - | | |
| 3,636 | | |
| (1,383 | ) | |
| - | | |
| 2,253 | |
Expiration of options | |
| - | | |
| - | | |
| 11 | | |
| (11 | ) | |
| - | | |
| - | |
Share-based payments | |
| - | | |
| - | | |
| - | | |
| 956 | | |
| - | | |
| 956 | |
Net profit for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,089 | | |
| 1,089 | |
Balance at June 30, 2024 | |
| 68,356,013 | | |
| - | | |
| 108,963 | | |
| 12,705 | | |
| (101,244 | ) | |
| 20,424 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Balance at January 1, 2023 | |
| 32,628,044 | | |
| - | | |
| 95,077 | | |
| 15,042 | | |
| (96,808 | ) | |
| 13,311 | |
Changes during the six months ended June 30, 2023: | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance of ordinary shares upon exercise of options | |
| 165,046 | | |
| - | | |
| 111 | | |
| (91 | ) | |
| - | | |
| 20 | |
Expiration of options | |
| - | | |
| - | | |
| 21 | | |
| (21 | ) | |
| - | | |
| - | |
Share-based payments | |
| - | | |
| - | | |
| - | | |
| 637 | | |
| - | | |
| 637 | |
At-the-market offering, net of issuance costs | |
| 2,076,140 | | |
| - | | |
| 545 | | |
| - | | |
| - | | |
| 545 | |
Net loss for the period | |
| - | | |
| - | | |
| - | | |
| - | | |
| (8,389 | ) | |
| (8,389 | ) |
Balance at June 30, 2023 | |
| 34,869,230 | | |
| - | | |
| 95,754 | | |
| 15,567 | | |
| (105,197 | ) | |
| 6,124 | |
The accompanying notes are an integral part
of these condensed consolidated financial statements.
ALARUM TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
Six months ended June 30 | |
| |
2024 | | |
2023 | |
| |
U.S. dollars in thousands | |
Cash flows from operating activities | |
| | |
| |
Net profit (loss) for the period | |
| 1,089 | | |
| (8,389 | ) |
Adjustments for: | |
| | | |
| | |
Effect of exchange rate differences on cash and cash equivalents and restricted deposits balances | |
| 68 | | |
| 26 | |
Change in fair value of derivative financial instruments | |
| 3,300 | | |
| (24 | ) |
Impairment of goodwill and intangible assets | |
| - | | |
| 8,806 | |
Depreciation and amortization | |
| 474 | | |
| 617 | |
Interest income related to short-term bank deposits | |
| (267 | ) | |
| - | |
Interest portion of lease payments | |
| 68 | | |
| 7 | |
Interest and other finance expense )income( related to long-term loan | |
| 161 | | |
| (250 | ) |
Interest expense related to short-term bank loans | |
| - | | |
| 83 | |
Share-based payments | |
| 956 | | |
| 599 | |
| |
| 4,760 | | |
| 9,864 | |
Changes in asset and liability items: | |
| | | |
| | |
Trade receivables | |
| (477 | ) | |
| (489 | ) |
Other receivables | |
| (127 | ) | |
| 268 | |
Trade payables | |
| 201 | | |
| (1,226 | ) |
Other payables | |
| 653 | | |
| (50 | ) |
Deferred taxes | |
| (117 | ) | |
| (238 | ) |
Contract liabilities | |
| 302 | | |
| 119 | |
| |
| 435 | | |
| (1,616 | ) |
Net cash provided by (used in) operating activities | |
| 6,284 | | |
| (141 | ) |
| |
| | | |
| | |
Cash flows from investing activities | |
| | | |
| | |
Withdrawn of short-term restricted deposits | |
| - | | |
| 60 | |
Withdrawn of long-term deposits | |
| 2 | | |
| - | |
Interest related to short-term bank deposits | |
| 267 | | |
| - | |
Investment in long-term deposits | |
| - | | |
| (48 | ) |
Investment in long-term restricted deposits | |
| - | | |
| (21 | ) |
Repayment of long-term restricted deposits | |
| - | | |
| 33 | |
Purchase of property and equipment | |
| (60 | ) | |
| (24 | ) |
Net cash provided by investing activities | |
| 209 | | |
| - | |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Long-term loans received | |
| - | | |
| 888 | |
Long-term loans interest payments | |
| (110 | ) | |
| (230 | ) |
Long-term loans principal payments | |
| (89 | ) | |
| (329 | ) |
Short-term bank loans received | |
| - | | |
| 4,800 | |
Repayment of short-term bank loans | |
| - | | |
| (4,800 | ) |
Short-term bank loans interest payments | |
| - | | |
| (88 | ) |
Principal portion of lease payments | |
| (133 | ) | |
| (107 | ) |
Interest portion of lease payments | |
| (68 | ) | |
| (7 | ) |
Proceeds from exercise of options and warrants | |
| 4,763 | | |
| 20 | |
Proceeds from at-the-market offering | |
| - | | |
| 688 | |
Issuance costs in connection with offerings | |
| (34 | ) | |
| (151 | ) |
Net cash provided by financing activities | |
| 4,329 | | |
| 684 | |
The accompanying notes are an integral part
of these condensed consolidated financial statements.
ALARUM TECHNOLOGIES LTD.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| |
Six months ended June 30 | |
| |
2024 | | |
2023 | |
| |
U.S. dollars in thousands | |
| |
| | |
| |
Changes in cash and cash equivalents | |
| 10,822 | | |
| 543 | |
Cash and cash equivalents at beginning of the period | |
| 10,872 | | |
| 3,290 | |
Effect of exchange rate changes on cash and cash equivalents | |
| (68 | ) | |
| (20 | ) |
Cash and cash equivalents at end of the period | |
| 21,626 | | |
| 3,813 | |
| |
| | | |
| | |
Supplemental disclosure of non-cash investing and financing activities: | |
| | | |
| | |
Receivables due to exercise of options | |
| 435 | | |
| - | |
Addition of right-of-use assets | |
| - | | |
| 541 | |
The accompanying notes are an integral part
of these condensed consolidated financial statements.
ALARUM TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - GENERAL:
Background
Alarum Technologies Ltd. (“Alarum”,
and collectively referred to with its wholly-owned subsidiaries as the “Company”) is a global provider of internet access
and web data collection solutions.
The Company’s ordinary shares are listed
on the Tel Aviv Stock Exchange (“TASE”) and the Company’s American Depositary Shares (“ADSs”) are listed
on the Nasdaq Capital Market.
The Company currently operates in two segments
- enterprise internet access and consumer internet access. The enterprise internet access solutions are provided through the Company’s
wholly owned subsidiary NetNut Ltd. (“NetNut”) and enable customers to collect data anonymously at any scale from any public
sources over the web using a unique hybrid network. The consumer internet access solutions are provided through the Company’s wholly-owned
subsidiary CyberKick Ltd. (“CyberKick”), and provide a powerful, secured and encrypted connection, masking the customers online
activity and keeping them safe from hackers.
The Company currently funds its operations primarily
through cash generated from operating activities. Accordingly, cash and cash equivalents as of June 30, 2024, were $21,626 thousand and
cash provided by operating activities was $6,284 thousand for the six months ended June 30, 2024. Based on the Company’s cash position,
the Company believes that it has sufficient resources to fund its operations for at least the next twelve months from the date on which
the condensed consolidated financial statements are authorized for issue.
War in Israel
In October 2023, Israel was attacked by the Hamas
terrorist organization and entered a state of war. To date, there is no material adverse impact on the Company’s operations and
financial results as a result of this war. However, at this time, it is not possible to predict the intensity or duration of the war,
nor can the Company predict how this war will ultimately affect Israel’s economy in general. The Company continues to monitor the
situation closely and examine the potential disruptions that could adversely affect its operations.
NOTE 2 - ACCOUNTING POLICIES:
Basis of presentation
The Company’s condensed consolidated financial
statements for the six months ended June 30, 2024, have been prepared in accordance with International Accounting Standard (“IAS”)
34, “Interim Financial Reporting”. These condensed consolidated financial statements, which are unaudited, do not include
all of the information and disclosures that would otherwise be required in a complete set of annual financial statements and should be
read in conjunction with the annual financial statements for the year ended December 31, 2023 and their accompanying notes, which have
been prepared in accordance with International Financial Reporting Standards (“IFRS”) as published by the International Accounting
Standards Board.
The results of operations for the six months ended
June 30, 2024, are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2024,
or for any other interim period.
Estimates
The preparation of interim financial statements
requires the Company’s management to exercise its judgment and to use significant accounting estimates and assumptions that affect
the application of the Company’s accounting policies and the amounts of reported assets, liabilities, income and expenses. Actual
results may materially differ from those estimates.
ALARUM TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
(UNAUDITED)
In preparation of these condensed consolidated
financial statements, the significant judgments that were exercised by the management in applying the Company’s accounting policies
and the key sources of estimation uncertainty were similar to those applied in the Company’s annual financial statements for the
year ended December 31, 2023.
Accounting policies
The accounting policies applied in the preparation
of these condensed consolidated financial statements are consistent with those applied in the preparation of the annual financial statements
for the year ended December 31, 2023, except as described below.
Income tax
Income tax expense for interim periods is recognized
at an amount determined by multiplying the profit before income tax for the interim period of each individual jurisdiction by management’s
best estimate of the expected effective annual income tax rate of each jurisdiction, adjusted for the tax effects of certain items recognized
in full in the interim period.
New standards and amendments adopted
Several new standards, amendments to standards and
interpretations that are effective for annual periods beginning on January 1, 2024, have been applied in preparing these condensed consolidated
financial statements. None of these had a material effect on the Company’s condensed consolidated financial statements.
New standards and amendments not yet adopted
IFRS 18, “Presentation and Disclosure in
Financial Statements” (“IFRS 18”)
IFRS 18 replaces IAS 1, “Presentation of
Financial Statements” (“IAS 1”). As part of the new disclosure requirements, companies will be required to present new
defined subtotals in the statement of profit or loss, as follows: (i) operating profit and (ii) profit before financing and tax. In addition,
items in the statement of profit or loss will be classified into three defined categories: operating, investment and financing. The standard
also includes a requirement to provide a separate disclosure in the financial statements regarding the use of management-defined performance
measures (“non-GAAP measures”), and specific instructions were added for the grouping and splitting of items in the financial
statements and their accompanying notes. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with
an option for early adoption. The Company is currently in a preliminary stage of assessing the expected effect of this new standard.
NOTE 3 - SIGNIFICANT CHANGES IN THE CURRENT REPORTING PERIOD:
Shares issuance
During the six months ended June 30, 2024, 527,686
warrants issued as a part of the Company’s September 14, 2023 private placement and 75,900 warrants issued as part of April 3, 2020
public offering, were exercised into 603,586 ADSs, or 6,035,860 ordinary shares, for a total consideration of $2,253 thousand.
During the six months ended June 30, 2024, 2,492,688
options were exercised into 2,492,688 ordinary shares for a total consideration of $2,945 thousand, and 145,833 vested restricted share
units (“RSUs”) were issued into 145,833 ordinary shares.
ALARUM TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
(UNAUDITED)
Derivative financial instruments
Derivative financial instruments consist of certain
warrants previously issued to investors which are accounted for as financial liabilities at fair value through profit or loss. Accordingly,
these warrants are measured at fair value (level 3) and changes are recorded to profit or loss on a periodic basis.
During the six months ended June 30, 2024, there
was a significant increase in the fair value of derivative financial instruments, mainly due to an increase in the Company’s share
price, which resulted in an increase of $3,300 thousand recognized in finance expense in profit or loss.
The fair value of the warrants as of June 30, 2024,
was estimated using the Black-Scholes model, with the following principal assumptions: risk-free interest rate of 4.99%-5.43%, expected
term (in years) of 0.36-1.25 and volatility of 96.54%-109.20%.
As of June 30, 2024, derivative financial instruments
totaled to $3,409 thousand.
O.R.B agreement
Further to the described in Note 10 to the Company’s
annual financial statements for the year ended December 31, 2023, during the six months ended June 30, 2024, the Company repaid to O.R.B.
Spring Ltd. an amount of $199 thousand, based on the actual customers’ payments according to the revenue share model.
For the six months ended June 30, 2024, interest
expenses related to long-term loan totaled to $110 thousand.
As of June 30, 2024, long-term loan, including
current maturities, totaled to $1,003 thousand.
Options and RSUs grants
During the six months
ended June 30, 2024, the Company’s board of directors (“BOD”) approved grants of 240,044 RSUs and 145,012 options to
purchase 145,012 ordinary shares. The options have exercise prices range of NIS 0-3.97 and they will vest over 1-3 years from the grant
dates. The total fair value of these grants was $493 thousand.
NOTE 4 - SEGMENT AND REVENUE INFORMATION:
Disaggregation of revenue
The Company’s revenue
is disaggregated by segments and source.
The following table presents
the Company’s revenue disaggregated by source for the six months ended June 30, 2024 and 2023:
| |
Six months ended June 30 | |
| |
2024 | | |
2023 | |
| |
U.S. dollars in thousands | |
| |
| | |
| |
Software as a Service | |
| 17,257 | | |
| 9,983 | |
Advertising services | |
| 3 | | |
| 2,681 | |
| |
| 17,260 | | |
| 12,664 | |
ALARUM TECHNOLOGIES LTD.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
(UNAUDITED)
Segments
Management has determined
the Company’s operating segments based on the information reviewed by the Company’s chief operating decision maker for the
purpose of allocating resources to the segments and assessing their performance.
The chief operating decision
maker, who is the Company’s Chief Executive Officer (“CEO”), examines the performance of each operating segment based
on revenue and segment adjusted EBITDA. The Company defines segment adjusted EBITDA as net profit (loss) before depreciation, amortization
and impairment of intangible assets, finance income (expense) and income tax, as further adjusted for the effect of impairment of goodwill,
share-based payments and other adjustments, as applicable.
The following table presents details of the Company’s operating
segments and a reconciliation of the total segment adjusted EBITDA to profit (loss) before income tax for the six months ended June 30,
2024 and 2023:
| |
Six months ended June 30 | |
| |
2024 | | |
2023 | |
| |
U.S. dollars in thousands | |
Revenue | |
| | |
| |
Enterprise internet access | |
| 16,751 | | |
| 8,428 | |
Consumer internet access | |
| 509 | | |
| 4,236 | |
| |
| 17,260 | | |
| 12,664 | |
Segment adjusted EBITDA | |
| | | |
| | |
Enterprise internet access | |
| 7,610 | | |
| 2,219 | |
Consumer internet access | |
| 260 | | |
| 73 | |
| |
| 7,870 | | |
| 2,292 | |
Non-attributable corporate costs | |
| (1,315 | ) | |
| (1,123 | ) |
Depreciation, amortization and impairment of intangible assets | |
| (334 | ) | |
| (3,002 | ) |
Impairment of goodwill | |
| - | | |
| (6,311 | ) |
Share-based payments | |
| (956 | ) | |
| (599 | ) |
Finance income (expense), net | |
| (3,345 | ) | |
| 116 | |
Profit (loss) before income tax | |
| 1,920 | | |
| (8,627 | ) |
NOTE 5 - SUBSEQUENT EVENTS:
On July 16, 2024, the
Company’s BOD approved a grant of 199,992 RSUs to the Company’s CEO. The grant is subject to the shareholders’ approval.
In addition, the Company’s
BOD approved grants of 55,020 RSUs to employees and 100,000 options to purchase 100,000 ordinary shares to a consultant. The options have
a zero-exercise price and they will vest over a period of 2 years from the grant date.
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Exhibit 99.3
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of June 30, 2024, and for the Six Months
then Ended
Cautionary Statement Regarding Forward-Looking Statements
Certain
information included in this analysis 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,” “plans,” “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, statements
that contain projections of 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:
|
● |
our planned level of revenues and capital expenditures; |
|
|
|
|
● |
our ability to market and sell our products; |
|
|
|
|
● |
the ability of our clients to continue utilize our products at their current levels; |
|
|
|
|
● |
our ability to expand the number and the diversification of customers in order to avoid a material effect on our operating margins, our profitability, our sales and our results of operations as a result of a loss of a significant customer, or a material reduction in sales to a significant customer; |
|
|
|
|
● |
our plans to continue to invest in research and development to develop technology for both existing and new products; |
|
|
|
|
● |
our ability to maintain our relationships with partners and customers; |
|
|
|
|
● |
our ability to maintain or protect the validity of our European, U.S. and other patents and other intellectual property; |
|
|
|
|
● |
our ability to engage in future strategic opportunities, including, but not limited to, strategic acquisitions, and achieve any expected benefits there from; |
|
|
|
|
● |
our ability to launch and penetrate markets in new locations, including taking steps to expand our worldwide activities and to enter into engagements with new business partners in those markets; |
|
|
|
|
● |
our intention to increase marketing and sales activities; |
|
|
|
|
● |
our intention to establish partnerships with industry leaders; |
|
● |
our ability to locate additional funding available to us on acceptable terms; |
|
|
|
|
● |
our ability to retain professional employees and executive members; |
|
|
|
|
● |
our ability to internally develop new inventions and intellectual property; |
|
|
|
|
● |
our expectations regarding future changes in our cost of revenues and our operating expenses; |
|
|
|
|
● |
our expectations regarding our tax classifications; |
|
|
|
|
● |
interpretations of current laws and the passages of future laws and/or regulations; |
|
|
|
|
● |
our ability to continue to effectively comply with the requirements of Nasdaq; |
|
|
|
|
● |
the impact of potential litigation; |
|
|
|
|
● |
acceptance of our business model and performance by investors; and |
|
|
|
|
● |
general market, political, and economic conditions in the countries in which we operate including those related to recent unrest and actual or potential armed conflict in Israel and other parts of the Middle East, such as the Israel-Hamas war. |
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, 2023, 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 “Alarum”, the “Company”, “we”, “us” or
“our” are to Alarum Technologies Ltd. and its subsidiaries. All references in this report to “dollars” or
“$” means United States dollars.
You should read the following
discussion and analysis in conjunction with our unaudited condensed consolidated financial statements for the six months ended June 30,
2024 and notes thereto, and together with our audited consolidated financial statements for the year ended December 31, 2023 and notes
thereto filed with the SEC as part of our Annual Report.
Overview
Alarum is a global provider
of internet access and web data collection solutions.
We currently operate in two
segments: enterprise internet access and consumer internet access.
Our enterprise internet access
and web data collection solutions are provided through our wholly owned subsidiary NetNut Ltd., or NetNut, and offer secured, fast, and
anonymous IP Proxy Network Solutions, or IPPN solutions, to our business customers which, in turn, enables them to anonymously and securely
browse the internet as well as to collect data from any publicly available source on the web, for their own business purposes. Our IPPN
solutions allow organizations to collect vast amounts of accurate, transparent web data from public online sources by simultaneously connecting
to the Internet from different IP addresses. Our customers can choose from various types of IPs from our IP pool which contains millions
of IPs, including ISP IPs, data center IPs, and residential service provider IPs.
With our solutions, customers
gain data-driven information that provides valuable insights with respect to predictive capabilities or behaviors, thereby assisting ongoing
business management operation and decision making. An added benefit to our customers is the fact that utilizing our network completely
conceals enterprises from the internet by modifying IP addresses, thus ensuring high levels of privacy for their online presence. Our
solutions enable access to the internet through millions of end points globally, thus ensuring multiple business use cases, including
large-scale data collection and analysis, cyber security, price comparison, ad verification, search engine optimization validations, web
data extraction, collection of data for financial analysis, and more.
Our consumer internet access
solutions are provided through our wholly-owned subsidiary CyberKick Ltd., or CyberKick, and offer a powerful, secured and encrypted connection,
masking consumers’ online activity and keeping them safe from hackers. The solutions are designed for advanced and basic users,
ensuring complete protection for all personal and digital information. As part of our focus on generating profitable revenues, we decided
in July 2023 to downscale our investment in the consumer internet access segment of our business. We continue to maintain our products
and the service only to current paying users, which allows us to generate revenue from past investments in acquiring such users, with
minimal costs.
Our Business Model
We generate Software as a
Service, or SaaS, revenues when customers subscribe to our enterprise and consumer access platforms and pay for the packages they choose.
The packages are usually for the earlier of one to twelve months, or maximum bandwidth usage in the enterprise access segment, and for
a month or a year in the consumer access segment. Our revenue is recognized on a straight-line basis over the package period.
Results of Operations
The following discussion of
our results of operations for the six months ended June 30, 2024 and 2023, included in the following table, which presents selected financial
information data, is based upon our consolidated statements of profit or loss contained in our unaudited condensed consolidated financial
statements for those periods, and the related notes.
| |
For the Six Months Ended June 30, | |
U.S. dollars in millions | |
2024 | | |
2023 | |
Revenue | |
| 17.3 | | |
| 12.7 | |
Cost of revenue | |
| 3.9 | | |
| 4.4 | |
Gross profit | |
| 13.4 | | |
| 8.3 | |
Operating expenses: | |
| | | |
| | |
Research and development | |
| 2.1 | | |
| 1.9 | |
Selling and marketing | |
| 3.4 | | |
| 6.5 | |
General and administrative | |
| 2.6 | | |
| 2.3 | |
Impairment of goodwill | |
| - | | |
| 6.3 | |
Total operating expenses | |
| 8.1 | | |
| 17.0 | |
Operating profit (loss) | |
| 5.3 | | |
| (8.7 | ) |
Finance income (expense), net | |
| (3.4 | ) | |
| 0.1 | |
Profit (loss) before income tax | |
| 1.9 | | |
| (8.6 | ) |
Tax benefit (expense) | |
| (0.8 | ) | |
| 0.2 | |
Net profit (loss) for the period | |
| 1.1 | | |
| (8.4 | ) |
Key Business Metrics
In addition to our results,
determined in accordance with International Financial Reporting Standards, or IFRS, we believe the following non-IFRS financial measures
are useful in evaluating our operating performance.
EBITDA (EBITDA loss). We define
EBITDA (EBITDA loss) as net profit (loss) before depreciation, amortization and impairment of intangible assets, finance income (expense)
and income tax.
Adjusted EBITDA. We define
Adjusted EBITDA as EBITDA (EBITDA loss) as further adjusted to remove the impact of (i) impairment of goodwill (if any); and (ii) share-based
compensation.
Non-IFRS net profit (loss).
We define non-IFRS net profit (loss) as net profit (loss) before depreciation, amortization and impairment of intangible assets, impairment
of goodwill, finance income (expense) effects primarily related to derivative financial instruments as well as long-term loan, deferred
tax effects and share-based compensation.
In accordance with IFRS, we
are required to record non-cash expenses and non-core expenses, which have a material effect on our profitability. We believe that these
non-IFRS financial measures are useful in evaluating our business because of varying available valuation methodologies, subjective assumptions
and the variety of financial instruments that can impact a company’s non-cash expenses, and because they exclude non-cash expenditures
such as the expenses mentioned above, that do not reflect the performance of our core business. By excluding non-cash items that have
been expensed in accordance with IFRS, we believe that the Company’s non-IFRS results provide information to both management and
investors that is useful in assessing the Company’s core operating performance and in evaluating and comparing the Company’s
results of ongoing operations on a consistent basis from period to period. Our management also uses both IFRS and non-IFRS information
in evaluating and operating our business internally.
The following tables present
the reconciled effect of the above on the Company’s Adjusted EBITDA and non-IFRS net profit for the six months ended June 30, 2024,
and 2023:
| |
For the Six Months Ended June 30, | |
U.S. dollars in millions | |
2024 | | |
2023 | |
Net profit (loss) for the period | |
| 1.1 | | |
| (8.4 | ) |
Adjustments: | |
| | | |
| | |
Depreciation, amortization and impairment of intangible assets | |
| 0.3 | | |
| 3.0 | |
Finance expense (income), net | |
| 3.4 | | |
| (0.1 | ) |
Tax expense (benefit) | |
| 0.8 | | |
| (0.2 | ) |
EBITDA (EBITDA loss) | |
| 5.6 | | |
| (5.7 | ) |
Adjustments: | |
| | | |
| | |
Impairment of goodwill | |
| - | | |
| 6.3 | |
Share-based compensation | |
| 1.0 | | |
| 0.6 | |
Adjusted EBITDA | |
| 6.6 | | |
| 1.2 | |
| |
For the Six Months Ended June 30, | |
U.S. dollars in millions | |
2024 | | |
2023 | |
Net profit (loss) for the period | |
| 1.1 | | |
| (8.4 | ) |
Adjustments: | |
| | | |
| | |
Depreciation, amortization and impairment of intangible assets | |
| 0.3 | | |
| 3.0 | |
Finance expense, net effects | |
| 3.3 | | |
| 0.1 | |
Impairment of goodwill | |
| - | | |
| 6.3 | |
Deferred tax effects | |
| (0.1 | ) | |
| (0.2 | ) |
Share-based compensation | |
| 1.0 | | |
| 0.6 | |
Non-IFRS net profit | |
| 5.6 | | |
| 1.4 | |
Factors Affecting our Performance
We rely on businesses requiring
gathering data over the Internet using residential and Data Center IP addresses from various geographies. Also, our revenues from consumer
access tools rely on consumers’ willingness to spend money to increase their safety and privacy while using the internet.
Our prospective customers
in the enterprise access segment often do not have a specific portion of their information technology budgets allocated for products that
address the next generation of privacy solutions. We invest in sales and marketing efforts to increase market awareness, educate prospective
customers, and drive the adoption of our offerings. We believe that we will need to invest additional resources in targeted global markets
to drive awareness and market adoption. The degree to which prospective customers recognize the mission critical need for collecting valuable
information from internet sites will drive our ability to acquire new customers, increase renewals and follow-on sales opportunities,
which, in turn, will affect our future financial performance.
Reliance on Large Customers
We
work continuously to increase our customer base, in order to reduce reliance on large customers. During the first half of 2024, 44% of
our enterprise internet access revenue came from 38 customers who purchased services in amounts ranging between $50,000 and $500,000,
and 13% of our revenue was generated from 128 customers who purchased services at amounts ranging between $5,000 and $50,000. As of June
30, 2024, we had 5 customers that purchased services in amounts greater than $500,000, who generated together approximately 42% of the
total enterprise internet access business revenues. To the extent any of the Company’s significant customers reduce their purchases
of services, our revenues would be adversely impacted; however, an alteration in customer composition could strengthen the Company’s
market position and support more sustainable growth.
Expansion from Existing Customers
Our
large customer base represents a significant opportunity for further sales expansion. When customers have purchased subscriptions from
us, we have achieved significant expansion with them over time as they add additional features, geographic coverage, users, and digital
intelligence solutions. We believe the increased spending from our customers is an indication of the value we provide them over time.
An indication of our
success to increase spending from existing customers in the enterprise internet access business is our Net dollar-based Retention Rate,
or NRR, which compares our Annual Recurring Revenue, or ARR, from the same set of customers as of a certain point in time, relative to
the same point in time in the previous year ago period. We calculate our NRR as of a period-end by starting with the ARR from the cohort
of all customers as of 12 months prior to such period-end, or the Prior Period ARR. We then calculate the ARR from these same customers
as of the current period-end, or the Current Period ARR. Current Period ARR includes any expansion and is net of contraction or attrition
over the last 12 months but excludes ARR from new customers in the current period. We then divide the Current Period ARR by the Prior
Period ARR to arrive at the point-in-time NRR. We then calculate the average of the trailing four quarter point-in-time NRR to arrive
at the NRR. As of June 30, 2024, our NRR was 1.59.
Our NRR may fluctuate due
to a number of major factors, such as: material changes in our customers’ businesses; our customers’ satisfaction with our
solutions; pricing; support; and the competition which may impact the revenues from significant customers due to changes in our customers’
spending levels.
Comparison of the six months ended June 30,
2024 to the six months ended June 30, 2023
Revenue
The
following table summarizes our revenues by source for the periods presented. The period-to-period comparison of results is not necessarily
indicative of results for future periods.
| |
For the Six Months Ended June 30, | |
U.S. dollars in millions | |
2024 | | |
2023 | |
Revenue by source: | |
| | |
| |
Software as a Service | |
| 17.3 | | |
| 10.0 | |
Advertising services | |
| * | | |
| 2.7 | |
Total revenue | |
| 17.3 | | |
| 12.7 | |
Our
revenue for the six months ended June 30, 2024, totaled $17.3 million, compared to $12.7 million generated in the six months ended June
30, 2023. The increase in revenue is mainly due to an increase in SaaS revenue in the enterprise internet access segment generated by
NetNut, which doubled its revenues from $8.4 million to $16.8 million, primarily due to higher transactions volumes from our customers
during the six months ended June 30, 2024. Our decision to scale down our consumer internet access business, drove a partial offset in
revenue growth, of which $2.7 million is attributed to advertising revenue and $1.1 million to a drop in the SaaS revenues in this segment
from $1.6 million in the first half of 2023 to $0.5 million in the equivalent period in 2024.
Cost of Revenue and Gross Profit
The
following table summarizes our cost of revenue for the periods presented, as well as presenting the gross profit as a percentage of total
revenue. The period-to-period comparison of results is not necessarily indicative of results for future periods.
| |
For the Six Months Ended June 30, | |
U.S. dollars in millions | |
2024 | | |
2023 | |
Internet protocol addresses costs | |
| 2.7 | | |
| 1.7 | |
Traffic acquisition costs | |
| - | | |
| 1.1 | |
Networks and servers | |
| 0.4 | | |
| 0.3 | |
Depreciation, amortization and impairment of intangible assets | |
| 0.3 | | |
| 0.6 | |
Clearing fees | |
| 0.1 | | |
| 0.5 | |
Payroll, related expenses and share-based payment | |
| 0.3 | | |
| 0.2 | |
Other | |
| 0.1 | | |
| * | |
Total cost of revenue | |
| 3.9 | | |
| 4.4 | |
Gross profit | |
| 13.4 | | |
| 8.3 | |
Gross profit % | |
| 78 | % | |
| 65 | % |
Our
cost of revenue for the six months ended June 30, 2024, totaled $3.9 million, compared to $4.4 million in the six months ended June 30,
2023. The decrease is primarily attributed to the operational scale down in the consumer internet access segment of $1.5 million, mainly
in traffic acquisition costs, partially offset by an increase of $1.1 million in the enterprise internet access segment costs of addresses
and networks and servers, to support the increase in revenue.
As
a result of a higher increase in revenue compared to cost of revenue, gross profit for the six months ended June 30, 2024, totaled $13.4
million, compared to $8.3 million in the six months ended June 30, 2023, representing an increase of 61%.
Research and Development Expenses
The
following table summarizes our research and development expenses for the periods presented. The period-to-period comparison of results
is not necessarily indicative of results for future periods.
| |
For the Six Months Ended June 30, | |
U.S. dollars in millions | |
2024 | | |
2023 | |
Payroll, related expenses and share-based payment | |
| 1.7 | | |
| 1.7 | |
Subcontractors | |
| 0.1 | | |
| * | |
Other | |
| 0.3 | | |
| 0.2 | |
Total research and development expenses | |
| 2.1 | | |
| 1.9 | |
Research and development expenses
for the six months ended June 30, 2024, totaled $2.1 million, compared to $1.9 million for the six months ended June 30, 2023. The increase
is attributed to higher payroll and subcontractors’ costs in the enterprise internet access segment, partially offset by the stoppage
of development operations in the consumer internet access segment, mainly payroll and related expenses.
Selling and Marketing Expenses
The
following table summarizes our sales and marketing expenses for the periods presented. The period-to-period comparison of results is not
necessarily indicative of results for future periods.
| |
For the Six Months Ended June 30, | |
U.S. dollars in millions | |
2024 | | |
2023 | |
Payroll, related expenses and share-based payment | |
| 2.2 | | |
| 2.0 | |
Media costs | |
| - | | |
| 1.4 | |
Marketing | |
| 0.5 | | |
| 0.3 | |
Professional fees | |
| 0.1 | | |
| 0.1 | |
Depreciation, amortization and impairment of intangible assets | |
| 0.1 | | |
| 2.5 | |
Other | |
| 0.5 | | |
| 0.2 | |
Total selling and marketing expenses | |
| 3.4 | | |
| 6.5 | |
Sales and marketing expenses for the six months
ended June 30, 2024, totaled $3.4 million, compared to $6.5 million in the six months ended June 30, 2023. The decrease resulted from
CyberKick’s (the consumer internet access solutions) intangible assets impairment loss of $2.2 million during the six months ended June
30, 2023, as well as the scale down in its selling and marketing operations, mainly media costs at the amount of $1.4 million, partially
offset by a $0.9 million increase in the enterprise internet access segment costs, especially payroll and related expenses.
General and Administrative Expenses
The
following table summarizes our general and administrative expenses for the periods presented. The period-to-period comparison of results
is not necessarily indicative of results for future periods.
| |
For the Six Months Ended June 30, | |
U.S. dollars in millions | |
2024 | | |
2023 | |
Payroll and related expenses and share-based payment | |
| 1.5 | | |
| 1.0 | |
Professional fees | |
| 0.9 | | |
| 1.1 | |
Other | |
| 0.2 | | |
| 0.2 | |
Total general and administration expenses | |
| 2.6 | | |
| 2.3 | |
General
and administrative expenses for the six months ended June 30, 2024, totaled $2.6 million, compared to $2.3 million in the six months ended
June 30, 2023. The change is primarily due to higher payroll and share-based compensation expenses, partially offset by lower professional
fees costs.
Impairment of Goodwill
For the six months ended June
30, 2024, no goodwill impairment loss was recorded, compared to $6.3 million in the six months ended June 30, 2023, related to the CyberKick
cash-generating-unit.
Operating Profit (Loss)
As a result of the foregoing,
our operating profit for the six months ended June 30, 2024, totaled $5.3 million, compared to an operating loss of $8.7 million in the
six months ended June 30, 2023.
Finance income (expenses), net
Finance
expense, net, for the six months ended June 30, 2024, totaled $3.4 million, compared to financial income, net of $0.1 million in the six
months ended June 30, 2023. This change is primarily due to an increase in the fair value of derivative financial instruments, as a result
of the sharp rise in the Company’s share price as of June 30, 2024, compared to December 31, 2023.
Tax Benefit (Expense)
Tax
expense for the six months ended June 30, 2024, totaled $0.8 million, compared to tax benefit of $0.2 million in the six months ended
June 30, 2023. The switch to tax expense is due to the profit before income tax generated by NetNut in the first half of 2024, after utilizing
all of its carryforward tax losses.
Net Profit (Loss) for the Period
As
a result of the foregoing, our net profit for the six months ended June 30, 2024, totaled $1.1 million, compared to an $8.4 million net
loss in the six months ended June 30, 2023.
Liquidity and Capital Resources
Overview
As
of June 30, 2024, our cash and cash equivalents of approximately $21.6 million were intended for working capital, capital expenditures,
investment in technology and business acquisition purposes.
We
believe that our cash and cash equivalents will be sufficient to meet our anticipated cash needs for the foreseeable future and at least
for the next 12 months. Our future capital requirements will depend on many factors, including our growth rate, the timing and extent
of spending to support development efforts, the expansion of sales and marketing activities, the introduction of new and enhanced product
and service offerings, the continuing market acceptance of our products and our pursuit of strategic opportunities, including, but not
limited to, strategic acquisitions. If we are unable to raise additional capital when desired or if we cannot generate profit from operating
activities, our business, operating results, and financial condition would be adversely affected.
| |
For the Six Months Ended June 30, | |
U.S. dollars in millions | |
2024 | | |
2023 | |
Net cash provided by (used in) operating activities | |
| 6.3 | | |
| (0.2 | ) |
| |
| | | |
| | |
Net cash provided by investing activities | |
| 0.2 | | |
| - | |
| |
| | | |
| | |
Net cash provided by financing activities | |
| 4.3 | | |
| 0.7 | |
| |
| | | |
| | |
Net increase in cash and cash equivalents | |
| 10.8 | | |
| 0.5 | |
Operating Activities
During the six months ended
June 30, 2024, net cash provided by operating activities was $6.3 million, primarily attributable to an increase in the Company’s operating
profit from the enterprise internet access segment. This increase in cash provided by operating activities represents a $6.5 improvement
compared to the $0.2 million used in operating activities during the six months period ended June 30, 2023.
Investing Activities
During
the six months ended June 30, 2024, net cash provided by investing activities totaled $0.2 million, compared to no change during the six
months ended June 30, 2023, primarily due to interest received on short-term bank deposits.
Financing Activities
During
the six months ended June 30, 2024, net cash provided by financing activities totaled $4.3 million, mainly due to warrants and options
exercises, compared to $0.7 million which stemmed from funds received mainly from our at-the-market offering of $0.5 million, net of issuance
costs, during the six months ended June 30, 2023.
Net increase in
Cash and Cash Equivalents
As
a result of the foregoing, our cash and cash equivalents increased by $10.8 million during the six months ended June 30, 2024, compared
to an increase of $0.5 million during the six months ended June 30, 2023.
Strategic Funding
On
August 8, 2022, we signed a strategic funding agreement with O.R.B. Spring Ltd., or O.R.B., as further amended, of up to $4.0 million
to support the growth of our consumer access solutions and its customer acquisition program. The repayment of the funding was based on
a revenue share model in connection with sales generated from new customers acquired with each funding installment.
As
of June 30, 2024, we received aggregate funding of approximately $2.6 million and repaid to O.R.B. an amount of approximately $1.4 million
from the revenues that were generated as a result of the funding, and approximately $1.2 million is outstanding.
Private Placement
On September 14, 2023, we
completed a private placement offering of an aggregate of 187,225 units, or the Units, at a purchase price of $22.70 per Unit. Each Unit
consists of 10 American Depositary Shares, or ADSs, and one non-tradeable warrant, or the Private Placement Warrants (the “PP Warrants”),
each exercisable into three ADSs. Net proceeds totaled $3.82 million, after deducting offering costs of approximately $0.4 million.
The PP Warrants are exercisable
at any time for a period of 30 months from the offering date upon payment of an exercise price of $2.72 per ADS. In addition, we issued
an aggregate amount of 91,851 warrants to purchase 91,851 ADSs to placement agents, or the Agent Warrants, which can be exercised at an
exercise price of $2.27 per ADS within 30 months from the offering date.
During
the six months ended June 30, 2024, 466,452 PP Warrants were exercised to 466,452 ADSs in exchange for $1.27 million and 61,234 Agents
Warrants were exercised to 61,234 ADSs in exchange for $0.14 million. As of June 30, 2024, all PP Warrants and Agent Warrants were exercised.
Current Outlook
As of June 30, 2024, our cash
and cash equivalents were approximately $21.6 million. We expect that our current resources will be sufficient to meet our anticipated
cash needs for the foreseeable future and at least for the next 12 months. Our operating plans may change as a result of many factors
that may currently be unknown to us, which may impact our funding plans. Our future capital requirements will depend on many factors,
including:
|
● |
the progress
and costs of our research and development activities; |
|
|
|
|
● |
the
potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities
internally; |
|
|
|
|
● |
the
scope of our general and administrative expenses; and |
|
● |
potential future
acquisitions. |
Research and development, patents and licenses,
etc.
A comprehensive discussion
of our research and development, patents and licenses, etc., is included in “Item 5. Operating and Financial Review and Prospects
- Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report.
Critical Accounting Estimates
The preparation of financial
statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure
of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
periods. A comprehensive discussion of our critical accounting estimates is included in “Item 5. Operating and Financial Review
and Prospects – Management’s Discussion and Analysis of Financial Condition and Results of Operations” section in our
Annual Report, as well as our unaudited condensed consolidated financial statements and the related notes thereto for the six months ended
June 30, 2024, included elsewhere in this Report Form 6-K.
10
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Condensed Consolidated Statements of Financial Position (Unaudited) - USD ($) $ in Thousands |
Jun. 30, 2024 |
Dec. 31, 2023 |
Current assets: |
|
|
Cash and cash equivalents |
$ 21,626
|
$ 10,872
|
Trade, net |
2,471
|
1,994
|
Other |
961
|
399
|
Current assets |
25,058
|
13,265
|
Non-current assets: |
|
|
Long-term deposits |
102
|
104
|
Property and equipment, net |
119
|
88
|
Right-of-use assets |
638
|
779
|
Deferred tax assets |
298
|
181
|
Intangible assets, net |
1,082
|
1,386
|
Goodwill |
4,118
|
4,118
|
Other non-current assets |
94
|
145
|
Non-current assets |
6,451
|
6,801
|
Total assets |
31,509
|
20,066
|
Current liabilities: |
|
|
Trade |
570
|
369
|
Other |
3,058
|
2,439
|
Current maturities of long-term loans |
564
|
290
|
Contract liabilities |
2,285
|
1,983
|
Derivative financial instruments |
3,409
|
109
|
Short-term lease liabilities |
362
|
370
|
Current liabilities |
10,248
|
5,560
|
Non-current liabilities: |
|
|
Long-term lease liabilities |
398
|
523
|
Long-term loans, net of current maturities |
439
|
802
|
Non-current liabilities |
837
|
1,325
|
Total liabilities |
11,085
|
6,885
|
Equity: |
|
|
Ordinary shares |
|
|
Share premium |
108,963
|
100,576
|
Other equity reserves |
12,705
|
14,938
|
Accumulated deficit |
(101,244)
|
(102,333)
|
Total equity |
20,424
|
13,181
|
Total liabilities and equity |
$ 31,509
|
$ 20,066
|
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v3.24.2.u1
Condensed Consolidated Statements of Profit or Loss (Unaudited) - USD ($) $ in Thousands |
6 Months Ended |
Jun. 30, 2024 |
Jun. 30, 2023 |
Profit or loss [Abstract] |
|
|
Revenue |
$ 17,260
|
$ 12,664
|
Cost of revenue |
3,854
|
4,390
|
Gross profit |
13,406
|
8,274
|
Operating expenses: |
|
|
Research and development |
2,143
|
1,948
|
Selling and marketing |
3,372
|
6,472
|
General and administrative |
2,626
|
2,286
|
Impairment of goodwill |
|
6,311
|
Total operating expenses |
8,141
|
17,017
|
Operating profit (loss) |
5,265
|
(8,743)
|
Finance expense |
3,612
|
177
|
Finance income |
(267)
|
(293)
|
Finance expense (income), net |
3,345
|
(116)
|
Profit (loss) before income tax |
1,920
|
(8,627)
|
Tax benefit (expense) |
(831)
|
238
|
Net profit (loss) for the period |
$ 1,089
|
$ (8,389)
|
Basic and diluted profit (loss) per share: |
|
|
Basic profit (loss) per share (in Dollars per share) |
$ 0.02
|
$ (0.25)
|
Diluted profit (loss) per share (in Dollars per share) |
$ 0.02
|
$ (0.25)
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v3.24.2.u1
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands |
Ordinary shares |
Share premium |
Other equity reserves |
Accumulated deficit |
Total |
Balance at Dec. 31, 2022 |
|
$ 95,077
|
$ 15,042
|
$ (96,808)
|
$ 13,311
|
Balance (in Shares) at Dec. 31, 2022 |
32,628,044
|
|
|
|
|
Issuance of ordinary shares upon exercise of options |
|
111
|
(91)
|
|
20
|
Issuance of ordinary shares upon exercise of options (in Shares) |
165,046
|
|
|
|
|
Expiration of options |
|
21
|
(21)
|
|
|
Share-based payments |
|
|
637
|
|
637
|
At-the-market offering, net of issuance costs |
|
545
|
|
|
545
|
At-the-market offering, net of issuance costs (in Shares) |
2,076,140
|
|
|
|
|
Net profit (loss) for the period |
|
|
|
(8,389)
|
(8,389)
|
Balance at Jun. 30, 2023 |
|
95,754
|
15,567
|
(105,197)
|
6,124
|
Balance (in Shares) at Jun. 30, 2023 |
34,869,230
|
|
|
|
|
Balance at Dec. 31, 2023 |
|
100,576
|
14,938
|
(102,333)
|
13,181
|
Balance (in Shares) at Dec. 31, 2023 |
59,681,632
|
|
|
|
|
Issuance of ordinary shares upon exercise of options and vesting of RSUs |
|
4,740
|
(1,795)
|
|
2,945
|
Issuance of ordinary shares upon exercise of options and vesting of RSUs (in Shares) |
2,638,521
|
|
|
|
|
Issuance of ordinary shares upon exercise of warrants |
|
3,636
|
(1,383)
|
|
2,253
|
Issuance of ordinary shares upon exercise of warrants (in Shares) |
6,035,860
|
|
|
|
|
Expiration of options |
|
11
|
(11)
|
|
|
Share-based payments |
|
|
956
|
|
956
|
Net profit (loss) for the period |
|
|
|
1,089
|
1,089
|
Balance at Jun. 30, 2024 |
|
$ 108,963
|
$ 12,705
|
$ (101,244)
|
$ 20,424
|
Balance (in Shares) at Jun. 30, 2024 |
68,356,013
|
|
|
|
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v3.24.2.u1
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands |
6 Months Ended |
Jun. 30, 2024 |
Jun. 30, 2023 |
Cash flows from operating activities |
|
|
Net profit (loss) for the period |
$ 1,089
|
$ (8,389)
|
Adjustments for: |
|
|
Effect of exchange rate differences on cash and cash equivalents and restricted deposits balances |
68
|
26
|
Change in fair value of derivative financial instruments |
3,300
|
(24)
|
Impairment of goodwill and intangible assets |
|
8,806
|
Depreciation and amortization |
474
|
617
|
Interest income related to short-term bank deposits |
(267)
|
|
Interest portion of lease payments |
68
|
7
|
Interest and other finance expense )income( related to long-term loan |
161
|
(250)
|
Interest expense related to short-term bank loans |
|
83
|
Share-based payments |
956
|
599
|
Total adjustments |
4,760
|
9,864
|
Changes in asset and liability items: |
|
|
Trade receivables |
(477)
|
(489)
|
Other receivables |
(127)
|
268
|
Trade payables |
201
|
(1,226)
|
Other payables |
653
|
(50)
|
Deferred taxes |
(117)
|
(238)
|
Contract liabilities |
302
|
119
|
Changes in operating asset and liability, total |
435
|
(1,616)
|
Net cash provided by (used in) operating activities |
6,284
|
(141)
|
Cash flows from investing activities |
|
|
Withdrawn of short-term restricted deposits |
|
60
|
Withdrawn of long-term deposits |
2
|
|
Interest related to short-term bank deposits |
267
|
|
Investment in long-term deposits |
|
(48)
|
Investment in long-term restricted deposits |
|
(21)
|
Repayment of long-term restricted deposits |
|
33
|
Purchase of property and equipment |
(60)
|
(24)
|
Net cash provided by investing activities |
209
|
|
Cash flows from financing activities |
|
|
Long-term loans received |
|
888
|
Long-term loans interest payments |
(110)
|
(230)
|
Long-term loans principal payments |
(89)
|
(329)
|
Short-term bank loans received |
|
4,800
|
Repayment of short-term bank loans |
|
(4,800)
|
Short-term bank loans interest payments |
|
(88)
|
Principal portion of lease payments |
(133)
|
(107)
|
Interest portion of lease payments |
(68)
|
(7)
|
Proceeds from exercise of options and warrants |
4,763
|
20
|
Proceeds from at-the-market offering |
|
688
|
Issuance costs in connection with offerings |
(34)
|
(151)
|
Net cash provided by financing activities |
4,329
|
684
|
Changes in cash and cash equivalents |
10,822
|
543
|
Cash and cash equivalents at beginning of the period |
10,872
|
3,290
|
Effect of exchange rate changes on cash and cash equivalents |
(68)
|
(20)
|
Cash and cash equivalents at end of the period |
21,626
|
3,813
|
Supplemental disclosure of non-cash investing and financing activities: |
|
|
Receivables due to exercise of options |
435
|
|
Addition of right-of-use assets |
|
$ 541
|
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v3.24.2.u1
General
|
6 Months Ended |
Jun. 30, 2024 |
General [Abstract] |
|
GENERAL |
NOTE 1 - GENERAL:
Background
Alarum Technologies Ltd. (“Alarum”,
and collectively referred to with its wholly-owned subsidiaries as the “Company”) is a global provider of internet access
and web data collection solutions.
The Company’s ordinary shares are listed
on the Tel Aviv Stock Exchange (“TASE”) and the Company’s American Depositary Shares (“ADSs”) are listed
on the Nasdaq Capital Market.
The Company currently operates in two segments
- enterprise internet access and consumer internet access. The enterprise internet access solutions are provided through the Company’s
wholly owned subsidiary NetNut Ltd. (“NetNut”) and enable customers to collect data anonymously at any scale from any public
sources over the web using a unique hybrid network. The consumer internet access solutions are provided through the Company’s wholly-owned
subsidiary CyberKick Ltd. (“CyberKick”), and provide a powerful, secured and encrypted connection, masking the customers online
activity and keeping them safe from hackers.
The Company currently funds its operations primarily
through cash generated from operating activities. Accordingly, cash and cash equivalents as of June 30, 2024, were $21,626 thousand and
cash provided by operating activities was $6,284 thousand for the six months ended June 30, 2024. Based on the Company’s cash position,
the Company believes that it has sufficient resources to fund its operations for at least the next twelve months from the date on which
the condensed consolidated financial statements are authorized for issue.
War in Israel
In October 2023, Israel was attacked by the Hamas
terrorist organization and entered a state of war. To date, there is no material adverse impact on the Company’s operations and
financial results as a result of this war. However, at this time, it is not possible to predict the intensity or duration of the war,
nor can the Company predict how this war will ultimately affect Israel’s economy in general. The Company continues to monitor the
situation closely and examine the potential disruptions that could adversely affect its operations.
|
v3.24.2.u1
Accounting Policies
|
6 Months Ended |
Jun. 30, 2024 |
General [Abstract] |
|
ACCOUNTING POLICIES |
NOTE 2 - ACCOUNTING POLICIES:
Basis of presentation
The Company’s condensed consolidated financial
statements for the six months ended June 30, 2024, have been prepared in accordance with International Accounting Standard (“IAS”)
34, “Interim Financial Reporting”. These condensed consolidated financial statements, which are unaudited, do not include
all of the information and disclosures that would otherwise be required in a complete set of annual financial statements and should be
read in conjunction with the annual financial statements for the year ended December 31, 2023 and their accompanying notes, which have
been prepared in accordance with International Financial Reporting Standards (“IFRS”) as published by the International Accounting
Standards Board.
The results of operations for the six months ended
June 30, 2024, are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2024,
or for any other interim period.
Estimates
The preparation of interim financial statements
requires the Company’s management to exercise its judgment and to use significant accounting estimates and assumptions that affect
the application of the Company’s accounting policies and the amounts of reported assets, liabilities, income and expenses. Actual
results may materially differ from those estimates. In preparation of these condensed consolidated
financial statements, the significant judgments that were exercised by the management in applying the Company’s accounting policies
and the key sources of estimation uncertainty were similar to those applied in the Company’s annual financial statements for the
year ended December 31, 2023.
Accounting policies
The accounting policies applied in the preparation
of these condensed consolidated financial statements are consistent with those applied in the preparation of the annual financial statements
for the year ended December 31, 2023, except as described below.
Income tax
Income tax expense for interim periods is recognized
at an amount determined by multiplying the profit before income tax for the interim period of each individual jurisdiction by management’s
best estimate of the expected effective annual income tax rate of each jurisdiction, adjusted for the tax effects of certain items recognized
in full in the interim period.
New standards and amendments adopted
Several new standards, amendments to standards and
interpretations that are effective for annual periods beginning on January 1, 2024, have been applied in preparing these condensed consolidated
financial statements. None of these had a material effect on the Company’s condensed consolidated financial statements.
New standards and amendments not yet adopted
IFRS 18, “Presentation and Disclosure in
Financial Statements” (“IFRS 18”)
IFRS 18 replaces IAS 1, “Presentation of
Financial Statements” (“IAS 1”). As part of the new disclosure requirements, companies will be required to present new
defined subtotals in the statement of profit or loss, as follows: (i) operating profit and (ii) profit before financing and tax. In addition,
items in the statement of profit or loss will be classified into three defined categories: operating, investment and financing. The standard
also includes a requirement to provide a separate disclosure in the financial statements regarding the use of management-defined performance
measures (“non-GAAP measures”), and specific instructions were added for the grouping and splitting of items in the financial
statements and their accompanying notes. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with
an option for early adoption. The Company is currently in a preliminary stage of assessing the expected effect of this new standard.
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v3.24.2.u1
Significant Changes in the Current Reporting Period
|
6 Months Ended |
Jun. 30, 2024 |
Significant Changes in the Current Reporting Period [Abstract] |
|
SIGNIFICANT CHANGES IN THE CURRENT REPORTING PERIOD |
NOTE 3 - SIGNIFICANT CHANGES IN THE CURRENT REPORTING PERIOD:
Shares issuance
During the six months ended June 30, 2024, 527,686
warrants issued as a part of the Company’s September 14, 2023 private placement and 75,900 warrants issued as part of April 3, 2020
public offering, were exercised into 603,586 ADSs, or 6,035,860 ordinary shares, for a total consideration of $2,253 thousand.
During the six months ended June 30, 2024, 2,492,688
options were exercised into 2,492,688 ordinary shares for a total consideration of $2,945 thousand, and 145,833 vested restricted share
units (“RSUs”) were issued into 145,833 ordinary shares. Derivative financial instruments
Derivative financial instruments consist of certain
warrants previously issued to investors which are accounted for as financial liabilities at fair value through profit or loss. Accordingly,
these warrants are measured at fair value (level 3) and changes are recorded to profit or loss on a periodic basis.
During the six months ended June 30, 2024, there
was a significant increase in the fair value of derivative financial instruments, mainly due to an increase in the Company’s share
price, which resulted in an increase of $3,300 thousand recognized in finance expense in profit or loss.
The fair value of the warrants as of June 30, 2024,
was estimated using the Black-Scholes model, with the following principal assumptions: risk-free interest rate of 4.99%-5.43%, expected
term (in years) of 0.36-1.25 and volatility of 96.54%-109.20%.
As of June 30, 2024, derivative financial instruments
totaled to $3,409 thousand.
O.R.B agreement
Further to the described in Note 10 to the Company’s
annual financial statements for the year ended December 31, 2023, during the six months ended June 30, 2024, the Company repaid to O.R.B.
Spring Ltd. an amount of $199 thousand, based on the actual customers’ payments according to the revenue share model.
For the six months ended June 30, 2024, interest
expenses related to long-term loan totaled to $110 thousand.
As of June 30, 2024, long-term loan, including
current maturities, totaled to $1,003 thousand.
Options and RSUs grants
During the six months
ended June 30, 2024, the Company’s board of directors (“BOD”) approved grants of 240,044 RSUs and 145,012 options to
purchase 145,012 ordinary shares. The options have exercise prices range of NIS 0-3.97 and they will vest over 1-3 years from the grant
dates. The total fair value of these grants was $493 thousand.
|
v3.24.2.u1
Segment and Revenue Information
|
6 Months Ended |
Jun. 30, 2024 |
Segment and Revenue Information [Abstract] |
|
SEGMENT AND REVENUE INFORMATION |
NOTE 4 - SEGMENT AND REVENUE INFORMATION:
Disaggregation of revenue
The Company’s revenue
is disaggregated by segments and source.
The following table presents
the Company’s revenue disaggregated by source for the six months ended June 30, 2024 and 2023:
| |
Six months ended June 30 | |
| |
2024 | | |
2023 | |
| |
U.S. dollars in thousands | |
| |
| | |
| |
Software as a Service | |
| 17,257 | | |
| 9,983 | |
Advertising services | |
| 3 | | |
| 2,681 | |
| |
| 17,260 | | |
| 12,664 | |
Segments
Management has determined
the Company’s operating segments based on the information reviewed by the Company’s chief operating decision maker for the
purpose of allocating resources to the segments and assessing their performance.
The chief operating decision
maker, who is the Company’s Chief Executive Officer (“CEO”), examines the performance of each operating segment based
on revenue and segment adjusted EBITDA. The Company defines segment adjusted EBITDA as net profit (loss) before depreciation, amortization
and impairment of intangible assets, finance income (expense) and income tax, as further adjusted for the effect of impairment of goodwill,
share-based payments and other adjustments, as applicable.
The following table presents details of the Company’s operating
segments and a reconciliation of the total segment adjusted EBITDA to profit (loss) before income tax for the six months ended June 30,
2024 and 2023:
| |
Six months ended June 30 | |
| |
2024 | | |
2023 | |
| |
U.S. dollars in thousands | |
Revenue | |
| | |
| |
Enterprise internet access | |
| 16,751 | | |
| 8,428 | |
Consumer internet access | |
| 509 | | |
| 4,236 | |
| |
| 17,260 | | |
| 12,664 | |
Segment adjusted EBITDA | |
| | | |
| | |
Enterprise internet access | |
| 7,610 | | |
| 2,219 | |
Consumer internet access | |
| 260 | | |
| 73 | |
| |
| 7,870 | | |
| 2,292 | |
Non-attributable corporate costs | |
| (1,315 | ) | |
| (1,123 | ) |
Depreciation, amortization and impairment of intangible assets | |
| (334 | ) | |
| (3,002 | ) |
Impairment of goodwill | |
| - | | |
| (6,311 | ) |
Share-based payments | |
| (956 | ) | |
| (599 | ) |
Finance income (expense), net | |
| (3,345 | ) | |
| 116 | |
Profit (loss) before income tax | |
| 1,920 | | |
| (8,627 | ) |
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v3.24.2.u1
Subsequent Events
|
6 Months Ended |
Jun. 30, 2024 |
Subsequent Events [Abstract] |
|
SUBSEQUENT EVENTS |
NOTE 5 - SUBSEQUENT EVENTS:
On July 16, 2024, the
Company’s BOD approved a grant of 199,992 RSUs to the Company’s CEO. The grant is subject to the shareholders’ approval.
In addition, the Company’s
BOD approved grants of 55,020 RSUs to employees and 100,000 options to purchase 100,000 ordinary shares to a consultant. The options have
a zero-exercise price and they will vest over a period of 2 years from the grant date.
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v3.24.2.u1
Accounting Policies, by Policy (Policies)
|
6 Months Ended |
Jun. 30, 2024 |
Accounting Policies [Abstract] |
|
Basis of presentation |
Basis of presentation The Company’s condensed consolidated financial
statements for the six months ended June 30, 2024, have been prepared in accordance with International Accounting Standard (“IAS”)
34, “Interim Financial Reporting”. These condensed consolidated financial statements, which are unaudited, do not include
all of the information and disclosures that would otherwise be required in a complete set of annual financial statements and should be
read in conjunction with the annual financial statements for the year ended December 31, 2023 and their accompanying notes, which have
been prepared in accordance with International Financial Reporting Standards (“IFRS”) as published by the International Accounting
Standards Board. The results of operations for the six months ended
June 30, 2024, are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2024,
or for any other interim period.
|
Estimates |
Estimates The preparation of interim financial statements
requires the Company’s management to exercise its judgment and to use significant accounting estimates and assumptions that affect
the application of the Company’s accounting policies and the amounts of reported assets, liabilities, income and expenses. Actual
results may materially differ from those estimates. In preparation of these condensed consolidated
financial statements, the significant judgments that were exercised by the management in applying the Company’s accounting policies
and the key sources of estimation uncertainty were similar to those applied in the Company’s annual financial statements for the
year ended December 31, 2023.
|
Accounting policies |
Accounting policies The accounting policies applied in the preparation
of these condensed consolidated financial statements are consistent with those applied in the preparation of the annual financial statements
for the year ended December 31, 2023, except as described below.
|
Income tax |
Income tax Income tax expense for interim periods is recognized
at an amount determined by multiplying the profit before income tax for the interim period of each individual jurisdiction by management’s
best estimate of the expected effective annual income tax rate of each jurisdiction, adjusted for the tax effects of certain items recognized
in full in the interim period.
|
New standards and amendments adopted |
New standards and amendments adopted Several new standards, amendments to standards and
interpretations that are effective for annual periods beginning on January 1, 2024, have been applied in preparing these condensed consolidated
financial statements. None of these had a material effect on the Company’s condensed consolidated financial statements.
|
New standards and amendments not yet adopted |
New standards and amendments not yet adopted IFRS 18, “Presentation and Disclosure in
Financial Statements” (“IFRS 18”) IFRS 18 replaces IAS 1, “Presentation of
Financial Statements” (“IAS 1”). As part of the new disclosure requirements, companies will be required to present new
defined subtotals in the statement of profit or loss, as follows: (i) operating profit and (ii) profit before financing and tax. In addition,
items in the statement of profit or loss will be classified into three defined categories: operating, investment and financing. The standard
also includes a requirement to provide a separate disclosure in the financial statements regarding the use of management-defined performance
measures (“non-GAAP measures”), and specific instructions were added for the grouping and splitting of items in the financial
statements and their accompanying notes. IFRS 18 is effective for annual reporting periods beginning on or after January 1, 2027, with
an option for early adoption. The Company is currently in a preliminary stage of assessing the expected effect of this new standard.
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v3.24.2.u1
Segment and Revenue Information (Tables)
|
6 Months Ended |
Jun. 30, 2024 |
Segment and Revenue Information [Abstract] |
|
Schedule of Company’s Revenue Disaggregated |
The following table presents
the Company’s revenue disaggregated by source for the six months ended June 30, 2024 and 2023:
| |
Six months ended June 30 | |
| |
2024 | | |
2023 | |
| |
U.S. dollars in thousands | |
| |
| | |
| |
Software as a Service | |
| 17,257 | | |
| 9,983 | |
Advertising services | |
| 3 | | |
| 2,681 | |
| |
| 17,260 | | |
| 12,664 | |
|
Schedule of Operating Segments and a Reconciliation of the Total Segment |
The following table presents details of the Company’s operating
segments and a reconciliation of the total segment adjusted EBITDA to profit (loss) before income tax for the six months ended June 30,
2024 and 2023:
| |
Six months ended June 30 | |
| |
2024 | | |
2023 | |
| |
U.S. dollars in thousands | |
Revenue | |
| | |
| |
Enterprise internet access | |
| 16,751 | | |
| 8,428 | |
Consumer internet access | |
| 509 | | |
| 4,236 | |
| |
| 17,260 | | |
| 12,664 | |
Segment adjusted EBITDA | |
| | | |
| | |
Enterprise internet access | |
| 7,610 | | |
| 2,219 | |
Consumer internet access | |
| 260 | | |
| 73 | |
| |
| 7,870 | | |
| 2,292 | |
Non-attributable corporate costs | |
| (1,315 | ) | |
| (1,123 | ) |
Depreciation, amortization and impairment of intangible assets | |
| (334 | ) | |
| (3,002 | ) |
Impairment of goodwill | |
| - | | |
| (6,311 | ) |
Share-based payments | |
| (956 | ) | |
| (599 | ) |
Finance income (expense), net | |
| (3,345 | ) | |
| 116 | |
Profit (loss) before income tax | |
| 1,920 | | |
| (8,627 | ) |
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Significant Changes in the Current Reporting Period (Details) $ / shares in Units, $ in Thousands |
6 Months Ended |
|
|
Jun. 30, 2024
USD ($)
Years
$ / shares
shares
|
Jun. 30, 2024
USD ($)
₪ / shares
shares
|
Dec. 31, 2023
USD ($)
|
Sep. 14, 2023
shares
|
Significant Changes in the Current Reporting Period [Line Items] |
|
|
|
|
Warrants issued | shares |
527,686
|
527,686
|
|
75,900
|
Exercised (in Dollars per share) | $ / shares |
$ 603,586
|
|
|
|
Exercise of warrants | shares |
6,035,860
|
|
|
|
Total consideration (in Dollars) | $ |
$ 2,253
|
$ 2,253
|
|
|
Options exercised | shares |
2,492,688
|
|
|
|
Shares issued | shares |
2,492,688
|
2,492,688
|
|
|
Vested restricted share units | shares |
145,833
|
|
|
|
Fair value of derivative financial instruments (in Dollars) | $ |
$ 3,300
|
$ 3,300
|
|
|
Derivative financial instruments (in Dollars) | $ |
3,409
|
3,409
|
$ 109
|
|
Actual customers payments (in Dollars) | $ |
199
|
|
|
|
Interest expenses (in Dollars) | $ |
110
|
|
|
|
Current maturities (in Dollars) | $ |
$ 1,003
|
$ 1,003
|
|
|
Purchase options | shares |
145,012
|
|
|
|
Ordinary shares | shares |
145,012
|
|
|
|
Bottom of range [member] |
|
|
|
|
Significant Changes in the Current Reporting Period [Line Items] |
|
|
|
|
Risk-free interest rate |
4.99%
|
|
|
|
Expected term (in Years) | Years |
0.36
|
|
|
|
Volatility |
96.54%
|
|
|
|
Exercise prices range (in New Shekels per share) | ₪ / shares |
|
$ 0
|
|
|
Vest over |
1 year
|
|
|
|
Top of range [member] |
|
|
|
|
Significant Changes in the Current Reporting Period [Line Items] |
|
|
|
|
Risk-free interest rate |
5.43%
|
|
|
|
Volatility |
109.20%
|
|
|
|
Exercise prices range (in New Shekels per share) | ₪ / shares |
|
$ 3.97
|
|
|
Vest over |
3 years
|
|
|
|
RSUs [Member] |
|
|
|
|
Significant Changes in the Current Reporting Period [Line Items] |
|
|
|
|
Total consideration (in Dollars) | $ |
$ 2,945
|
$ 2,945
|
|
|
Shares issued | shares |
145,833
|
145,833
|
|
|
Options and RSUs grants [Member] |
|
|
|
|
Significant Changes in the Current Reporting Period [Line Items] |
|
|
|
|
Total consideration (in Dollars) | $ |
$ 493
|
$ 493
|
|
|
Number of options granted |
240,044
|
|
|
|
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v3.24.2.u1
Segment and Revenue Information (Details) - Schedule of Operating Segments and a Reconciliation of the Total Segment - USD ($) $ in Thousands |
6 Months Ended |
Jun. 30, 2024 |
Jun. 30, 2023 |
Revenue |
|
|
Revenue |
$ 17,260
|
$ 12,664
|
Segment adjusted EBITDA |
|
|
Segment adjusted EBITDA |
7,870
|
2,292
|
Non-attributable corporate costs |
(1,315)
|
(1,123)
|
Depreciation, amortization and impairment of intangible assets |
(334)
|
(3,002)
|
Impairment of goodwill |
|
(6,311)
|
Share-based payments |
(956)
|
(599)
|
Finance income (expense), net |
(3,345)
|
116
|
Profit (loss) before income tax |
1,920
|
(8,627)
|
Enterprise internet access [Member] | Operating segments [member] |
|
|
Revenue |
|
|
Revenue |
16,751
|
8,428
|
Enterprise internet access [Member] | Reconciliation total segment adjusted EBITDA [Member] |
|
|
Segment adjusted EBITDA |
|
|
Segment adjusted EBITDA |
7,610
|
2,219
|
Consumer internet access [Member] | Operating segments [member] |
|
|
Revenue |
|
|
Revenue |
509
|
4,236
|
Consumer internet access [Member] | Reconciliation total segment adjusted EBITDA [Member] |
|
|
Segment adjusted EBITDA |
|
|
Segment adjusted EBITDA |
$ 260
|
$ 73
|
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