Safe-T® Group Ltd.
(Nasdaq, TASE:
SFET), a provider of secure access solutions for on-premise
and hybrid cloud environments, today announced its financial
results for the six and three-month periods ended June 30, 2020.
Revenues for the first half of 2020 totaled
$2,165,000, an increase of 164% compared to $821,000 in the first
half of 2019. Revenues for the three-month period ended June
30, 2020 totaled $1,077,000, an increase of 173% compared to
$394,000 in the three-month period ended June 30, 2019.
The Company’s cash balance at the end of the
quarter was $9,771,000. During July and August 2020, the Company
raised gross funds of $6,794,000 through the issuance of ADSs and
pre-funded warrants, and the exercise of warrants, bringing the
cash balance of the Company including short-term deposits as of
August 27, 2020 to approximately $15.0 million.
Shachar Daniel, Chief Executive Officer,
commented on the results: “Over the past few months we continued to
make successful progress towards some of the goals we set at the
beginning of the year: accelerating revenue growth; moving fully to
an indirect go-to-market approach (working with partners) with our
innovative product for secure remote work while reducing
implementation and support costs resulting in improved gross
margin; and developing innovative capabilities of our IP proxy
product to expand potential customers and maximize sales potential
of our solution. We continued to receive market validation for our
products’ technological superiority by receiving a prestigious
order from one of the leading intelligence agencies in the world
and in a number of prestigious engagements with the most
professional and industry-leading distribution agencies.”
Mr. Daniel added, “In addition, we were able to
strengthen the Company’s balance sheet and raise significant funds
that will provide us the ability to continue growing organically as
well as in the form of successful acquisitions such as the
acquisition of NetNut during 2019. We are proud of the fact that
despite this challenging period, we continued to work hard at full
capacity, while maintaining efficient operations with minimal
expenses.”
Recent Material Developments:
- On July 7, 2020, Safe-T announced
the expansion of its indirect partner sales channel by more than 25
new partners;
- On July 22, 2020, we completed a
registered direct offering of ADSs and pre-funded warrants with
gross proceeds of approximately $5,907,000;
- Between July 1, 2020 and August 28,
2020, 739,000 warrants from Safe-T’s April 23, 2020 underwritten
public offering, were exercised, for an aggregate of $887,000, in
addition to the exercise of 435,000 pre-funded warrants from the
Company’s July 2020 registered direct offering;
- On August 24, 2020, we announced
the launch by our wholly owned subsidiary, NetNut Ltd., of its
Dynamic Residential Proxy network in Europe and Asia.
Second Quarter 2020 Corporate Highlights:
- On April 6, 2020, we completed a
registered direct offering of ADSs with gross proceeds of
$720,000;
- In April 2020, we retired in full
$8.23 million in outstanding debenture debt, pertaining to the
convertible debentures issued during April 2019 through December
2019, predominantly to finance the acquisition of our IP proxy
business, NetNut Ltd.;
- On April 23, 2020, we completed a
public offering of ADSs, pre-funded warrants and warrants with
gross proceeds of approximately $8,392,000;
- All pre-funded warrants to purchase
6,777,500 ADSs, issued in our April 23, 2020 public offering were
exercised in full through June 30, 2020;
- Warrants to purchase 2,320,000 ADSs
that were issued in the April 23, 2020 public offering were
exercised through June 30, 2020, for an aggregate of
$2,784,000;
- On June 22, 2020, Safe-T announced
that it was named as a Representative Vendor in Gartner’s June 2020
Market Guide for Zero Trust Network Access;
- On June 25, 2020, Safe-T announced
the launch of its Perimeter Access Orchestration Fabric
(PAOF) solution for Secure Remote Access;
- On June 29, 2020, Safe-T launched
its Zero-Trust Secure File Access Solution and received its first
order from a leading intelligence unit.
COVID-19 Impacts
The COVID-19 outbreak has forced us to modify
our business practices and we have adopted early and strict
prevention measures to protect the health of our employees
(including employees’ travel, employees’ work locations and
cancellation of physical participation in meetings, events and
conferences). Thanks to the resilience of our operational
capabilities, we have been able to continuously serve our clients
during this crisis. We leveraged our IT expertise to implement
remote connections with employees, customers and vendors to deliver
a functional and productive work-from-home strategy.
Due to an almost complete freeze in the travel
sector, we experienced a reduction in revenue of some of the IP
proxy business sectors. At the same time, this business recently
gained new entry into the cyber-security market and launched its
Dynamic Residential Proxy network in Europe and Asia, that we
believe can compensate for the travel sector-related revenue
reduction. Due to the COVID-19 lack of visibility implications, the
decision making of customers in the cyber-security business had
slowed down, and we anticipate longer sale cycles as organizations
continue to evaluate their strategic and financial position.
Nevertheless, as an agile and responsive business, we believe we
are able to put in place the correct measures on health and safety,
customer service, cost controls, cash management and employee
engagement during this evolving situation. This pandemic in a
global, highly connected world, has shown the increased need for
secure remote access solutions that we offer, and with our unique
ZoneZero® solution, we are able to complete an entire end-to-end
sales cycle remotely, from pre-sale stage to final
implementation.
Our business, despite the resilience it has
shown in the first half of the year, might not be immune to the
impact that global lockdowns resulting from the pandemic are having
on a number of the markets that we operate in or serve. We may
experience a slowdown in the pace of new business in the second
half of the year, which we plan to compensate by closely monitoring
all parts of the business to make sure we can respond quickly to
fluctuations in demand, as well as by executing our M&A
strategy in the coming months.
Financial results for the six months ended June 30,
2020:
- Total revenues amounted to
$2,165,000 (H1 2019: $821,000). The increase in revenues compared
to the first half of 2019 is due to the consolidation of revenues
generated by Safe-T’s wholly owned subsidiary, NetNut, a provider
of IP Proxy Network services, throughout the entire period compared
to the consolidation in 2019 which occurred only from NetNut’s
acquisition on June 12, 2019 until the period ended on June 30,
3019. The increase was partially offset by a reduction in the sales
of the Secure Data Exchange (SDE) product, as part of the Company’s
strategic plan to focus on the Software Defined Perimeter (SDP)
market with its Zero Trust solutions;
- Cost of revenues totaled $1,121,000
(H1 2019: $416,000). The increase is mainly due to the
consolidation of NetNut’s cost of revenues, as well as amortization
of NetNut’s intangible assets, partially offset by a decrease of
costs resulting from the streamlining of support and post sales
teams;
- Research and development (R&D)
expenses were $793,000 (H1 2019: $1,373,000). The decrease is due
to a reduction in the SDE solution development costs, partially
offset by the consolidation of NetNut’s development
costs;
- Sales and marketing expenses
totaled $1,781,000 (H1 2019: $1,637,000). The increase is
primarily attributed to consolidation of NetNut’s sales and
marketing costs, partially offset by efficiency measures and cost
reductions in overall sales, professional and marketing costs of
the cyber business;
- General and administrative expenses
(G&A) totaled $1,495,000 (H1 2019: $1,628,000). The decrease is
due to a reduction in share-based payments, partially offset by an
increase mainly in salary and professional fees costs as well as
the consolidation of NetNut’s general and administrative
costs;
- IFRS net loss totaled $1,544,000,
or $0.01 basic loss per ordinary share (H1 2019: loss of
$2,510,000, or $0.48 basic loss per ordinary share);
- Non-IFRS net loss was $2,309,000,
or $0.01 basic loss per ordinary share (H1 2019: loss of
$3,526,000, or $0.67 basic loss per ordinary share).
Financial results for the three months ended June 30,
2020:
- Total revenues amounted to
$1,077,000 (Q2 2019: $394,000). The increase is mainly attributed
to the consolidation of NetNut’s revenues, partially offset by a
reduction of sales of the Company’s SDE product;
- Cost of revenues totaled $570,000
(Q2 2019: $239,000). The increase is mainly due to the
consolidation of NetNut’s cost of revenues, as well as amortization
of NetNut’s intangible assets, partially offset by a decrease of
costs resulting from the streamlining of support and post sales
teams;
- R&D expenses were $399,000 (Q2
2019: $559,000). The decrease is mainly attributed to a decrease in
costs in connection with the streamlining of the R&D team,
partially offset by the consolidation of NetNut’s development
costs;
- Sales and marketing expenses
totaled $919,000 (Q2 2019: $739,000). The increase is
primarily attributed to consolidation of NetNut’s sales and
marketing costs, partially offset by efficiency measures and cost
reductions in overall sales, professional and marketing
costs;
- G&A expenses totaled $918,000
(Q2 2019: $956,000). The decrease is due to a reduction in
share-based payments, partially offset by an increase mainly in
salary and professional fees costs as well as the consolidation of
NetNut’s general and administrative costs;
- IFRS net loss totaled $2,227,000,
or $0.01 basic earnings per ordinary share (Q2 2019: loss of
$226,000, or $0.04 basic loss per ordinary share);
- Non-IFRS net loss was $1,321,000,
or $0.00 basic loss per ordinary share (Q2 2019: loss of
$1,744,000, or $0.29 basic loss per ordinary share).
All descriptions of Safe-T’s share capital in
this press release, including share amounts and per share amounts,
are presented after giving effect to the reverse split that the
Company affected on October 21, 2019.
The following table presents the reconciled
effect of the non-cash expenses/income and one-time expenses
further described below on the Company’s net loss for the six and
three-month periods ended June 30, 2020 and 2019, and for the year
ended December 31, 2019:
|
|
For the Six-Month Period Ended
June 30, |
|
|
For the Three-Month Period Ended
June 30, |
|
|
For the year
Ended December 31, |
|
(thousands of U.S.
dollars) |
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
|
1,544 |
|
|
|
2,510 |
|
|
|
2,227 |
|
|
|
226 |
|
|
|
12,998 |
|
Issuance and
acquisition costs |
|
|
156 |
|
|
|
- |
|
|
|
156 |
|
|
|
- |
|
|
|
790 |
|
Amortization
and impairment of intangible assets and goodwill |
|
|
1,307 |
|
|
|
201 |
|
|
|
253 |
|
|
|
126 |
|
|
|
2,105 |
|
Share-based
compensation |
|
|
41 |
|
|
|
529 |
|
|
|
12 |
|
|
|
275 |
|
|
|
454 |
|
Finance
liabilities at fair value |
|
|
(2,269 |
) |
|
|
(1,746 |
) |
|
|
485 |
|
|
|
(1,919 |
) |
|
|
2,596 |
|
Total
adjustment |
|
|
(765 |
) |
|
|
(1,016 |
) |
|
|
906 |
|
|
|
(1,518 |
) |
|
|
5,945 |
|
Non-IFRS net loss |
|
|
2,309 |
|
|
|
3,526 |
|
|
|
1,321 |
|
|
|
1,744 |
|
|
|
7,053 |
|
Balance Sheet
Highlights
- As of June 30, 2020, shareholders’
equity totaled $15,431,000, or an amount of approximately $1.17 per
outstanding ADS as of June 30, 2020, compared to shareholders’
equity of $2,777,000 on December 31, 2019. The increase is due
mainly to equity raised through the issuance of ADSs and pre-funded
warrants and warrant exercises as well as debenture conversions,
partially offset by our operating loss during the first half of
2020.
- As of June 30, 2020, the Company’s
cash balance was $9,771,000.
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 net loss for the periods presented that exclude the
effect of share-based compensation expenses, amortization of
intangible assets, non-cash issuance and acquisition expenses and
the revaluation of finance liabilities at fair value. The Company’s
management believes the non-IFRS financial information provided in
this 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.
About Safe-T® Group Ltd.
Safe-T Group Ltd. (Nasdaq, TASE: SFET) is a
provider of Zero Trust Access solutions which mitigate attacks on
enterprises’ business-critical services and sensitive data, while
ensuring uninterrupted business continuity. Safe-T’s cloud and
on-premises solutions ensure that an organization’s access use
cases, whether into the organization or from the organization out
to the internet, are secured according to the “validate first,
access later” philosophy of Zero Trust. This means that no one is
trusted by default from inside or outside the network, and
verification is required from everyone trying to gain access to
resources on the network or in the cloud.
Safe-T’s wide range of access solutions reduce
organizations’ attack surface and improve their ability to defend
against modern cyberthreats. As an additional layer of security,
our integrated business-grade global proxy solution cloud service
enables smooth and efficient traffic flow, interruption-free
service, unlimited concurrent connections, instant scaling and
simple integration with our services.
With Safe-T’s patented reverse-access technology
and proprietary routing technology, organizations of all size and
type can secure their data, services and networks against internal
and external threats.
Safe-T’s SDP solution on AWS Marketplace is
available here.
For more information about Safe-T, visit
www.safe-t.com
Forward-Looking Statements
This press release contains forward-looking
statements within the meaning of the “safe harbor” provisions of
the Private Securities Litigation Reform Act of 1995 and other
Federal securities laws. 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, Safe-T is using
forward-looking statements in this press release when it discusses
its outlook for the future, the expanding of potential customers
and maximization of sales potential of its solution, the increasing
interest in its innovative solutions, the positive results and
growth over time, the impact of COVID-19, closely monitoring the
Company’s business in order to respond quickly to fluctuations in
demand and the ability to continue growing organically as well as
executing its M&A strategy. Because such statements deal with
future events and are based on Safe-T’s current expectations, they
are subject to various risks and uncertainties and actual results,
performance or achievements of Safe-T 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
Safe-T’s annual report on Form 20-F filed with the Securities and
Exchange Commission (“SEC”) on March 31, 2020, and in any
subsequent filings with the SEC. Except as otherwise required by
law, Safe-T 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.
Safe-T is not responsible for the contents of third-party
websites.
CONTACT INVESTOR RELATIONS: Michal Efraty
+972-(0)52-3044404 michal@efraty.com
Consolidated Statements of Financial Position(In
thousands of USD)
|
|
June 30, |
|
|
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
|
|
(Unaudited) |
|
|
(Audited) |
|
Assets |
|
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
9,771 |
|
|
|
943 |
|
|
|
4,341 |
|
Restricted
deposits |
|
|
- |
|
|
|
107 |
|
|
|
29 |
|
Trade
receivables |
|
|
547 |
|
|
|
781 |
|
|
|
680 |
|
Other
receivables |
|
|
380 |
|
|
|
1,451 |
|
|
|
470 |
|
Total current assets |
|
|
10,698 |
|
|
|
3,282 |
|
|
|
5,520 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
restricted deposits |
|
|
82 |
|
|
|
- |
|
|
|
82 |
|
Long-term
deposit |
|
|
47 |
|
|
|
- |
|
|
|
44 |
|
Property,
plant and equipment, net |
|
|
195 |
|
|
|
330 |
|
|
|
266 |
|
Right of use
assets |
|
|
393 |
|
|
|
534 |
|
|
|
441 |
|
Goodwill |
|
|
6,077 |
|
|
|
8,112 |
|
|
|
6,877 |
|
Intangible
assets, net |
|
|
4,100 |
|
|
|
5,510 |
|
|
|
4,607 |
|
Total non-current assets |
|
|
10,894 |
|
|
|
14,486 |
|
|
|
12,317 |
|
Total assets |
|
|
21,592 |
|
|
|
17,768 |
|
|
|
17,837 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
loan |
|
|
- |
|
|
|
24 |
|
|
|
4 |
|
Trade
payables |
|
|
102 |
|
|
|
1,602 |
|
|
|
237 |
|
Other
payables |
|
|
1,130 |
|
|
|
1,325 |
|
|
|
1,553 |
|
Contract
liabilities |
|
|
439 |
|
|
|
615 |
|
|
|
562 |
|
Contingent
consideration |
|
|
1,000 |
|
|
|
2,011 |
|
|
|
2,170 |
|
Convertible
debentures |
|
|
- |
|
|
|
- |
|
|
|
7,151 |
|
Derivative
financial instruments |
|
|
1,978 |
|
|
|
- |
|
|
|
1,637 |
|
Short-term
lease liabilities |
|
|
175 |
|
|
|
219 |
|
|
|
184 |
|
Liability in
respect of the Israeli Innovation Authority |
|
|
- |
|
|
|
27 |
|
|
|
8 |
|
Total current liabilities |
|
|
4,824 |
|
|
|
5,823 |
|
|
|
13,506 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-current liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Contract
liabilities |
|
|
33 |
|
|
|
186 |
|
|
|
82 |
|
Long-term
lease liabilities |
|
|
264 |
|
|
|
367 |
|
|
|
324 |
|
Deferred tax
liabilities |
|
|
918 |
|
|
|
1,021 |
|
|
|
1,040 |
|
Derivative
financial instruments |
|
|
- |
|
|
|
1,327 |
|
|
|
- |
|
Convertible
debentures |
|
|
- |
|
|
|
2,527 |
|
|
|
- |
|
Liability in
respect of the Israeli Innovation Authority |
|
|
122 |
|
|
|
94 |
|
|
|
108 |
|
Total non-current liabilities |
|
|
1,337 |
|
|
|
5,522 |
|
|
|
1,554 |
|
Total liabilities |
|
|
6,161 |
|
|
|
11,345 |
|
|
|
15,060 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Ordinary shares |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Share premium |
|
|
64,821 |
|
|
|
46,604 |
|
|
|
52,394 |
|
Other equity
reserves |
|
|
14,841 |
|
|
|
12,018 |
|
|
|
13,070 |
|
Accumulated
deficit |
|
|
(64,231 |
) |
|
|
(52,199 |
) |
|
|
(62,687 |
) |
Total equity |
|
|
15,431 |
|
|
|
6,423 |
|
|
|
2,777 |
|
Total liabilities and equity |
|
|
21,592 |
|
|
|
17,768 |
|
|
|
17,837 |
|
Consolidated Statements of Profit or Loss
(In thousands of USD, except per share
amounts)
|
|
For the Six Months Ended
June 30, |
|
|
For the Three Months Ended
June 30, |
|
|
For the
Year Ended
December 31, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
2019 |
|
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Unaudited) |
|
|
(Audited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
2,165 |
|
|
|
821 |
|
|
|
1,077 |
|
|
|
394 |
|
|
|
3,284 |
|
Cost of revenues |
|
|
1,121 |
|
|
|
416 |
|
|
|
570 |
|
|
|
239 |
|
|
|
1,889 |
|
Gross profit |
|
|
1,044 |
|
|
|
405 |
|
|
|
507 |
|
|
|
155 |
|
|
|
1,395 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development expenses |
|
|
793 |
|
|
|
1,373 |
|
|
|
399 |
|
|
|
559 |
|
|
|
2,485 |
|
Sales and
marketing expenses |
|
|
1,781 |
|
|
|
1,637 |
|
|
|
919 |
|
|
|
739 |
|
|
|
3,783 |
|
General and
administrative expenses |
|
|
1,495 |
|
|
|
1,628 |
|
|
|
918 |
|
|
|
956 |
|
|
|
3,757 |
|
Impairment of goodwill |
|
|
800 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
1,002 |
|
Contingent
consideration measurement |
|
|
430 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
159 |
|
Operating expenses |
|
|
(5,299 |
) |
|
|
(4,638 |
|
|
|
(2,236 |
) |
|
|
(2,254 |
) |
|
|
(11,186 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss |
|
|
(4,255 |
) |
|
|
(4,233 |
|
|
|
(1,729 |
) |
|
|
(2,099 |
) |
|
|
(9,791 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income (expenses), net |
|
|
2,589 |
|
|
|
1,720 |
|
|
|
(559 |
) |
|
|
1,870 |
|
|
|
(3,184 |
) |
Tax benefit
(taxes on income) |
|
|
122 |
|
|
|
3 |
|
|
|
61 |
|
|
|
3 |
|
|
|
(23 |
) |
Net
loss |
|
|
(1,544 |
) |
|
|
(2,510 |
|
|
|
(2,227 |
) |
|
|
(226 |
) |
|
|
(12,998 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per share* |
|
|
(0.01 |
) |
|
|
(0.48 |
|
|
|
(0.01 |
) |
|
|
(0.04 |
) |
|
|
(0.96 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per share* |
|
|
(0.02 |
) |
|
|
(0.48 |
|
|
|
(0.01 |
) |
|
|
(0.12 |
) |
|
|
(1.03 |
) |
|
* |
Adjusted
retrospectively to reflect a 20:1 reverse share split of our
ordinary shares effective as October 21, 2019 |
Safe T (NASDAQ:SFET)
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From May 2023 to May 2024