TIDMSTAR

RNS Number : 4177T

Starcom PLC

25 March 2021

This announcement contains inside information for the purposes of Regulation 11 of the Market Abuse (amendment) (EU Exit) Regulations 2019/310.

25 March 2021

Starcom PLC

("Starcom" or the "Company")

Final results for the year ended 31 December 2020

Starcom (AIM: STAR), which specialises in the development of wireless, Internet-Of-Things (IoT) based solutions for the remote tracking, monitoring and protection of a variety of assets, announces its audited results for the year ended 31 December 2020.

CHAIRMAN'S STATEMENT

I am pleased to provide the annual report and accounts for 2020. As we previously announced, the Covid-19 pandemic has disrupted Starcom's business in 2020 and this is reflected in the results. The results for the year to 31 December 2020 show that revenues reduced to $5.04m (2019: $6.8m), which has resulted in an operating loss for the year of $1.78m (2019: $0.7m loss) and an adjusted EBITDA* loss of $370,000 (2019: profit $296,000).

Gross margin was down to 33% (2019: 41%) reflecting the lower sales revenues and the impact of increases in the cost of raw materials, shipment and logistics as experienced across the industry due to the pandemic.

However, the Company has been able to cope effectively with the crisis. Costs were adjusted quickly and a low-cost long-term bank loan, as well as government grants, were secured to ensure business continuity. This enabled the Company to focus on retaining its key assets, mainly the solid client base and pipeline of future opportunities, as well as to utilize its engineering resources to progress R&D plans to improve competitiveness, to be leveraged when higher customer demand returns.

Even during the long lock-down periods, the Company continued to maintain and further develop Starcom's strategic alliances and pipeline of potential projects. For example, work with Zero Motorcycles ("Zero") progressed during 2020 to integrate Starcom's technology with Zero's new generation of electric motorcycles. Additional projects included working with the National Transport and Safety Authority of Kenya and central authorities in South America for the potential deployment of Starcom's products in container and shipment transportation. More recently, the Company made its modest contribution to the global anti-Covid vaccination effort by providing certain vaccination organizations in Panama with the means to monitor temperature and other conditions of vaccines while in transit.

As many of the Company's customers were impacted by the pandemic, not only were some unable to place orders but some could not make scheduled payments for existing orders as expected, and therefore provisions of approximately $500,000 were made in the 2020 accounts which are included as general and administrative costs. We are hopeful that some of these debts may be recoverable during this year.

BUSINESS REVIEW BY PRODUCT

Although hardware sales were severely depressed by the pandemic at $2.8 million (2019: $4.8m), the newer and higher margin products - Kylos, Tetis and Lokies - still represented 40% of hardware sales.

Lokies

The Company's intelligent keyless padlock, branded as Lokies, was successfully launched in 2019 and well received by customers. It had been anticipated that significant orders would follow based on the positive interest shown, however these orders were not progressed as hoped in 2020. However, we still anticipate that these orders will be resumed later this year.

Kylos

Kylos is a real-time tracking and monitoring solution for the protection and management of any portable asset. One of our major opportunities for 2020 was a project with Cubemonk, a USA company that intended to incorporate Kylos into its shipping containers. However, Covid-19 restrictions resulted in this project being suspended. We remain in contact with this customer and hope that as conditions improve in the USA it may be possible to restart the project.

Kylos development continued to progress in 2020 and Kylos Dodge, a long range cellular based variant of Kylos was launched, allowing cross-device communication for low-cost operations.

Tetis

Tetis is a solution for the tracking, monitoring, and management of cargo shipped by the sea. New developments in the year have seen the Company establish new control centre dashboard software for Tetis, which is now integrated directly into a custom system for a customs authority in South America.

Tetis and Lokies are ideally suited to monitor goods for customs purposes and is a key target market for Starcom.

Helios

Helios Pro was launched in 2020. It is the next generation of our high-end vehicle tracking products and which can connect directly to the computer of over 2,600 vehicle models, to collect and transmit important data for driver security and external sensor integration. In addition, a new project for the monitoring of defibrillators in Israel using Helios was initiated and is expected to lead to more sales in 2021.

SaaS

It is encouraging to see that, even in such a challenging year, the Company could still rely on its strong and loyal customer base to generate $2.2 million of SaaS revenues (2019: $2m), an increase of approximately 9% compared to the previous year. We have also used the time to upgrade the entire structure of Starcom Online - our SaaS platform - and brought it up to date in both the software and underlying backbone. We have also integrated various third-party tracking units to allow easy transitions for customers from other companies to Starcom, developed a full vehicle maintenance module, and added support for Telegram Messaging App. In addition, we launched Olly - a new Android/iOS application for Helios end-users, allowing them to communicate with their vehicle securely using Bluetooth 5.

FINANCIAL REVIEW

Group revenues for the year were $5.04m, compared with $6.8m for the year ended 31 December 2019, a decrease of 26%.

The gross margin for the year was 33%, compared with 41% for 2019. This was due to lower sales revenues and the impact of increases in the cost of raw materials, shipment and logistics as experienced across the industry due to the pandemic.

Total operating expenditure for the year was $3.4m (2019: $3.4m), mainly due to non-cash expenses such as depreciation, share option provisions and exceptional provisions made for doubtful debt. Excluding the exceptional provisions, the operating expenditures were decreased by 12%.

Net loss after taxation for the year increased to $2.0m compared with the 2019 net loss of $1.0m. The operating loss in the period was $1.78m, compared to an operating loss of $0.76m in 2019.

The Group recorded an exchange rate loss of $0.14m resulting from the strengthening of the Israeli Shekel compared with the US dollar.

The Group balance sheet showed stability in trade receivables of $1.1m, compared with $2.0m as at 31 December 2019, due to exceptional provisions made for doubtful debts.

Group inventories at the period end were $2.1m, compared to $2.3m as at the end of 2019. An exceptional provision for obsolete stock was made of $0.08m.

Trade payables at the year-end were $1.6m, compared with $2.1m as at 31 December 2019.

Net cash used in operating activities in the period was approximately $0.4m, compared with zero for the year ended 31 December 2019.

OUTLOOK

At this time of the year, we would normally expect to have a stronger indication of how the current year might end but during this exceptional period many of our clients and prospects are still unable to commit or more safely predict their needs yet. Another factor that makes forecasting very difficult is the increase we have noticed in the cost of raw material and in the lead times for supply, by several weeks in some cases. The currency fluctuations also impact margins. We are working to mitigate this challenge.

However, our discussions with clients and prospects make us cautiously optimistic that the level of activity is starting to rise, and we are hopeful that this is now the beginning of the process of gradually enlarging the sales pipeline and order book and the resumption of projects that had been put on hold. We are therefore quite confident that revenues will increase in the second half of this year. With the solid technology we have kept at the forefront of our business and client relationships that have been maintained throughout the tough period, we will be ready and are well positioned to meet customer demand when it hopefully increases in the second half of 2021 as markets gradually return to some normality.

Michael Rosenberg

Non-Executive Chairman

March 24, 2021

STARCOM PLC

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

U.S. Dollars in thousands

 
                                                    December 31, 
                                           Note  2020          2019 
                                                 -----  ----------- 
      ASSETS 
 
        NON-CURRENT ASSETS 
      Property, plant and equipment, net    6      318          378 
      Rights-of-use assets, net             22     330          228 
      Intangible assets, net                7    1,900        2,119 
      Income tax authorities                        56           54 
      Total Non-Current Assets                   2,604        2,779 
                                                 -----  ----------- 
 
        CURRENT ASSETS 
      Cash and cash equivalents                    264          158 
      Short-term bank deposit               5      150           61 
      Trade receivables, net                3B   1,129        1,986 
      Other accounts receivable             3A      81          169 
      Inventories                           4    2,127        2,346 
      Total Current Assets                       3,751        4,720 
                                                 -----  ----------- 
 
      TOTAL ASSETS                               6,355        7,499 
                                                 =====  =========== 
 
 
 
   EQUITY AND LIABILITIES 
 
     EQUITY                                     14  2,101  3,891 
                                                    -----  ----- 
 
   NON-CURRENT LIABILITIES 
   Long-term loans from banks, net of current 
    maturities                                  10    303    167 
   Long-term leasehold liabilities              22    236    115 
                                                    -----  ----- 
   Total Non-Current Liabilities                      539    282 
                                                           ----- 
 
     CURRENT LIABILITIES 
   Short-term bank credit                              25     79 
   Short-term bank loan                         12    739      - 
   Current maturities of long-term loans from 
    banks                                       10     12    136 
   Trade payables                                   1,579  2,081 
   Other accounts payable                       9     303    227 
   Leasehold liabilities                        22    136    135 
   Warrants at fair value                       11     10      - 
   Conversion component of a convertible loan 
    at fair value                               11     42      - 
   Amortized cost of a convertible loan         11    254      - 
   Related parties                              20    615    668 
                                                    -----  ----- 
   Total Current Liabilities                        3,715  3,326 
                                                    -----  ----- 
 
   TOTAL EQUITY AND LIABILITIES                     6,355  7,499 
                                                    =====  ===== 
 

The accompanying notes are an integral part of the consolidated financial statements.

STARCOM PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

U.S. Dollars in thousands (except shares data)

Year ended December 31,

 
 
                                          Note   2020           2019 
                                                -------  ------------------- 
 
   Revenues                                       5,041                6,817 
 
   Cost of sales                           15   (3,374)              (4,019) 
                                                ------- 
 
   Gross profit                                   1,667                2,798 
                                                -------  ------------------- 
 
   Operating expenses: 
 
     Research and development                     (206)                (231) 
 
     Selling and marketing                        (580)                (776) 
 
    General and administrative expenses    16   (2,680)              (2,423) 
 
    Other income (expenses)                17        24                 (74) 
                                                -------  ------------------- 
 
   Total operating expenses                     (3,442)              (3,504) 
                                                -------  ------------------- 
 
   Operating loss                               (1,775)                (706) 
 
   Finance income                         18A         1                    - 
 
   Finance expenses                       18B     (271)                (313) 
                                                ------- 
 
   Net finance expenses                           (270)                (313) 
                                                -------  ------------------- 
 
Total comprehensive loss for the year           (2,045)              (1,019) 
                                                =======  =================== 
 
Loss per share: 
 Basic and diluted loss per share          19   (0.006)              (0.003) 
 
 

The accompanying notes are an integral part of the consolidated financial statements.

STARCOM PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

U.S. Dollars in thousands

 
 
                                                                           Capital Reserve 
                                      Premium                                  in Regard 
                            Share       on                                  to Share-Based         Accumulated 
                            Capital   Shares      Capital Reserve        Payment Transactions         Loss          Total 
                           --------   -------   --------------------   ------------------------   ------------   ------------ 
Balance as of January 
 1, 2019                          -    11,460                     89                        687        (8,375)        3,861 
 
Proceeds from issued 
 share capital, net of 
 mobilization costs               -       794                      -                          -              -          794 
 
Share based payment (see 
 Note 14c)                        -         -                      -                        255              -          255 
 
Comprehensive loss for 
 the year                         -         -                      -                          -        (1,019)      (1,019) 
                           --------   -------   --------------------   ------------------------   ------------   ---------- 
 
Balance as of December 
 31, 2019                         -    12,254                     89                        942        (9,394)        3,891 
 
Issued share capital, 
 net of expenses (see 
 Note 1 4 )                       -        74                      -                          -              -           74 
 
Share based payment (see 
 Note 14c)                        -         -                      -                        181              -          181 
 
Comprehensive loss for 
 the year                         -         -                      -                          -        (2,045)      (2,045) 
                           --------   -------   --------------------   ------------------------   ------------   ---------- 
 
Balance as of December 
 31, 2020                         -    12,328                     89                      1,123       (11,439)        2,101 
                           ========   =======   ====================   ========================   ============   ========== 
 
 

The accompanying notes are an integral part of the consolidated financial statements.

STARCOM PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. Dollars in thousands

 
                                                                    Year Ended December 
                                                                             31, 
                                                                 2020            2019 
                                                               --------   ------------------- 
CASH FLOWS FOR OPERATING ACTIVITIES: 
Loss for the year                                               (2,045)               (1,019) 
Adjustments to reconcile loss for 
 the year to net cash used in operating 
 activities: 
Depreciation and amortization                                       725                   673 
Interest expenses and exchange rate 
 differences                                                         50                   (6) 
Share-based payment expense                                         181                   255 
Capital loss                                                          -                    51 
Changes in assets and liabilities: 
Decrease (Increase) in inventories                                  219                 (321) 
Decrease (Increase) in trade receivables, 
 net                                                                857                  (89) 
Decrease (Increase) in other accounts 
 receivable                                                          88                  (82) 
Increase in Income Tax Authorities                                  (2)                   (8) 
Increase (Decrease) in trade payables                             (502)                   669 
Increase (Decrease) in other accounts 
 payable                                                             40                 (131) 
 
Net cash used in operating activities                             (389)                   (8) 
                                                               --------   ------------------- 
 
CASH FLOWS FOR INVESTING ACTIVITIES: 
Purchases of property, plant and equipment                         (18)                 (220) 
Proceeds from sales of property, plant 
 and equipment                                                        -                    53 
Increase in short-term deposits                                    (89)                   (1) 
Cost of intangible assets                                         (281)                 (297) 
 
Net cash used in investing activities                             (388)                 (465) 
                                                               --------   ------------------- 
 
CASH FLOWS FROM FINANCING ACTIVITIES: 
Receipt (Repayment) of short-term 
 bank credit, net                                                  (54)                    51 
Receipt (Repayment) of short-term 
 bank loan, net                                                     739                 (462) 
Receipt of convertible unsecured loans,                             290                     - 
 net 
Proceeds from related parties, net                                   57                    87 
Payment for leasehold liabilities                                 (162)                 (128) 
Receipt of long-term loans                                          312                   290 
Repayment of long-term loans                                      (299)                  (76) 
Consideration from issue of shares, 
 net                                                                  -                   780 
                                                               --------   ------------------- 
 
Net cash provided by financing activities                           883                   542 
                                                               --------   ------------------- 
 
Increase in cash and cash equivalents                               106                    69 
Cash and cash equivalents at the beginning 
 of the year                                                        158                    89 
                                                               --------   ------------------- 
Cash and cash equivalents at the end 
 of the year                                                        264                   158 
                                                               ========   =================== 
 
Appendix A - Additional Information 
Interest paid during the year                                      (69)                  (30) 
                                                               ========   =================== 
 
 Appendix B - Non-Cash Financing Activities 
 
Issuance of shares to a related party 
 in payment of debt                                                  74                    15 
                                                               ========   =================== 
 
                       Significant non-cash transactions (entering into new lease agreements) 
                                                                    are disclosed in Note 2 2 
 
 

The accompanying notes are an integral part of the consolidated financial statements.

STARCOM PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

 
 NOTE 1     GENERAL 
  - 
 
           a.   The Reporting Entity 
                1. Starcom PLC ("the Company") was incorporated in 
                 Jersey on November 28, 2012. The Company and its subsidiaries 
                 ("the Group") specializes in easy-to-use practical 
                 wireless solutions that combine advanced technology, 
                 telecommunications and digital data for the protection 
                 and management of people, fleets of vehicles, containers 
                 and assets. The Group engages in production, marketing, 
                 distribution, research and development of G.P.S. systems. 
 
                    The Company fully owns Starcom G.P.S. Systems Ltd., 
                     an Israeli company, and Starcom Systems Limited, a 
                     company incorporated in Jersey. 
 
                     The Company's shares are admitted for trading on the 
                     AIM market of the London Stock Exchange ("AIM"). 
 
                     The address of the official Company office in Israel 
                     of Starcom G.P.S. Systems Ltd. is: 16A Ha'Taas Street, 
                     Kfar Saba, Israel. 
 
                     The address of the Company's registered office in 
                     Jersey of Starcom Systems Limited is: Forum 4, Grenville 
                     Street, St. Helier, Jersey, Channel Islands, JE4 8TQ. 
 
            b.    Definitions in these financial statements: 
 
                  1.   International Financial Reporting Standards ("IFRS") 
                        - Standards and interpretations adopted by the 
                        International Accounting Standards Board ("IASB") 
                        that include international financial reporting 
                        standards (IFRS) and international accounting standards 
                        (IAS), with the addition of interpretations to 
                        these Standards as determined by the International 
                        Financial Reporting Interpretations Committee (IFRIC) 
                        or interpretations determined by the Standards 
                        Interpretation Committee (SIC), respectively. 
 
                  2.   The Company - Starcom PLC. 
 
                  3.   The Subsidiaries - Starcom G.P.S. Systems Ltd. 
                        and Starcom Systems Limited. 
                  4.   Starcom Jersey - Starcom Systems Limited. 
                  5.   Starcom Israel - Starcom G.P.S. Systems Ltd. 
                  6.   The Group - Starcom PLC. and the Subsidiaries. 
                  7.   Related Party - As determined in International 
                        Accounting Standard No. 24. 
 
 
 
              c.      Operating Turnover Period 
                      The ordinary operating period turnover for the Group 
                       is a year. As a result, the current assets and current 
                       liabilities include items that are expected and intended 
                       to be realized at the end of the ordinary operating 
                       turnover period for the Group. 
 
              d.      Functional and Presentation Currency 
                      The consolidated financial statements are presented 
                       in U.S. dollars (hereinafter: "dollars") that is the 
                       functional currency of the Group and is rounded to 
                       the nearest thousands, except when otherwise indicated. 
                      The dollar is the currency that represents the economic 
                       environment in which the Group operates. 
                      The Group's transactions and balances denominated 
                       in dollars are presented at their original amounts. 
                       Non-dollar transactions and balances have been remeasured 
                       to dollars. All transaction gains and losses from 
                       remeasurement of monetary assets and liabilities denominated 
                       in non-dollar currencies are reflected in the statements 
                       of comprehensive income as financial income or expenses, 
                       as appropriate. 
 
              a.      Declaration in regard to implementation of International 
                       Financial Reporting Standards (IFRS) 
                           The consolidated financial statements of the Company 
                            have been prepared in accordance with IFRS and related 
                            clarifications published by the IASB. 
                            The Company's Board of Directors authorized the Consolidated 
                            Financial Statements on March 24, 2021. 
 
              b.      Basis of Measurement 
                      The consolidated financial statements have been prepared 
                       on the historical cost basis, except for financial 
                       instruments at fair value through profit or loss that 
                       are stated at fair value. 
 
  NOTE 2B        USE OF ESTIMATES AND JUDGMENTS 
   - 
 
                 The preparation of financial statements in conformity 
                  with IFRS requires management to make judgments, estimates 
                  and assumptions that affect the application of accounting 
                  policies and the reported amounts of assets, liabilities, 
                  income and expenses. Actual results may differ from these 
                  estimates. 
 
                 Upon formulation of accounting estimates used in preparation 
                  of the Group financial statements, management is required 
                  to make assumptions in regard to circumstances and events 
                  that are significantly uncertain. Management arrives 
                  at these decisions based on prior experiences, various 
                  facts, external items and reasonable assumptions in accordance 
                  with the circumstances related to each assumption. 
                 Estimates and underlying assumptions are reviewed on 
                  an ongoing basis. Revisions to accounting estimates are 
                  recognized in the period in which the estimates are revised 
                  and in any future periods affected. 
 
                 Information about critical judgment in applying accounting 
                  policies that have a significant effect on the amounts 
                  recognized in the consolidated financial statements is 
                  included in the following Notes: 
                 Note 7 - Capitalization of development costs and amortization 
                  of these costs. 
                 Note 14 - Options issued. 
                 Information about assumptions and estimations that have 
                  significant risk of resulting in a material adjustment 
                  is included in the following Notes: 
                 Note 3B - Allowance for doubtful accounts. 
                 Note 7 - Calculation of amortization. 
                 Note 8 - Utilization of tax losses. 
                 Note 11 - Financial liabilities of convertible loans 
                  and warrants 
 
  NOTE 2C        SIGNIFICANT ACCOUNTING POLICIES 
   - 
 
                    a.       Basis of consolidation 
                             All intra-Group transactions, balances, income and 
                              expenses of the companies are eliminated on consolidation. 
 
                    b.       Foreign currency and linkage basis 
 
                             Balances stated in foreign currency or linked to a 
                              foreign currency have been included in the consolidated 
                              financial statements according to the prevailing representative 
                              exchange rates at the balance sheet date. Balances 
                              linked to the Consumer Price Index in Israel are included 
                              in accordance with the Index published prior to balance 
                              sheet date. Linkage and exchange rate differences 
                              are included in the statement of comprehensive income 
                              when incurred. 
 
                                                                                     As of December 31, 
                                                                            2020                 2019 
                              CPI (in points) *                            124.19                   125.06 
                             Exchange Rate of NIS in 
                              U.S. $                                       0.311                0.289 
                                                                         For the Year Ended December 
                                                                          31, 
                                                                            2020                    2019 
                             Change in CPI                                (0.69%)                0.6% 
                             Change in Exchange Rate 
                              of NIS                                        7.6%                 8.3% 
                             * Base Index 2002 = 100. 
 
 
 
                   c.     Financial instruments 
                          (i) Non-derivative financial assets 
                          The Group initially recognizes loans and receivables 
                           on the date that they are originated. All other financial 
                           assets (including assets designated as at fair value 
                           through profit or loss) are recognized initially on 
                           the trade date, which is the date that the Group becomes 
                           a party to the contractual provisions of the instrument. 
 
                          The Group derecognizes a financial asset when the 
                           contractual rights to the cash flows from the asset 
                           expire, or it transfers the rights to receive the 
                           contractual cash flows in a transaction in which substantially 
                           all the risks and rewards of ownership of the financial 
                           asset are transferred. Any interest in such transferred 
                           financial assets that is created or retained by the 
                           Group is recognized as a separate asset or liability. 
 
                          Financial assets and liabilities are offset and the 
                           net amount presented in the statement of financial 
                           position when, and only when, the Group has a legal 
                           right to offset the amounts and intends either to 
                           settle on a net basis or to realize the asset and 
                           settle the liability simultaneously. 
 
                          The Group classified non-derivative financial assets 
                           into the following categories: Financial assets at 
                           fair value, through profit or loss, held-to-maturity 
                           financial assets, loans and receivables, and available-for-sale 
                           financial assets. 
 
                          Financial assets at fair value through profit or loss: 
                          A financial asset is classified as at fair value through 
                           profit or loss if it is classified as held for trading 
                           or is designated as such on initial recognition. Financial 
                           assets are designated as at fair value through profit 
                           or loss if the Group manages such investments and 
                           makes purchase and sale decisions based on their fair 
                           value in accordance with the Group's documented risk 
                           management or investment strategy. Attributable transaction 
                           costs are recognized in profit or loss as incurred. 
                           Financial assets at fair value through profit or loss 
                           are measured at fair value and changes therein, which 
                           take into account any dividend income, are recognized 
                           in profit or loss. 
 
                          Financial assets designated as at fair value through 
                           profit or loss comprise equity securities that otherwise 
                           would have been classified as available for sale. 
 
                          Loans and receivables: 
                          Loans and receivables are financial assets with fixed 
                           or determinable payments that are not quoted in an 
                           active market. Such assets are recognized initially 
                           at fair value plus any directly attributable transaction 
                           costs. Subsequent to initial recognition, loans and 
                           receivables are measured at amortized cost using the 
                           effective interest method, less any impairment losses. 
                          Loans and receivables are comprised of trade and other 
                           receivables, excluding short -term trade and other 
                           receivables where the interest amount is immaterial. 
 
                          (ii) Non-derivative financial liabilities 
                          The Group initially recognizes debt securities issued 
                           and subordinated liabilities on the date that they 
                           originated. All other financial liabilities (including 
                           liabilities designated as at fair value through profit 
                           or loss) are recognized initially on the trade date, 
                           which is the date that the Group becomes a party to 
                           the contractual provisions of the instrument. 
 
                          The Group derecognizes a financial liability when 
                           its contractual obligations are discharged, cancelled 
                           or expire. 
 
                          The Group classifies non-derivative financial liabilities 
                           into the other financial liabilities category. Such 
                           financial liabilities are recognized initially at 
                           fair value less any directly attributable transaction 
                           costs. Subsequent to initial recognition, these financial 
                           liabilities are measured at amortized cost using the 
                           effective interest method. 
 
                          Other financial liabilities comprise loans and borrowings, 
                           bank overdrafts, and trade and other payables. 
 
                          (iii) Compound financial instruments 
                          Compound financial instruments issued by the Company 
                           comprised: an interest-bearing loan with a conversion 
                           option issued to the lender. 
 
                          The option component was recognized initially at its 
                           fair value using a binomial calculation. 
 
                          The liability component was recognized initially as 
                           the difference between the loan amount and the option 
                           component 
 
                          Any directly attributable transaction costs are allocated 
                           to the liability and equity components in proportion 
                           to their initial carrying amounts. 
 
                          Subsequent to initial recognition, the liability component 
                           of a compound financial instrument is measured at 
                           amortized cost using the effective interest method. 
                           The equity component of a compound financial instrument 
                           is not remeasured subsequent to initial recognition. 
 
                          Interest related to the financial liability is recognized 
                           in profit or loss. 
 
                         d.           Cash and cash equivalents 
                                      Cash and cash equivalents comprise cash balances and 
                                       call deposits with maturities of three months or less 
                                       from the acquisition date that are subject to an insignificant 
                                       risk of changes in their fair value and are used by 
                                       the Group in the management of its short-term commitments. 
 
                         e.           Share capital 
                                      Ordinary shares: 
                                      Ordinary shares are classified as equity. Incremental 
                                       costs directly attributable to the issue of ordinary 
                                       shares are recognized as a deduction from equity, 
                                       net of any tax effects. 
 
                         f.           Property, plant and equipment 
                                      Property, plant and equipment are measured at cost 
                                       less accumulated depreciation. 
                                      Depreciation is calculated using the straight-line 
                                       method over the estimated useful lives of the assets, 
                                       at the following annual rates: 
                                                                                                % 
                                                                                     ---------------------- 
                                      Computers and software                                   33 
                                      Office furniture and equipment                         7 - 15 
                                      Vehicles                                                 15 
                                      Laboratory equipment                                     15 
                                      Leasehold improvements                                   10 
 
                                      Leasehold improvements are depreciated by the straight-line 
                                       method over the term of the lease, ten-year period, 
                                       (including option terms) or the estimated useful lives 
                                       of the improvements, unless it is reasonably certain 
                                       that the Group will obtain ownership by the end of 
                                       the lease term. 
 
                                      At each balance sheet date, the Group examines the 
                                       residual value, the useful life and the depreciation 
                                       method it uses. If the Group identifies material changes 
                                       in the expected residual value, the useful life or 
                                       the future pattern of consumption of future economic 
                                       benefits in the asset that may indicate that a change 
                                       in the depreciation is required, such changes are 
                                       treated as changes in accounting estimates. In the 
                                       reported periods, no material changes have taken place 
                                       with any material effect on the financial statements 
                                       of the Group. 
 
                            g.        Intangible assets: Research and 
                                       development 
                                      Expenditure on research activities, undertaken with 
                                       the prospect of gaining new scientific or technical 
                                       knowledge and understanding, is recognized in profit 
                                       or loss as incurred. 
 
                                      Development activities involve a plan or design for 
                                       the production of new or substantially improved products 
                                       and processes. Development expenditure is capitalized 
                                       only if development costs can be measured reliably, 
                                       the product or process is technically and commercially 
                                       feasible, future economic benefits are probable, and 
                                       the Group intends and has sufficient resources to 
                                       complete development and to use or sell the asset. 
 
                                      The expenditure capitalized includes the cost of materials, 
                                       direct labor, overhead costs that are directly attributable 
                                       to preparing the asset for its intended use. Other 
                                       development expenditure is recognized in profit or 
                                       loss as incurred. 
 
                   Expenditure on research activities, undertaken with 
                    the prospect of gaining new scientific or technical 
                    knowledge and understanding, is recognized in profit 
                    or loss as incurred. 
                   Capitalized development expenditure is measured at 
                    cost less accumulated amortization and accumulated 
                    impairment losses. Amortization is calculated using 
                    the straight-line method over the estimated useful 
                    lives of the assets: ten years. 
 
                   At each balance sheet date, the Group reviews whether 
                    any events have occurred or changes in circumstances 
                    have taken place, which might indicate that there 
                    has been an impairment of the intangible assets. When 
                    such indicators of impairment are present, the Group 
                    evaluates whether the carrying value of the intangible 
                    asset in the Group's accounts can be recovered from 
                    the cash flows anticipated from that asset, and, if 
                    necessary, records an impairment provision up to the 
                    amount needed to adjust the carrying amount to the 
                    recoverable amount. 
 
                   h.     Short-term deposit 
                   Deposits with maturities of more than three months 
                    but less than one year are included in short-term 
                    deposits. 
 
                   i.     Leases 
                   The Group assesses at contract inception whether a 
                    contract is, or contains, a lease. That is, if the 
                    contract conveys the right to control the use of an 
                    identified asset for a period of time in exchange 
                    for consideration. 
 
                   Group as a lessee 
                   The Group applies a single recognition and measurement 
                    approach for all leases, except for short-term leases 
                    and leases of low-value assets. The Group recognizes 
                    lease liabilities to make lease payments and right-of-use 
                    assets representing the right to use the underlying 
                    assets. 
                   1. Right-of-use assets 
                      The Group recognizes right-of-use assets at the commencement 
                       date of the lease (i.e., the date the underlying asset 
                       is available for use). Right-of-use assets are measured 
                       at cost, less any accumulated depreciation and impairment 
                       losses, and adjusted for any remeasurement of lease 
                       liabilities. The cost of right-of-use assets includes 
                       the amount of lease liabilities recognized, initial 
                       direct costs incurred, and lease payments made at 
                       or before the commencement date less any lease incentives 
                       received. Right-of-use assets are depreciated on a 
                       straight-line basis over the shorter of the lease 
                       term and the estimated useful lives of the assets, 
                       as follows: 
                      Property - 3 to 4 years 
                      Vehicles - 3 years 
                      If ownership of the leased asset transfers to the 
                       Group at the end of the lease term or the cost reflects 
                       the exercise of a purchase option, depreciation is 
                       calculated using the estimated useful life of the 
                       asset. 
                      The right-of-use assets are also subject to impairment. 
                       Refer to the accounting policies in Note 2C(k). 
                                      2. Lease liabilities 
                                         At the commencement date of the lease, the Group recognizes 
                                          lease liabilities measured at the present value of 
                                          lease payments to be made over the lease term. The 
                                          lease payments include fixed payments (including in 
                                          substance fixed payments) less any lease incentives 
                                          receivable, variable lease payments that depend on 
                                          an index or a rate, and amounts expected to be paid 
                                          under residual value guarantees. The lease payments 
                                          also include the exercise price of a purchase option 
                                          reasonably certain to be exercised by the Group and 
                                          payments of penalties for terminating the lease, if 
                                          the lease term reflects the Group exercising the option 
                                          to terminate. 
                                          Variable lease payments that do not depend on an index 
                                          or a rate are recognized as expenses (unless they 
                                          are incurred to produce inventories) in the period 
                                          in which the event or condition that triggers the 
                                          payment occurs. 
                                         In calculating the present value of lease payments, 
                                          the Group uses its incremental borrowing rate at the 
                                          lease commencement date because the interest rate 
                                          implicit in the lease is not readily determinable. 
                                          After the commencement date, the amount of lease liabilities 
                                          is increased to reflect the accretion of interest 
                                          and reduced for the lease payments made. In addition, 
                                          the carrying amount of lease liabilities is remeasured 
                                          if there is a modification, a change in the lease 
                                          term, a change in the lease payments (e.g., changes 
                                          to future payments resulting from a change in an index 
                                          or rate used to determine such lease payments) or 
                                          a change in the assessment of an option to purchase 
                                          the underlying asset. 
                                      3. Short-term leases and leases of low-value assets 
                                         The Group applies the short-term lease recognition 
                                          exemption to its short-term leases of machinery and 
                                          equipment (i.e., those leases that have a lease term 
                                          of 12 months or less from the commencement date and 
                                          do not contain a purchase option). It also applies 
                                          the lease of low-value assets recognition exemption 
                                          to leases of office equipment that are considered 
                                          to be low value. Lease payments on short-term leases 
                                          and leases of low value assets are recognized as an 
                                          expense on a straight-line basis over the lease term. 
 
                         j.              Inventories 
                                      Inventories are stated at the lower of cost or net 
                                       market value. 
                                      Cost is determined using the "first-in, first -out" 
                                       method. 
                                      Inventory write-downs are provided to cover risks 
                                       arising from slow-moving items, technological obsolescence, 
                                       excess inventories, and discontinued products and 
                                       for market prices lower than cost, if any. At the 
                                       point of loss recognition, a new lower cost basis 
                                       for that inventory is established. 
 
                   k.     Impairment in value of assets 
                   During every financial period, the Group examines 
                    the book value of its tangible and intangible assets 
                    to determine any signs of loss from impairment in 
                    value of these assets. In the event that there are 
                    signs of impairment, the Group examines the realization 
                    value of the designated asset. In the event that the 
                    realization cannot be measured for an individual asset, 
                    the Group estimates realization value for the unit 
                    where the asset belongs. Joint assets are assigned 
                    to the units yielding cash on the same basis. Joint 
                    assets are designated to the smallest groups of yielding 
                    assets for which one can identify a reasonable basis 
                    that is consistent with the allocation. 
 
                   The realization value is the higher of net sale price 
                    of the asset as compared with its useful life that 
                    is determined by the present value of projected cash 
                    flows to be realized from this asset and its realization 
                    value at the end of its useful life. 
                    In the event that the book value of the asset or cash-yielding 
                    unit is greater than its realization value, a devaluation 
                    of the asset has occurred in the amount of the difference 
                    between its book value and its realization value. 
                    This amount is recognized immediately in the statements 
                    of comprehensive income. 
 
                   In the event that prior devaluation of an asset is 
                    nullified, the book value of the asset or of the cash-yielding 
                    unit is increased to the estimated current fair value, 
                    but not in excess of the asset or cash-yielding unit 
                    book value that would have existed had there not been 
                    devaluation. Such nullification is recognized immediately 
                    in the statements of comprehensive income. 
 
                   l.     Revenue recognition 
                   The Group generates revenues from sales of products, 
                    which include hardware and software, software licensing, 
                    professional services and maintenance. Professional 
                    services include mainly installation, project management, 
                    customization, consulting and training. The Group 
                    sells its products indirectly through a global network 
                    of distributors, system integrators and strategic 
                    partners, all of whom are considered end-users, and 
                    through its direct sales force. 
 
                   Revenue from products and software licensing is recognized 
                    when persuasive evidence of an agreement exists, delivery 
                    of the product has occurred, the fee is fixed or determinable 
                    and collectability is probable. 
                   Revenues from maintenance and professional services 
                    are recognized ratably over the contractual period 
                    or as services are performed, respectively. 
                          Allowance for doubtful accounts 
                  m 
                  . 
                          The Group evaluates its allowance for doubtful accounts 
                           on a regular basis through periodic reviews of the 
                           collectability of the receivables in light of historical 
                           experience, adverse situations that may affect the 
                           repayment abilities of its customers, and prevailing 
                           economic conditions. This evaluation is inherently 
                           subjective, as it requires estimates that are susceptible 
                           to significant revision as more information becomes 
                           available. 
                          The Group performs ongoing credit evaluations of its 
                           customers and generally does not require collateral 
                           because (1) management believes it has certain collection 
                           measures in-place to limit the potential for significant 
                           losses, and (2) because of the nature of its customers 
                           that comprise the Group's customer base. Receivables 
                           are written off when the Group abandons its collection 
                           efforts. An allowance for doubtful accounts is provided 
                           with respect to those amounts that the Group has determined 
                           to be doubtful of collection. 
 
                   n.     Concentrations of credit risk 
                   Financial instruments that potentially subject the 
                    Group to concentrations of credit risk consist principally 
                    of cash and cash equivalents, short-term deposits 
                    and trade receivables. 
 
                   o.     Provisions 
                   Provisions are recognized when the Group has a current 
                    obligation (legal or derived) as a result of a past 
                    occurrence that can be reliably measured, that will 
                    in all probability result in the Group being required 
                    to provide additional benefits in order to settle 
                    this obligation. Provisions are determined by capitalization 
                    of projected cash flows at a rate prior to taxes that 
                    reflects the current market preparation for the money 
                    duration and the specific risks for the liability. 
 
                   p.     Employee benefits 
                   The Group has several benefit plans for its employees: 
 
                     1.   Short-term employee benefits - 
                           Short-term employee benefits include salaries, 
                            vacation days, recreation and deposits to the National 
                            Insurance Institute that are recognized as expenses 
                            when rendered. 
                      2.   Benefits upon retirement - 
                           Benefits upon retirement, generally funded by deposits 
                            to insurance companies and pension funds, are classified 
                            as restricted deposit plans or as restricted benefits. 
                            All Group employees have restricted deposit plans, 
                            in accordance with Section 14 of the Severance 
                            Pay Law (Israel), whereby the Group pays fixed 
                            amounts without bearing any legal responsibility 
                            to pay additional amounts thereto even if the fund 
                            did not accumulate enough amounts to pay the entire 
                            benefit amount to the employee that relates to 
                            the services he rendered during the current and 
                            prior periods. Deposits to the restricted plan 
                            are classified as for benefits or for compensation 
                            and are recognized as an expense upon deposit to 
                            the plan concurrent with receiving services from 
                            the employee and no additional provision is required 
                            in the financial statements. 
                   q.     Finance income and expenses 
                   Finance income includes interest in regard to invested 
                    amounts, changes in the fair value of financial assets 
                    presented at fair value in the statements of comprehensive 
                    income and gains from changes in the exchange rates 
                    and interest income that are recognized upon accrual 
                    using the effective interest method. 
                   Finance expenses include interest on loans received, 
                    changes in the time estimate of provisions, changes 
                    in the fair value of financial assets presented at 
                    fair value in the statements of comprehensive loss 
                    and losses from changes in value of financial assets. 
                   Gains and losses from exchange rate differences are 
                    reported net. Exchange rate differences in regard 
                    to issuance of shares are charged to equity. 
 
                   r.     Taxes 
                   Tax expense comprises current and deferred tax. Current 
                    tax and deferred tax are recognized in profit or loss 
                    except to the extent that they relate to a business 
                    combination, or items recognized directly in equity 
                    or in other comprehensive income. 
 
                   Current tax is the expected tax payable or receivable 
                    on the taxable income or loss for the year, using 
                    tax rates enacted or substantively enacted at the 
                    reporting date, and any adjustment to tax payable 
                    in respect of previous years. Current tax payable 
                    also includes any tax liability arising from the declaration 
                    of dividends. 
 
                   Deferred tax is recognized in respect of temporary 
                    differences between the carrying amounts of assets 
                    and liabilities for financial reporting purposes and 
                    the amounts used for taxation purposes. 
 
                   Deferred tax is not recognized for: 
            --          Temporary differences on the initial recognition 
                         of assets or liabilities in a transaction that is 
                         not a business combination and that affects neither 
                         accounting nor taxable profit or loss; 
            --          Temporary differences related to investments in 
                         subsidiaries and jointly controlled entities to 
                         the extent that it is probable that they will not 
                         reverse in the foreseeable future; and 
            --          Taxable temporary differences arising on the initial 
                         recognition of goodwill. 
 
            Deferred tax is measured at the tax rates that are 
             expected to be applied to temporary differences when 
             they reverse, using tax rates enacted or substantively 
             enacted at the reporting date. 
            Deferred tax assets and liabilities are offset if 
             there is a legally enforceable right to offset current 
             tax liabilities and assets, and they relate to taxes 
             levied by the same Tax Authority on the same taxable 
             entity, or on different tax entities, but they intend 
             to settle current tax liabilities and assets on a 
             net basis or their tax assets and liabilities will 
             be realized simultaneously. 
                   Since there is uncertainty in regard to existence 
                    of taxable revenues in the near future, a deferred 
                    tax asset was not recognized. 
                   A deferred tax asset is recognized for unused tax 
                    losses, tax credits and deductible temporary differences 
                    to the extent that it is probable that future taxable 
                    profits will be available against which they can be 
                    utilized. Deferred tax assets and liabilities are 
                    reviewed at each reporting date and are reduced to 
                    the extent that it is no longer probable that the 
                    related tax benefit (taxes on income) will be realized. 
 
                   s.     Basic and Diluted Earnings per Share 
                   Basic earnings per share are computed based on the 
                    weighted average number of common shares outstanding 
                    during each year. 
                    Diluted earnings per share are computed based on the 
                    weighted average number of common shares outstanding 
                    during each year, plus dilutive potential common shares 
                    considered outstanding during the year. 
 
                   t.     Statement of cash flows 
                   The statement of cash flows from current operations 
                    is presented using the indirect method, whereby interest 
                    amounts paid and received by the Group are included 
                    in the cash flows in current operations. 
 
                   u.     Dividend distribution 
                   Dividend distribution to the Company's shareholders 
                    is recognized as a liability in the Group's financial 
                    statements in the period in which the dividends are 
                    approved by the Group's shareholders. 
 
                   v.     Segment reporting 
                   Segment results that are reported to the CEO include 
                    items directly attributable to a segment as well as 
                    those that can be allocated on a reasonable basis. 
                    Unallocated items comprise mainly corporate assets, 
                    head office expenses and tax. 
 
                  w.      Government grants 
                   A government grant is not recognized until there is 
                    reasonable assurance that the Group will comply with 
                    the conditions attaching to it, and that the grant 
                    will be received. The Group received government grants, 
                    the nature of which is compensation for a decrease 
                    in revenues, the Group decided to record the grants 
                    received by the Government of Israel as revenues. 
 
                  x.       New standards, interpretations and amendments adopted 
                            by the Group 
                  1.      Amendments to IAS 1 and IAS 8 Definition of Material 
                           The amendments provide a new definition of material 
                           that states, "information is material if omitting, 
                           misstating or obscuring it could reasonably be expected 
                           to influence decisions that the primary users of general-purpose 
                           financial statements make on the basis of those financial 
                           statements, which provide financial information about 
                           a specific reporting entity." The amendments clarify 
                           that materiality will depend on the nature or magnitude 
                           of information, either individually or in combination 
                           with other information, in the context of the financial 
                           statements. A misstatement of information is material 
                           if it could reasonably be expected to influence decisions 
                           made by the primary users. These amendments had no 
                           impact on the consolidated financial statements of, 
                           nor is there expected to be any future impact to the 
                           Group. 
                  2.      Conceptual Framework for Financial Reporting issued 
                           on 29 March 2018 
                           The Conceptual Framework is not a standard, and none 
                           of the concepts contained therein override the concepts 
                           or requirements in any standard. The purpose of the 
                           Conceptual Framework is to assist the IASB in developing 
                           standards, to help preparers develop consistent accounting 
                           policies where there is no applicable standard in 
                           place and to assist all parties to understand and 
                           interpret the standards. This will affect those entities 
                           which developed their accounting policies based on 
                           the Conceptual Framework. The revised Conceptual Framework 
                           includes some new concepts, updated definitions and 
                           recognition criteria for assets and liabilities and 
                           clarifies some important concepts. These amendments 
                           had no impact on the consolidated financial statements 
                           of the Group. 
 
                  3.      Amendments to IFRS 16 Covid-19 Related Rent Concessions 
                           On 28 May 2020, the IASB issued Covid-19-Related Rent 
                           Concessions - amendment to IFRS 16 Leases The amendments 
                           provide relief to lessees from applying IFRS 16 guidance 
                           on lease modification accounting for rent concessions 
                           arising as a direct consequence of the Covid-19 pandemic. 
                           As a practical expedient, a lessee may elect not to 
                           assess whether a Covid-19 related rent concession 
                           from a lessor is a lease modification. A lessee that 
                           makes this election accounts for any change in lease 
                           payments resulting from the Covid-19 related rent 
                           concession the same way it would account for the change 
                           under IFRS 16, if the change were not a lease modification. 
                           The amendment applies to annual reporting periods 
                           beginning on or after 1 June 2020. Earlier application 
                           is permitted. This amendment had no impact on the 
                           consolidated financial statements of the Group. 
 
 
 
  NOTE 3A    OTHER ACCOUNTS RECEIVABLE 
   - 
                                                    December 31 
                                            2020          2019 
                                        ------------  ----------- 
  Government institutions                         78          119 
  Prepaid expenses                                 3           50 
                                        ------------  ----------- 
                                                  81          169 
                                        ============  =========== 
 
 
 NOTE 3B    TRADE RECEIVABLES, NET 
  - 
                                                  December 31 
                                          2020          2019 
                                      ------------  ----------- 
  Group receivables                          1,736        2,045 
  Allowance for doubtful 
   accounts                                  (607)         (59) 
                                             1,129        1,986 
                                      ============  =========== 
 
 
 NOTE 4    INVENTORIES 
  - 
                               December 31 
                              2020    2019 
                             ------  ------ 
  Raw materials               1,284   1,470 
  Finished goods                843     876 
                             ------  ------ 
                              2,127   2,346 
                             ======  ====== 
 
 
 NOTE 5   SHORT-TERM BANK DEPOSIT 
  - 
 
          The bank deposit sums of $150 and $61 as of December 
           31, 2020 and 2019, respectively, serve as a security 
           deposit for repayment of bank loans in accordance with 
           terms of the loans. The deposit bears yearly interest 
           at the rate of 0.02%. 
 
 
 NOTE 6   PROPERTY, PLANT AND EQUIPMENT, NET 
  - 
 
 
                                          Office 
                         Computers       Furniture 
                        and Software   and Equipment     Laboratory      Leasehold 
                                                         Equipment      Improvements     Vehicles*     Total 
                      --------------  --------------  -------------  ---------------  ------------  -------- 
      Cost: 
      Balance as 
       of January 
 c     1, 2020                   194             121            279               60           152       806 
  Additions 
   during the 
   year                            6               6              6                -             -        18 
  Balance as 
   of December 
   31, 2020                      200             127            285               60           152       824 
                      --------------  --------------  -------------  ---------------  ------------  -------- 
 
      Accumulated 
       Depreciation: 
  Balance as 
   of January 
   1, 2020                       164              85             93               17            69       428 
  Depreciation 
   during the 
   year                           13               8             30                6            21        78 
  Balance as 
   of December 
   31, 2020                      177              93            123               23            90       506 
                      --------------  --------------  -------------  ---------------  ------------  -------- 
 
  Net book value 
   as of December 
   31, 2020                       23              34            162               37            62       318 
                      ==============  ==============  =============  ===============  ============  ======== 
 
 

* See also Note 13.

 
   NOTE 7            INTANGIBLE ASSETS , NET 
    - 
 
                                                                                         Total 
                                                                                    -------------- 
                     Cost: 
                     Balance as of January 1, 2020                                           4,755 
                     Additions during the year                                                 281 
                     Balance as of December 31, 2020                                         5,036 
                                                                                    -------------- 
 
                     Accumulated Amortization: 
                     Balance as of January 1 ,2020                                         (2,434) 
                     Amortization during the year                                            (500) 
                     Balance as of December 31, 2020                                       (2,934) 
                                                                                    -------------- 
 
                     Accumulated Impairment of assets                                    (202) 
                                                                                    -------------- 
                     Net book value as of December 31, 
                      2020                                                                   1,900 
                                                                                    ============== 
 
                                                                                         Total 
                                                                                    -------------- 
                     Cost: 
                     Balance as of January 1, 2019                                          4, 458 
                     Additions during the year                                                 297 
                     Balance as of December 31, 2019                                         4,755 
                                                                                    -------------- 
 
                     Accumulated Amortization: 
                                                                                           (1, 977 
                     Balance as of January 1, 2019                                               ) 
 
                     Amortization during the year                                            (457) 
                     Balance as of December 31, 2019                                      (2,434) 
                                                                                    -------------- 
 
                     Accumulated Impairment of assets                                    (202) 
                                                                                    -------------- 
                     Net book value as of December 31, 
                      2019                                                                2,119 
                                                                                    ============== 
 
                The expenditure capitalized includes the cost of materials and 
                 direct labor that are directly attributable to preparing the 
                 assets for their intended use. Other development expenditure 
                 is recognized in profit or loss as incurred. 
 
                 Capitalized development expenditure is measured at cost less 
                 accumulated amortization and accumulated impairment losses. 
                 Amortization is calculated using the straight-line method over 
                 the estimated useful lives of the assets: ten years. 
 
                 See also Note 2C g and Note 2C k. 
 
 
 
 NOTE 8   TAXES ON INCOME 
  - 
 
          a.   Israeli taxation 
               1.   The Israeli corporate tax rate for 2020 and 2019 
                     is 23%. 
               2.   Tax Benefits from the Encouragement of Capital 
                     Investments Law, 1959 ("The Encouragement Law") 
                    Starcom Israel presents its financial statements 
                     to the tax authorities as an Approved Enterprise. 
                     In the framework of the Law for Change of Priorities, 
                     an increase in tax rates was approved, commencing 
                     with 2014 and thereafter, on revenues from an approved 
                     enterprise, as stated in the Encouragement Law 
                     for an Approved Enterprise. An eligible company 
                     in Development Area A was entitled to a tax rate 
                     of 9% during 2015. During 2016 an amendment to 
                     the law was confirmed according to which an eligible 
                     company in Development Area A is entitled to a 
                     tax rate of 7.5% as of 2017. 
                     In an area that is not Development Area A, the 
                     tax rate will be 16%. 
                     Concurrently, the tax rate on dividend, for distribution 
                     from January 1, 2014, the source of which is preferred 
                     income as stated in the Encouragement Law, is 20%. 
                     Starcom Israel is subject to a tax rate of 16% 
                     for the years 2020 and 2019. 
               3.   Starcom Israel has carryforward operating tax losses 
                     of approximately NIS 30 million as of December 
                     31, 2020 (NIS 27 million as of December 31, 2019). 
                     As for deferred tax assets see Note 2C(r). 
                     Starcom Israel has been assessed by the Income 
                     Tax Authorities up to and including the year 2017. 
 
          b.   Jersey taxation 
               Taxable income of the Company and Starcom Jersey is 
                subject to tax at the rate of zero percent for the 
                years 2020 and 2019. 
 
          c.   Detail of tax income: 
               Since the recording of a deferred tax asset is limited 
                to the amount of deferred tax liabilities, no deferred 
                tax income will be recorded in 2020 or was recorded 
                in 2019. 
 
 
 NOTE 9    OTHER ACCOUNTS PAYABLE 
  - 
                                                    December 31 
                                             2020         2019 
                                         -----------  ----------- 
  Employees and payroll 
   accruals                                      303          223 
  Accrued expenses and notes 
   payable                                         -            4 
                                                 303          227 
                                         ===========  =========== 
 
 
 NOTE 10       LONG-TERM LOANS FROM BANKS, NET OF CURRENT MATURITIES 
  - 
 
 1.    Composition:                                                                                  December 31 
                                                                                             2020             2019 
                                                                                          ----------      ------------ 
       Long-term liability                                                                      31 5               303 
       Less: current maturities                                                                 (12)             (136) 
                                                                                          ----------      ------------ 
                                                                                                 303               167 
                                                                                          ==========      ============ 
 2.    Aggregate maturities of long-term loans for years subsequent 
        to December 31, 2020 are as follows: 
                                                                                                         Amount 
                                                                                                  -------------------- 
       First year                                                                                          12 
       Second year                                                                                         74 
       Third year                                                                                          74 
       Fourth onwards                                                                                      155 
                                                                                                           315 
                                                                                                  ==================== 
 3.            Additional information regarding long-term 
                loans: 
 
                                                Amount           Annual                                  Interest 
                                               Received          Interest        Loan Terms              Payment 
   Loan #        Date Received                  NIS (U.          Rate            and                     Terms 
                                              S. dollars)                        Maturity Dates 
              ----------------------      ----------------     ----------     ------------------      ---------------- 
                                                                               36 equal monthly 
                                                                               installments            Monthly 
                                                                               including                commencing 
                                                                  Prime        principal                20 March 
     1.        June 3, 2018                   150 ($40)           + 3.85       and interest             2018 
                                                                               48 equal monthly 
                                                                               installments 
                                                                               including 
                                                                               principal 
                                                                               and interest 
                                                                               (once year              Monthly 
                                                                               grace for                commencing 
                                                                  Prime        principal)               09 Dec 
     2.        Dec 09, 2020                 1,000 ($310)          + 1.5        *                        2020 
               See also Note 13. 
               * The loan is a state-guaranteed loan, received as assistance 
                due to the spread of the Covid -19 virus, the state pays 
                the interest for the first year. See also Note 25. 
 
 
 
 
 NOTE 11   FINANCIAL LIABILITIES OF CONVERTIBLE LOANS AND WARRANTS 
  - 
            During March 2020, The Company received from Directors 
            Michael Rosenberg (via Montrose Securities Ltd), Avi 
            Engel and Igor Vatenmacher and an employee (hereinafter: 
            "the lenders") loans in the total amount of $290 thousand 
            (GBP244 thousand) in the form of convertible loans enabling 
            the lenders to convert the loans at an exercise price 
            of GBP0.0125 per share at any time up to September 30, 
            2021, as detailed below: 
             Lender                               Value of Loan provided     Number of 
                                                                              Warrants 
                                                                              granted 
             Montrose Securities Limited, 
              a company controlled by 
              Michael Rosenberg (Non-Executive 
              Chairman)                           GBP100,000                 1,600,000 
                                                 -------------------------  ---------- 
                                                  429,330 Israeli 
                                                   Shekels 
             Avi Engel                             (approximately 
              (Non-Executive Director)             GBP100,000)               1,600,000 
                                                 -------------------------  ---------- 
                                                  100,000 Israeli 
             Igor Vatenmacher                      Shekels (approximately 
              (Chief Financial Officer)            GBP21,800)                400,000 
                                                 -------------------------  ---------- 
                                                  100,000 Israeli 
                                                   Shekels (approximately 
             Starcom Employee                      GBP21,800)                400,000 
                                                 -------------------------  ---------- 
 
 
  The convertible loan bears interest at the rate of 8% 
   per annum calculated by reference to the principal amount 
   of the convertible loan. If not converted, the loans 
   will be repayable on September 30, 2021. 
 
   In addition, the lenders received fully vested warrants 
   to subscribe a total of 4 million further shares at an 
   exercise price of GBP0.015 per share. Any unexercised 
   warrants expire at the end of two-years from grant. 
 
   The loan was evaluated and divided into different components 
   by independent appraisers as follows: 
   Conversion component at fair value - $59 thousand 
   Warrants at fair value - $12 thousand 
   Amortized cost of a loan - $210 thousand 
   Transaction costs were allocated according to the component's 
   fair value ratio. 
   The part of the expenses that is attributed to the amortized 
   cost of the loan was reduced from its cost. 
   An effective interest rate was calculated for the liability 
   component of the loan, based on its amortization table. 
   The effective interest rate is 35.2% per annum. 
   Total revaluation income regarding these components in 
   the statement of comprehensive loss for the reported 
   period amounted to $19 thousand, net. 
 
   See also Note 20. 
 
   Composition: 
                                    Loan component    Option   Warrant 
                                  -----------------  -------  --------- 
  Balance as of January                           -        -          - 
   1, 2020 
  Additions during the 
   year                                         210       59         12 
  Finance (income) expenses                      73     (17)        (2) 
  Payments                                     (29)        -          - 
                                  -----------------  -------  --------- 
  Balance as of December 
   31, 2020                                     254       42         10 
 
 
 
 NOTE 12     SHORT-TERM BANK LOAN 
 - 
 
             During July 2020, Starcom Israel signed a loan agreement 
             with an Israeli bank in order to receive loans and credits 
             in an aggregate principal amount that will not exceed 
             NIS 5 million (hereinafter - "the Loan"). 
             The loan will bear annual interest in the amount of Prime 
             + 3%, calculated and payable on a monthly basis, to be 
             repaid after a year. 
             In the framework of the financial agreement that was 
             signed, the Company is obligated to maintain financials 
             covenants in regard to the Groups' EBITDA, Equity and 
             growth targets. 
 
             As of December 31, 2020, the Company is in breach of 
             the financial covenants. 
 
 
 NOTE 13   CHARGES 
  - 
 
                  In respect of the short-term and long-term bank loans 
                  set out in Notes 10 and 12 above- 
           1.   A charge was placed on the Starcom Israel's vehicle. 
           2.   A floating pledge was placed on the assets of Starcom 
                 Israel. 
           3.   A cross Group charge was placed. 
           4.   A Pledge on the bank deposit of Starcom Israel was 
                 placed. 
 
 
 
 NOTE 14   EQUITY 
  - 
           a.   Composition - common stock of no-par value, issued 
                 and outstanding 351,479,801 shares and 345,329,513 
                 shares as of December 31, 2020 and December 31, 2019, 
                 respectively. 
           b.   A Company share grants to its holder voting rights, 
                 rights to receive dividends and rights to net assets 
                 upon dissolution. 
 
 
 
         c.      Share-based payment 
 
                  The following table lists the number of share options 
                  and warrants and the exercise prices of such during 
                  the current year: 
                                                   2020                   2019 
                                           ----------------------  --------------------- 
                                                        Weighted               Weighted 
                                                         average                average 
                                             Number      exercise  Number of    exercise 
                                            of options    price      options     price 
                                           -----------  ---------  ----------  --------- 
                                                    GBP                     GBP 
                                           ----------------------  --------------------- 
           Share options outstanding 
            at beginning of year            49,293,947      0.027  33,496,480      0.037 
           Warrants granted during 
            the year*                        4,000,000      0.015  16,290,000      0.007 
           Options & Warrants exercised 
            during the year                          -                      -          - 
           Options & Warrants expired 
            during the year                  3,340,000      0.018   (492,533)       0.04 
           Share options & warrants 
            outstanding at end of year      49,953,947      0.027  49,293,947      0.027 
                                           ===========  =========  ==========  ========= 
 
           Share options & warrants 
            exercisable at end of year      45,953,947      0.028  27,587,280      0.038 
                                           ===========  =========  ==========  ========= 
 
           * See Note 11. 
         d.      During May 2020 the Company issued 6,150,288 new ordinary 
                  shares to Mr. Avi Hartmann, the Company's CEO ("Ordinary 
                  Shares") at a price of 1 penny per Ordinary Share 
                  in order to convert $74 thousand (GBP61 thousand) 
                  of historic unpaid salary. 
 
 
 
            (*) 
 NOTE 15    COST OF SALES 
  - 
                                                 Year Ended December 
                                                  31, 
                                                   2020        2019 
                                                ----------  ---------- 
  Purchases and other                                2,655       3,883 
  Amortization                                         500         457 
  Decrease (Increase) in inventory                     219       (321) 
                                                     3,374       4,019 
                                                ==========  ========== 
 
 
 
 NOTE 16    GENERAL AND ADMINISTRATIVE EXPENSES 
  - 
 
                                                                  Year Ended December 
                                                                   31, 
                                                                   2020        2019 
                                                                 -------   ------------ 
            a. 
     Salaries and related expenses (see 
      also Note 20)                                                1,167          1,268 
       Professional services 
        (1)                                                          557            633 
       Doubtful accounts and 
        bad debts                                                    550             49 
       Depreciation                                                  225            216 
       Office maintenance                                            112            153 
       Car maintenance                                                69            104 
                                                                   2,680          2,423 
                                                                 =======   ============ 
 
         (1) Including share-based payment to directors and senior 
         management in the amounts of $181 and $255 thousand for 
         the years ended December 31, 2020 and 2019, respectively. 
         See also Note 1 4 c 
 
 

b . Average Number of Staff Members by Category:

 
 
                                     Year Ended December 
                                             31, 
                                      2020        2019 
                                   ----------  ---------- 
     Sales and marketing                    5           6 
     Research and development               3           3 
     General and administrative            12          15 
                                   ----------  ---------- 
                                           20          24 
                                   ==========  ========== 
 
 
 NOTE 17    OTHER INCOME (EXPENSES) 
  - 
                                                        Year Ended December 
                                                                31, 
                                                            2020        2019 
                                                      ----------  ---------- 
      Capital loss from sale of property, 
       plant and equipment                                     -        (51) 
      Other income (expenses)                                 24        (23) 
                                                              24        (74) 
                                                      ==========  ========== 
 
 
 NOTE 18A   FINANCE INCOME 
  - 
 
                                       2020     2019 
                                      -----    ----- 
            Interest from deposits        1        - 
 
 
 
 NOTE 18B - FINANCE EXPENSES 
  Exchange rate differences                               (140)          (183) 
  Interest to banks and 
   others                                                  (62)           (31) 
  Bank charges                                             (43)           (77) 
  Interest to suppliers                                    (16)           (13) 
  Interest to related parties                              (10)            (9) 
                                                          (271)          (313) 
                                                        -------   ------------ 
 
  Net finance expenses                                    (270)          (313) 
                                                        =======   ============ 
 
 
 
 NOTE 19    LOSS PER SHARE 
  - 
 
            Weighted average number of shares used in computing basic 
             and diluted loss per share: 
                                              Year Ended December 31, 
                                               2020              2019 
                                        -----------------  ---------------- 
  Number of shares                            349,205,039     323,934,018 
                                        =================  ================ 
 
 
 NOTE 20    RELATED PARTIES 
  - 
 
             a.   The related parties that own shares in the Group are: 
                  Mr. Avraham Hartman (7.0%), Mr. Uri Hartman (6.8%), 
                   Mr. Doron Kedem (6.8%). 
 
             b.   Short-term balances:                         December 31 
                                                           2020        2019 
                                                        ----------  --------- 
                  Credit balances 
                  Avi Hartmann                                (56)      (176) 
                  Uri Hartmann                               (444)      (373) 
                  Doron Kedem                                (173)      (173) 
                                                        ----------  --------- 
                  Total Credit Balance                       (673)      (722) 
                                                        ----------  --------- 
                  Loans 
                  Avi Hartmann                                  87         73 
                  Uri Hartmann                               (236)      (226) 
                  Doron Kedem                                  207        207 
                                                        ----------  --------- 
                  Total Loans                                   58         54 
                                                        ----------  --------- 
 
                                                             (615)      (668) 
                                                        ==========  ========= 
 
 
     c.   Shareholders' credit balances related to deferred 
           salaries and are linked to the New Israel Shekel ("NIS"). 
           Loans from shareholders accrue 4% annual interest. 
 
     d.     Transactions:                                      Year Ended December 
                                                               31, 
                                                                2020         2019 
                                                            ------------  ---------- 
          Key management compensation: 
   Total salaries and related expenses 
    for shareholders/related parties                              312          365 
                                                            ============  ========== 
   Total share-based payment                                     80           112 
                                                            ============  ========== 
   Interest to related parties                                   10            9 
                                                            ============  ========== 
 
     e.   Directors and the shareholders of the Group are each 
           entitled to benefits, in addition to salaries, that 
           include a vehicle, meals, cellular phones and a professional 
           enrichment fund. Concurrently, the Group deposits 
           for them amounts in a restricted benefit plan for 
           implementation upon completion of their employment. 
   See also Note 11 and Note 14. 
 
 
 NOTE 21       FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS 
  - 
          a.     Financial Risk Factors: 
                 The Group's operations expose it to a variety of financial 
                  risks, including: market, currency, credit and liquidity 
                  risks. The comprehensive Group plan for risk management 
                  focuses on the fact that it is not possible to predict 
                  financial market behavior and an effort to minimize 
                  possible negative effects on Company financial performance. 
                 In this Note, information is stated in regard to Group 
                  exposure to each of the risks abovementioned and the 
                  handling of these risks. Risk management and capital 
                  are handled by the Group management that identifies 
                  and evaluates financial risks. 
                 1)   Exchange rate risk 
                      Group operations are exposed to exchange rate risks 
                       arising mainly from exposure of loans that are 
                       linked to the NIS from banks, suppliers and others. 
                 2)   Credit risk 
                      Credit risks are handled at the Group level. These 
                       risks arise from cash and cash equivalents, bank 
                       deposits and unpaid receivable balances. The Group 
                       settled a credit insurance with one of the biggest 
                       credit insurance companies worldwide and manages 
                       its credit risk accordingly. Cash and cash equivalent 
                       balances of the Group are deposited in an Israeli 
                       bank. Group management is of the opinion that there 
                       is insignificant credit risk regarding these amounts. 
                 3)   Liquidity risks 
                      Cautious management of liquidity risks requires 
                       that there will be sufficient amounts of cash to 
                       finance operations. Group management currently 
                       examines projections regarding liquidity surpluses 
                       deriving from cash and cash equivalents. This examination 
                       is based on projected cash flows, in accordance 
                       with procedures and limitations determined by the 
                       Group. 
                       Short term loan covenants compliance is closely 
                       monitored by the financial department. 
          b.     Linkage terms of financial instruments: 
                 Group exposure to Index and foreign currency risks, 
                  based on par value, except for derivative financial 
                  instruments is as follows: 
 
 
 
                                                     December 31, 2020 
                           --------------------------------------------------------------------- 
                                      NIS                U.S.         GBP       Euro       Total 
                                                         Dollar 
                           ------------------------   ----------   --------   -------   ---------- 
                                          Variable 
                              Unlinked     Interest               Unlinked 
                           -----------   ----------   -------------------------------   -------- 
 
 Financial Assets: 
 Cash and cash 
  equivalents                        2            -          251          -        11        264 
 Short-term deposit                  -          150            -          -         -        150 
 Trade receivables, 
  net                              233            -          872          5        19      1,129 
 Other accounts 
  receivable                       132            -            -          5         -        137 
 
 Financial Liabilities: 
 Short-term bank credit              -         (25)            -          -         -       (25) 
 Short term bank loan                -        (739)            -          -         -      (739) 
 Trade payables                      -      (1,018)        (412)      (146)       (3)    (1,579) 
 Other accounts payable          (303)            -            -          -         -      (303) 
 Leasehold liabilities               -        (372)            -          -         -      (372) 
 Related parties                     -        (615)            -          -         -      (615) 
 Long-term loans from 
  banks                              -        (315)            -          -         -      (315) 
 Financial liabilities 
  of convertible loans               -        (196)            -      (110)         -      (306) 
                                    64      (3,130)          711      (246)        27    (2,574) 
                           ===========   ==========   ==========   ========   =======   ======== 
 
 
 
                                                        December 31, 2019 
                             ---------------------------------------------------------------------- 
                                        NIS                 U.S.     GBP       Euro        Total 
                                                          Dollar 
                             ------------------------   --------   -------   -------   ------------ 
                                            Variable 
                                Unlinked     Interest              Unlinked 
                             -----------   ----------   ---------------------------- 
 
 Financial Assets: 
 Cash and cash equivalents             -            -        158         -         -            158 
 Short-term deposit                    -           61          -         -         -             61 
 Trade receivables, 
  net                                212            -      1,741         5        28          1,986 
 Other accounts receivable           162            -          -         7         -            169 
 
 Financial Liabilities: 
 Short-term bank credit                -         (79)          -         -         -           (79) 
 Trade payables                        -      (1,490)      (517)      (71)       (3)        (2,081) 
 Other accounts payable            (223)            -          -       (4)         -          (227) 
 Leasehold liabilities                 -        (250)          -         -         -          (250) 
 Related parties                       -        (668)          -         -         -          (668) 
 Long-term loans from 
  banks                                -        (303)          -         -         -          (303) 
                                           ----------   -------- 
 
                                     151      (2,729)      1,382      (63)        25        (1,234) 
                             ===========   ==========   ========   =======   =======   ============ 
 
 
 
  Analysis of Sensitivity to Changes in the Exchange Rate of the 
   U.S. Dollar Against the NIS: 
                                                             5% Increase       5% Decrease 
                                                                  in                in 
                                                             Exchange Rate     Exchange Rate 
                                                           ---------------   --------------- 
 For the Year Ended December 
  31 
 2020                                                                (153)               153 
 2019                                                                (126)               126 
 
 Analysis of Sensitivity to Changes in the Exchange Rate of the 
  U.S. Dollar Against the Euro: 
                                                             5% Increase       5% Decrease 
                                                                  in                in 
                                                             Exchange Rate       Exchange 
                                                                                   Rate 
                                                           ---------------   --------------- 
 For the Year Ended December 
  31 
 2020                                                                    1               (1) 
 2019                                                                    1               (1) 
 
 Analysis of Sensitivity to Changes in the Exchange Rate of the 
  U.S. Dollar Against the GBP: 
                                                             5% Increase       5% Decrease 
                                                                  in                in 
                                                             Exchange Rate     Exchange Rate 
                                                           ---------------   --------------- 
 For the Year Ended December 
  31 
 2020                                                                 (12)                12 
 2019                                                                  (3)                 3 
 
 
 
 
 
   c.   Fair value 
        As of December 31, 2020, there was no significant 
         difference between the carrying amounts and fair values 
         of the Company's financial instruments that are presented 
         in the financial statements not at fair value. 
 
 
 NOTE 22   Leases 
  - 
 
           Group as a lessee 
           The Group has lease contracts for various items of property 
            and vehicles used in its operations. The leases of property 
            have lease terms between 3 to 4 years, while motor vehicles 
            have lease terms of 3 years. The Group's obligations 
            under its leases are secured by the lessor's title to 
            the leased assets. Generally, the Group is restricted 
            from assigning and subleasing. 
            There are several lease contracts that include extension 
            and termination options, which are further discussed 
            below. 
           The Group also has certain leases of machinery with 
            lease terms of 12 months or less and leases of office 
            equipment with low value. The Group applies the 'short-term 
            lease' and 'lease of low-value assets' recognition exemptions 
            for these leases. 
 
           Below are the carrying amounts of right-of-use assets 
            recognized and the movements during the period: 
 
 
                                Property   Vehicles   Total 
                               ---------  ---------  ------ 
 Balance at January 1, 2019           79        100     179 
 Additions                           185          -     185 
 Depreciation expenses              (84)       (52)   (136) 
                               ---------  ---------  ------ 
 Balance at December 31, 
  2019                               180         48     228 
 Additions                           111        138     249 
 Depreciation expenses              (85)       (62)   (147) 
                               ---------  ---------  ------ 
 Balance at December 31, 
  2020                               206        124     330 
                               =========  =========  ====== 
 
 
 
             Below are the carrying amounts of lease liabilities 
              (included under Leasehold Liabilities) and the movements 
              during the period: 
 
                                                2020     2019 
                                              -------   ------ 
 As at January 1                                (250)    (194) 
 Additions                                      (249)    (185) 
 Exchange rate differences and 
  others                                         (22)       16 
 Accretion of interest                           (13)     (15) 
 Payments                                         162      128 
                                              -------   ------ 
 Balance at December 31                         (372)    (250) 
 Current                                        (136)    (135) 
 Non-Current                                    (236)    (115) 
 
 
 
 
   Maturity analysis - contractual undiscounted cash flows 
    Less than one year                                   134 
     One to five years                                    118 
     Total undiscounted lease liabilities at December 
      31, 2020                                            252 
                                                         ==== 
 
   The following are the amounts recognized in profit or 
    loss: 
 
 
                                           2020    2019 
                                          ------  ------ 
 Depreciation expenses of right-of-use 
  assets                                   (147)   (136) 
 Interest income (expenses) on 
  lease liabilities                         (13)      16 
 Accretion of interest                      (22)    (15) 
                                          ------  ------ 
 Total amount recognized in profit 
  or loss                                  (182)   (135) 
                                          ======  ====== 
 
 
                                               Within     More than    Total 
                                               5 years     5 years 
                                             ---------   ----------   ------ 
 Extension options expected not                                   - 
  to be exercised 
 Termination options expected to                     -            -        - 
  be exercised 
                                             ---------   ----------   ------ 
 December 31, 2020                                               -- 
                                             ---------   ----------   ------ 
 
 Extension options expected not 
  to be exercised                                  197            -      197 
 Termination options expected to                     -            -        - 
  be exercised 
                                             ---------   ----------   ------ 
 December 31, 2019                                 197            -      197 
                                             =========   ==========   ====== 
  The Group had total cash outflows for leases of 162 
   in 2020 (128 in 2019). The Group also had non-cash additions 
   to right-of-use assets and lease liabilities of 249 
   in 2020 (185 in 2019) 
 
  The Group has several lease contracts that include extension 
   and termination options. These options are negotiated 
   by management to provide flexibility in managing the 
   leased-asset portfolio and to align with the Group's 
   business needs. Management performs significant judgment 
   operations in determining whether these extension and 
   termination options are reasonably certain to be exercised. 
  Below are the undiscounted potential future rental payments 
   relating to periods following the exercise date of extension 
   and termination options that are not included in the 
   lease term: 
 
 
 
 NOTE 23   CUSTOMERS AND GEOGRAPHIC INFORMATION 
  - 
 
 
   a.   Major customers' data as a percentage of total consolidated 
         sales to unaffiliated customers: 
 
 
 
               Year Ended December 
                31, 
                  2020       2019 
               ----------  --------- 
 Customer A           14%        10% 
 Customer B           12%         6% 
 Customer C            5%         6% 
 
 
   b.   Breakdown of consolidated sales to unaffiliated customers 
         according to geographic regions: 
 
 
                  Year Ended December 
                   31, 
                     2020       2019 
                  ----------  --------- 
 Latin America           15%        15% 
 Europe                  16%        16% 
 Africa                  33%        31% 
 Asia                     9%        10% 
 Middle East             20%        17% 
 North America            7%        11% 
                  ----------  --------- 
 Total                  100%       100% 
                  ----------  --------- 
 
 
 NOTE 24   SEGMENTATION REPORTING 
  - 
 
 
     The Group has two main reportable segments, as detailed 
      below: 
     Reported operating segments include: Hardware and SaaS. 
     For each of the strategic divisions, the Group's CEO 
      reviews internal management reports on at least a quarterly 
      basis. 
     There are no inter-segment sales. Information regarding 
      the results of each reportable segment is included below. 
      Performance is measured based on segment gross profit 
      included in the internal management reports that are 
      reviewed by the Group's CEO. Segment profit is used to 
      measure performance, as management believes that such 
      information is the most relevant in evaluating the results 
      of certain segments. 
 
 
     Segment information regarding the reported segments: 
 
 
                             Hardware   SaaS 
                            ---------  ------ 
 Year Ended 31.12.2020: 
 Segment revenues              2,8 33   2,208 
 Cost of sales                (3,070)   (304) 
                            ---------  ------ 
                                         1,90 
 Gross profit (loss)            (237)       4 
 
 Year Ended 31.12.2019: 
 Segment revenues               4,796   2,021 
 Cost of sales                (3,805)   (214) 
                            ---------  ------ 
 Gross profit                     991   1,807 
 
 
 NOTE 25   SIGNIFICANT EVENTS DURING THE REPORTED PERIOD (COVID-19) 
  - 
            Due to the pandemic outbreak since March 2020, most of 
            the countries across the Globe had taken extra measures 
            to prevent and reduce COVID-19 exposure. 
            Among the actions taken were noted: citizens transport 
            limitations, closing its borders, shutting some business 
            activity, limitation of number of employees per square 
            feet, shutting the educations systems, etc. 
            The unprecedented conditions resulted in a decrease in 
            revenues for the period. In addition, normal purchasing 
            processes and difficult shipping limitations created 
            additional costs and delays which impacted the fulfilment 
            of some existing orders. Marketing activities were inevitably 
            disrupted 
            Operational costs were reduced by approximately 20 per 
            cent with effect from March 2020 including unpaid leave 
            for employees. 
            In parallel the company submitted applications and secured 
            both government supported loan for long term amounted 
            $315 thousands (See also note 10) and grants amounted 
            $196 thousands. 
            The continuing cases of COVID-19 and the developments 
            surrounding the pandemic have had a negative impact on 
            the Group's business. Significant events affecting the 
            overall economy have historically had an impact on revenue 
            volumes, with the full extent of the impact generally 
            determined by the length of time the event influences 
            decisions as well as general economic conditions. The 
            COVID-19 outbreak and resulting economic conditions have 
            had, and the Group believes will continue to have, an 
            adverse impact on its operations and on its financial 
            results and liquidity, and such negative impact may continue 
            well beyond the containment of the outbreak. 
            The Group has taken, and plans to take further actions 
            to manage its liquidity, including reducing operating 
            expenses and strict cashflow monitoring, due to its uncertainty 
            to assure its assumptions used to estimate its liquidity 
            requirements will be correct because it has never previously 
            experienced such a change in demand, and as a consequence, 
            its ability to be predictive is uncertain. In addition, 
            the duration of the pandemic is uncertain. However, based 
            on current operational assumptions, the Group believes 
            it has adequate liquidity beyond the next twelve months. 
 

-ends-

For further information please contact:

 
 Starcom Plc 
  Michael Rosenberg, Chairman                       07785 727595 
  Avi Hartmann, CEO                                 +972 5477 35663 
 Allenby Capital Limited (Nominated Adviser 
  and Joint Broker) 
  Jeremy Porter/Asha Chotai                       020 3328 5656 
                                                 ------------------ 
 Peterhouse Capital Limited (Joint Broker) 
  Lucy Williams/Charles Goodfellow/Eran Zucker    020 7469 0930 
                                                 ------------------ 
 Leander PR (Financial PR) 
  Christian Taylor-Wilkinson                      07795 168 157 
                                                 ------------------ 
 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy.

END

FR FFFLVVLISFIL

(END) Dow Jones Newswires

March 25, 2021 03:00 ET (07:00 GMT)

T42 Iot Tracking Solutions (LSE:TRAC)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more T42 Iot Tracking Solutions Charts.
T42 Iot Tracking Solutions (LSE:TRAC)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more T42 Iot Tracking Solutions Charts.