| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES The
following accounting policies have been applied consistently in the financial statements for all periods presented, unless otherwise
stated.
a. Basis
of presentation of the financial statements: These
consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS")
as issued by the International Accounting Standards Board ("IASB"). The
consolidated financial statements have been prepared on a cost basis, except for available for sale financial assets and financial
liabilities that have been measured at fair value through profit or loss. The Company has elected to present profit or loss items
using the function of expense method.
b. The
operating cycle of the Company is one year.
c. Consolidated
financial statements: The
consolidated financial statements comprise the financial statements of the Company and its subsidiary. The
financial statements of the Company and its subsidiary are prepared as of the same dates and periods. The consolidated financial
statements are prepared using uniform accounting policies by all companies in the group. Significant intra-group balances, transactions
and gains or losses resulting from intra-group are eliminated in full in the consolidated financial statements.
d. Functional
currency, presentation currency and foreign currency:
1. Functional
currency and presentation currency: The
presentation currency of the financial statements is the U.S. dollars. The
functional currency is the currency that best reflects the economic environment in which the Company and its subsidiary operates
and conducts their transactions. Most of the Company costs are incurred in U.S. dollars. In addition, the Company financing activities
are incurred in U.S. dollars. The Company's management believes that the functional currency of the Company is the U.S. dollar.
2. Transactions,
assets and liabilities in foreign currency: Transactions
denominated in foreign currency are recorded upon initial recognition at the exchange rate at the date of the transaction. After
initial recognition, monetary assets and liabilities denominated in foreign currency are translated at the end of each reporting
period into the functional currency at the exchange rate at that date. Exchange rate differences are recognized in profit or loss.
Non-monetary assets and liabilities measured at cost in foreign currency are translated at the exchange rate at the date of the
transaction. Non-monetary assets and liabilities denominated in foreign currency and measured at fair value are translated into
the functional currency using the exchange rate prevailing at the date when the fair value was determined.
e. Cash
equivalents: Cash
equivalents are considered as highly liquid investments, including unrestricted short-term bank deposits with an original maturity
of three months or less from the date of investment or with a maturity of more than three months, but which are redeemable on
demand without penalty and which form part of the Company's cash management.
f. Short-term
deposits and restricted deposits: Short-term
bank deposits are deposits with an original maturity of more than three months from the date of investment and which do not meet
the definition of cash equivalents. The deposits are presented according to their terms of deposit. Restricted
deposit is primarily invested in highly liquid deposits. Restricted deposit amounted to $150 as of December 31, 2019 and 2018,
and is included in prepaid expenses and other current assets on the statements of financial position.
g. Property
and equipment: Property,
plant and equipment are measured at cost, including directly attributable costs, less accumulated depreciation, accumulated impairment
losses and any related investment grants and excluding day-to-day servicing expenses. Depreciation
is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:
%
Machinery 10-15
Office furniture and equipment 6 - 33
Leasehold improvements (*)
Project
in process - manufacturing plant (**)
(*) Leasehold
improvements are depreciated on a straight-line basis over the shorter of the lease term
(including the extension option held by the Company and intended to be exercised) and
the expected life of the improvement.
(**) As of December 31, 2019, the manufacturing plant is under construction,
depreciation of the manufacturing plant will begin upon completion of its construction. The
useful life, depreciation method and residual value of an asset are reviewed at least each year-end and any changes are accounted
for prospectively as a change in accounting estimate. An
item of property and equipment is derecognized upon disposal or when no future economic benefits are expected from its use or
disposal.
h. Research
and development costs: Research
expenditures are recognized in profit or loss when incurred. An intangible asset arising from a development project or from the
development phase of an internal project is recognized if the Company can demonstrate: the technical feasibility of completing
the intangible asset so that it will be available for use or sale; the Company's intention to complete the intangible asset and
use or sell it; the Company's ability to use or sell the intangible asset; how the intangible asset will generate future economic
benefits; the availability of adequate technical, financial and other resources to complete the intangible asset; and the Company's
ability to measure reliably the expenditure attributable to the intangible asset during its development. Since the Company development
projects are often subject to regulatory approval procedures and other uncertainties, the conditions for the capitalization of
costs incurred before receipt of approvals are not normally satisfied and, therefore, development expenditures are recognized
in profit or loss when incurred.
i. Impairment
of non-financial assets: The
Company evaluates the need to record an impairment of the carrying amount of non-financial assets whenever events or changes in
circumstances indicate that the carrying amount is not recoverable. If
the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount.
The recoverable amount is the higher of fair value less costs of sale and value in use. The recoverable amount of an asset that
does not generate independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses
are recognized in profit or loss. An
impairment loss of an asset is reversed only if there have been changes in the estimates used to determine the asset's recoverable
amount since the last impairment loss was recognized. Reversal of an impairment loss, as above, shall not be increased above the
lower of the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been
recognized for the asset in prior years, and its recoverable amount. During
the years ended December 31, 2019, 2018 and 2017, the Company did not recognize any impairment of non-financial assets.
j. Government
investment grants: Government
grants are recognized when there is reasonable assurance that the grants will be received and the Company will comply with the
related conditions. Government
grants received from Israel Innovation Authority ("IIA") (formerly, the Office of the Chief Scientist in Israel ("OCS"))
are recognized upon receipt as a liability if future economic benefits are expected from the project that will result in royalty-bearing
sales. If no such economic benefits are expected, the grants are recognized as a reduction of the related research and development
expenses. In that event, the royalty obligation is treated as contingent liability in accordance with IAS 37. At
the end of each reporting periods, the Company evaluates, based on its best estimate of future sales, whether there is reasonable
assurance that the liability recognized, in whole or in part, will not be repaid (since the Company will not be required to pay
royalties). If there is such reasonable assurance, the appropriate amount of the liability is derecognized and recorded in profit
or loss as a revaluation of research and development expenses. If
the estimate of future sales indicates that there is no such reasonable assurance, the appropriate amount of the liability that
reflects expected future royalty payments is recognized with a corresponding adjustment to financial expenses or income. As of
December 31, 2019 and 2018, the Company concurred future economic benefits are expected from its research and development project
and recorded a liability for its entire contingent obligation to IIA. Grants
received from the IIA which are recognized as a liability are accounted for as forgivable loans, in accordance with IAS 20 (Revised),
pursuant to the provisions of IFRS 9, "Financial Instruments ". Accordingly, when the liability for the loan is first
recognized, it is measured at fair value using a discount rate that reflects a market rate of interest which in the Company's
case was determined to be 30%, 28% and 25% for 2019, 2018 and 2017, respectively. The difference between the amount of the grants
received and the fair value of the liability is accounted for upon recognition of the liability as a government grant and recognized
as a reduction of research and development expenses. For
the years ended December 31, 2019, 2018 and 2017 no royalties were paid with respect to grants received from the IIA. Payments
will be treated as a reduction of the liability. Grants
in the amount of $871, $2,425 and $2,948 were approved during 2019, 2018 and 2017, respectively. Grant receivable amounted to
$7 and $0 as of December 31, 2019 and 2018, respectively, and is included in prepaid expenses and other current assets on the
statements of financial position.
k. Provisions: A
provision in accordance with IAS 37 is recognized when the Company has a present obligation (legal or constructive) as a result
of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
l. Operating
leases: Until
December 31, 2018, the initial adoption of IFRS 16 Leases, Lease agreements were classified as an operating lease if they do not
transfer substantially all the risks and benefits incidental to ownership of the leased asset. Operating lease payments were recognized
as an expense in profit or loss on a straight-line basis over the lease term. (for leases subsequent to the adoptions of IFRS
16, refer to note 2q below)
m. Share-based
payment transactions: The
Company's employees and other service providers are entitled to remuneration in the form of equity-settled share-based payment
transactions. Equity-settled
transactions: The
cost of equity-settled transactions with employees is measured at the fair value of the equity instruments granted at grant date.
The fair value is determined using an acceptable option pricing model. With
respect to other service providers, the cost of the transactions is measured at the fair value of the goods or services received
as consideration for equity instruments. In cases where the fair value of the goods or services received as consideration of equity
instruments cannot be measured, it is measured by reference to the fair value of the equity instruments granted. The
cost of equity-settled transactions is recognized in profit or loss, together with a corresponding increase in equity, during
the period which the performance and/or service conditions are to be satisfied, ending on the date on which the relevant employees
become fully entitled to the award (the "Vesting Period"). No
expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition,
which are treated as vested irrespective of whether the market condition is satisfied, provided that all other vesting conditions
are satisfied.
n. Deferred
tax: Deferred
tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes at the reporting date. Deferred
tax assets are recognized for all deductible temporary differences. Deferred tax assets are recognized to the extent that it is
probable that taxable profit will be available against which the deductible temporary differences and unused tax losses can be
utilized. Unrecognized
deferred tax assets are re-assessed at each reporting date and are recognized to the extent that it has become probable that future
taxable profits will allow the deferred tax asset to be recovered.
o. Employee
benefit liabilities: The
Company has several employee benefit plans:
1. Short-term
employee benefits: Short-term
employee benefits are benefits that are expected to be settled entirely before twelve months after the end of the annual reporting
period in which the employees render the related services. These benefits include salaries, paid annual leave, paid sick leave,
recreation and social security contributions and are recognized as expenses as the services are rendered.
2. Post-employment
benefits: The
plans are normally financed by contributions to insurance companies and classified as defined benefit plan. The Company operates a defined benefit plan in respect of severance
pay pursuant to the Severance Pay Law, 1963 (the "Law"). According to the Law, employees are entitled to severance pay
upon dismissal or retirement. The liability for termination of employment is measured using the projected unit credit method. The
amounts are presented based on discounted expected future cash flows using a discount rate determined by reference to market yields
at the reporting date on high quality corporate bonds that are linked to the Consumer Price Index with a term that is consistent
with the estimated term of the severance pay obligation. In
respect of its severance pay obligation to certain of its employees, the Company makes current deposits in pension funds and insurance
companies (the "Plan Assets"). Plan Assets comprise assets held by a long-term employee benefit fund or qualifying insurance
policies. Plan Assets are not available to the Company's own creditors and cannot be returned directly to the Company. Actuarial
gains and losses are recognized in other comprehensive income or (loss) retrospectively in the period in which they occur.
p. Financial
instruments: On
January 1, 2018, the Company first adopted IFRS 9, "Financial Instruments" ("the Standard"). The Company elected
to adopt the provisions of the Standard retrospectively without restatement of comparative data. The
accounting policy for financial instruments applied commencing from January 1, 2018, is as follows:
1. Investment
in marketable securities: Financial
assets are measured upon initial recognition at fair value plus transaction costs that are directly attributable to the acquisition
of the financial assets, except for financial assets measured at fair value through profit or loss in respect of which transaction
costs are recorded in profit or loss. The
Company classifies and measures debt instruments in the financial statements based on the following criteria:
- The
Company's business model for managing financial assets; and
- The
contractual cash flow terms of the financial asset. The
Company measured all of its marketable securities at fair value through other comprehensive income (FVTCOI). Debt
instruments are measured at fair value through other comprehensive income when: The
Company's business model is to hold the financial assets in order to both collect their contractual cash flows and to sell the
financial assets, and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding. After initial recognition, the instruments in this category
are measured at fair value. Gains or losses from fair value adjustments, excluding interest and exchange rate differences, are
recognized in other comprehensive income. The Company evaluates at the end of each reporting period the loss allowance for financial
debt instruments. Marketable
securities as of December 31, 2018 and 2019 includes corporate and government debentures with no significant premium or discount.
The investment in marketable securities, which are measured at fair value through other comprehensive income is considered level
2 measurement.
2. Financial
liabilities: Financial
liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables net of directly attribute
transaction costs. The Company's financial liabilities include trade and other payables and warrants to shareholders. Warrants
to shareholders can be exercised into a variable number of share and therefore such warrants recorded as a financial liability
and are measured at each balance sheet date at their fair value. Gains or losses are recognized in profit or loss.
a) Derecognition: A
financial liability is derecognized when the obligation under the liability is discharged or cancelled, or expires.
b) Offsetting
of financial instruments: Financial
assets and financial liabilities are offset and the net amount is reported in the statements of financial position if there is
a currently enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, to realize
the assets and settle the liabilities simultaneously.
3. Fair
value: Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The
Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure
fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs. All
assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair
value hierarchy. The
carrying amounts of cash and cash equivalents, Marketable securities, other receivables, short-term deposits, prepaid
expenses and other current assets, trade payables and accrued expenses and other payables approximate their fair value due to
the short-term maturity of such instruments. Regarding fair value of the liability to IIA, refer to note 2j above.
q. IFRS
16 - Leases: The
Company adopted IFRS 16, "Leases" ("the Standard"), with the date of initial application of January 1, 2019.
The Company elected to adopt the provisions of the Standard using the modified retrospective method (without restatement of comparative
data). Under
this method, the standard is applied retrospectively with the cumulative effect of initially applying the standard recognised
at the date of initial application. The Company elected to use the transition practical expedient allowing the standard to be
applied only to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 at the date of initial application.
The Company also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term
of 12 months or less and do not contain a purchase option ('short- term leases'), and lease contracts for which the
underlying asset is of low value ('low-value assets'). The
Company has a number of lease contracts, mainly leases of an office building and a production plant. Before the adoption of IFRS
16, the Company classified each of its leases (as lessee) at the inception date as an operating lease. The leased property was
not capitalized and the lease payments were recognized as rent expense in profit or loss on a straight-line basis over the lease
term. Any prepaid rent and accrued rent were recognized under prepaid expenses and other current assets and accrued expenses and
other payables, respectively. Set
out below are the new accounting policies of the Company upon adoption of IFRS 16, which have been applied from the date of initial
application: The
Company accounts for a contract as a lease when the contract terms convey the right to control the use of an identified asset
for a period of time in exchange for consideration.
1. Right-of-use
assets: The
Company 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. Unless the Company is reasonably certain
to obtain ownership of the leased asset at the end of the lease term, the recognized right-of-use assets are depreciated on a
straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to
impairment pursuant to the provision of IAS 36.
2. Lease
liabilities: At the commencement date
of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the
lease term discounted at the interest rate implicit in the lease, if that rate can be determined, or otherwise using the
Company's incremental borrowing rate. 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 Company and payments of penalties for terminating a lease, if the lease term reflects the
Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are
recognized as expense in the period on which the event or condition that triggers the payment occurs. After the commencement
date, the Company measures the lease liability using the effective interest rate method. Based on the foregoing, the following are data relating to the
initial application of the standard as of January 1, 2019, in respect of leases existing as of that date:
● Right-of-use
assets of $6,869 were recognized and presented separately in the statements of financial position.
● Additional
lease liabilities of $6,795 were recognized and presented separately in the statements
of financial position .
● Prepaid
expenses and other current assets of $256 and accrued expenses and other payables of
$183 related to previous operating leases were derecognized. The
lease liabilities as of January 1, 2019 reconcilliation to the operating lease commitments as of December 31, 2018 are as follows:
Operating lease commitments as of December 31, 2018 $ 7,441
Weighted average incremental borrowing rate as of January 1, 2019 (%) 1.45-4.01
Discounted operating lease commitments of January 1, 2019 6,795
Lease liabilities as of January 1, 2019 $ 6,795 |
