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CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
June 30, 2023 | December 31, 2022 | |||||||
Unaudited | ||||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 10,485 | $ | 14,937 | ||||
Short-term bank deposits | 113 | 110 | ||||||
Restricted cash and deposits | 1,332 | 5 | ||||||
Trade receivables, (net of allowance for credit losses of $93 and $103 as of June 30, 2023 and December 31, 2022, respectively) | 8,617 | 9,973 | ||||||
Unbilled accounts receivable | 7 | 350 | ||||||
Other accounts receivable and prepaid expenses | 1,932 | 1,441 | ||||||
Inventories (Note 3) | 9,546 | 8,443 | ||||||
Total current assets | 32,032 | 35,259 | ||||||
LONG-TERM ASSETS: | ||||||||
Deferred tax assets | 2,260 | 1,981 | ||||||
Operating lease right-of-use assets | 885 | 987 | ||||||
Total long-term assets | 3,145 | 2,968 | ||||||
PROPERTY AND EQUIPMENT, NET | 1,627 | 1,651 | ||||||
INTANGIBLE ASSETS, NET | 1,069 | 1,142 | ||||||
GOODWILL | 11,062 | 10,866 | ||||||
Total assets | $ | 48,935 | $ | 51,886 |
June 30, 2023 | December 31, 2022 | |||||||
Unaudited | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 1,430 | $ | 2,408 | ||||
Customer advances | 230 | 239 | ||||||
Deferred revenues | 2,643 | 2,866 | ||||||
Other accounts payable and accrued expenses | 4,212 | 4,749 | ||||||
Short-term operating lease liabilities | 251 | 248 | ||||||
Total current liabilities | 8,766 | 10,510 | ||||||
LONG-TERM LIABILITIES: | ||||||||
Deferred revenues | 1,318 | 1,463 | ||||||
Deferred tax liabilities | 852 | 865 | ||||||
Accrued severance pay | 314 | 330 | ||||||
Long-term operating lease liabilities | 652 | 757 | ||||||
Other long-term liabilities | 261 | 274 | ||||||
Total long-term liabilities | 3,397 | 3,689 | ||||||
COMMITMENTS AND CONTINGENT LIABILITIES (Note 4) | ||||||||
SHAREHOLDERS' EQUITY: | ||||||||
Share capital - | ||||||||
Ordinary shares of NIS 1 par value - | ||||||||
Authorized: 39,748,000 shares at June 30, 2023 and December 31, 2022; Issued and outstanding: 23,309,987 shares at June 30, 2023 and December 31, 2022 | 6,799 | 6,799 | ||||||
Additional paid-in capital | 30,504 | 30,503 | ||||||
Accumulated other comprehensive loss | (95 | ) | (758 | ) | ||||
Foreign currency translation adjustments (Company's standalone financial statements) | 9,675 | 9,654 | ||||||
Accumulated deficit | (10,111 | ) | (8,511 | ) | ||||
Total shareholders' equity (Note 5) | 36,772 | 37,687 | ||||||
Total liabilities and shareholders' equity | $ | 48,935 | $ | 51,886 |
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
Revenues | $ | 14,886 | $ | 15,909 | ||||
Cost of revenues | 6,169 | 5,967 | ||||||
Gross profit | 8,717 | 9,942 | ||||||
Operating expenses: | ||||||||
Research and development, net | 2,075 | 2,182 | ||||||
Selling and marketing | 5,071 | 4,519 | ||||||
General and administrative | 3,221 | 3,806 | ||||||
Total operating expenses | 10,367 | 10,507 | ||||||
Operating loss | (1,650 | ) | (565 | ) | ||||
Financial income (expenses), net | (34 | ) | (348 | ) | ||||
Loss before income taxes | (1,684 | ) | (913 | ) | ||||
Tax benefit | (84 | ) | (244 | ) | ||||
Net loss from continuing operations | (1,600 | ) | (669 | ) | ||||
Net loss from discontinued operations (Note 1b) | - | (264 | ) | |||||
Net loss attributable to Senstar's shareholders | $ | (1,600 | ) | $ | (933 | ) | ||
Basic and diluted net loss per share: | ||||||||
Continuing operations | $ | (0.07 | ) | $ | (0.03 | ) | ||
Discontinued operations | - | (0.01 | ) | |||||
Basic and diluted net loss per share | $ | (0.07 | ) | $ | (0.04 | ) |
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
Net loss | $ | (1,600 | ) | $ | (933 | ) | ||
Foreign currency translation adjustments | 663 | (791 | ) | |||||
Total other comprehensive income (loss) | 663 | (791 | ) | |||||
Total comprehensive loss | $ | (937 | ) | $ | (1,724 | ) | ||
Total comprehensive loss attributable to: | ||||||||
Senstar shareholders | $ | (937 | ) | $ | (1,724 | ) | ||
Total comprehensive loss | $ | (937 | ) | $ | (1,724 | ) |
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
Number of shares | Ordinary shares | Additional paid-in capital | Accumulated other comprehensive income (loss) | Foreign currency translation adjustment - the Company | Retained earnings (accumulated deficit) | Total shareholders' equity | ||||||||||||||||||||||
Balance as of December 31, 2021 | 23,301,653 | $ | 6,796 | $ | 30,394 | $ | 1,222 | $ | 9,687 | $ | (12,342 | ) | $ | 35,757 | ||||||||||||||
Issuance of shares upon exercise of employee stock options | 8,334 | 3 | 16 | - | - | - | 19 | |||||||||||||||||||||
Stock-based compensation | - | - | 58 | - | - | - | 58 | |||||||||||||||||||||
Foreign currency translation adjustments- the Company | - | - | - | - | 78 | - | 78 | |||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (933 | ) | (933 | ) | |||||||||||||||||||
Foreign currency translation adjustments | - | - | - | (791 | ) | - | - | (791 | ) | |||||||||||||||||||
Balance as of June 30, 2022 | 23,309,987 | $ | 6,799 | $ | 30,468 | $ | 431 | $ | 9,765 | $ | (13,275 | ) | $ | 34,188 |
Number of shares | Ordinary shares | Additional paid-in capital | Accumulated other comprehensive income (loss) | Foreign currency translation adjustment - the Company | Retained earnings (accumulated deficit) | Total shareholders' equity | ||||||||||||||||||||||
Balance as of December 31, 2022 | 23,309,987 | $ | 6,799 | $ | 30,503 | $ | (758 | ) | $ | 9,654 | $ | (8,511 | ) | $ | 37,687 | |||||||||||||
Stock-based compensation | - | - | 1 | - | - | - | 1 | |||||||||||||||||||||
Foreign currency translation adjustments- the Company | - | - | - | - | 21 | - | 21 | |||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | (1,600 | ) | (1,600 | ) | |||||||||||||||||||
Foreign currency translation adjustments | - | - | - | 663 | - | - | 663 | |||||||||||||||||||||
Balance as of June 30, 2023 | 23,309,987 | $ | 6,799 | $ | 30,504 | $ | (95 | ) | $ | 9,675 | $ | (10,111 | ) | $ | 36,772 |
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (1,600 | ) | $ | (933 | ) | ||
Adjustments required to reconcile net income to net cash used in operating activities: | ||||||||
Depreciation and amortization | 530 | 761 | ||||||
Loss on sale of property and equipment | 15 | - | ||||||
Stock based compensation | 1 | 58 | ||||||
Decrease (increase) in trade receivables, net | 1,464 | (2,456 | ) | |||||
Decrease in unbilled accounts receivable | 345 | 18 | ||||||
Increase in other accounts receivable and prepaid expenses | (486 | ) | (372 | ) | ||||
Increase in inventories | (889 | ) | (1,797 | ) | ||||
Decrease (increase) in deferred income taxes | (251 | ) | 11 | |||||
Decrease in operating lease right-of-use assets | 56 | 87 | ||||||
Decrease in operating lease liabilities | (56 | ) | (84 | ) | ||||
Increase (decrease) in trade payables | (1,010 | ) | 92 | |||||
Decrease in other accounts payable and accrued expenses and deferred revenues | (918 | ) | (2,471 | ) | ||||
Decrease in customer advances | (11 | ) | (126 | ) | ||||
Net cash used in operating activities | $ | (2,810 | ) | $ | (7,212 | ) |
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
Cash flows from investing activities: | ||||||||
Release of short-term and long-term bank deposits | - | 1 | ||||||
Purchase of property and equipment | (182 | ) | (68 | ) | ||||
Asset acquisition of technology | (214 | ) | - | |||||
Net cash used in investing activities | (396 | ) | (67 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of shares upon exercise of options to employees | - | 19 | ||||||
Net cash provided by financing activities | - | 19 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 81 | (1,198 | ) | |||||
Decrease in cash, cash equivalents and restricted cash | (3,125 | ) | (8,458 | ) | ||||
Cash, cash equivalents and restricted cash at the beginning of the period | 14,937 | 26,397 | ||||||
Cash, cash equivalents and restricted cash from continuing operations at the end of the period | $ | 11,812 | $ | 17,939 |
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
Supplemental disclosures of cash flows activities: | ||||||||
Cash and cash equivalents | $ | 10,485 | $ | 17,939 | ||||
Restricted cash | 1,327 | - | ||||||
Total cash, cash equivalents and restricted cash | $ | 11,812 | $ | 17,939 | ||||
Cash paid during the period for: | ||||||||
Interest | $ | 1 | $ | 112 | ||||
Income taxes | $ | 221 | $ | 1,307 | ||||
Significant non-cash transactions: | ||||||||
Right-of-use asset recognized with corresponding lease liability | $ | - | $ | 34 |
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
NOTE 1:- | GENERAL |
a. | General: |
b. | On February 7, 2021, the Company entered into an agreement (the “Purchase Agreement”) with Aeronautics Ltd., a subsidiary of RAFAEL Advanced Defense Systems Ltd., to sell the Company’s Integrated Solutions Division (the “Projects Division”), representing substantially all of the Company’s Integrated Solutions segment for total consideration of $35 million in cash at closing. On June 30, 2021, the Company completed the sale. The divestiture of the Company’s Integrated Solutions Division represented a strategic shift in the Company's operations. |
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
Income (loss) after income taxes | $ | - | $ | - | ||||
Capital loss from discontinued operation | - | (264 | ) | |||||
Net loss from discontinued operation | $ | - | $ | (264 | ) |
F - 10
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
NOTE 1:- | GENERAL (Cont.) |
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
Net cash provided by discontinued operating activities | $ | 22 | $ | 123 |
a. | Unaudited condensed interim consolidated financial statements: |
F - 11
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
b. | Use of estimates: |
c. | Principles of consolidation: |
d. | Concentrations of credit risk: |
F - 12
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
e. | Revenue recognition: |
f. | New accounting pronouncements not yet effective: |
F - 13
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
NOTE 3:- | INVENTORIES |
June 30, 2023 | December 31, 2022 | |||||||
Unaudited | ||||||||
Raw materials | $ | 2,723 | $ | 2,105 | ||||
Work in progress | 623 | 911 | ||||||
Finished products | 6,200 | 5,427 | ||||||
$ | 9,546 | $ | 8,443 |
NOTE 4:- | COMMITMENTS AND CONTINGENT LIABILITIES |
a. | Guarantees: |
b. | Restricted deposit: |
c. | Legal proceedings: |
1) | The Company is subject to legal proceedings arising in the normal course of business. Based on the advice of legal counsel, management believes that these proceedings will not have a material adverse effect on the Company's financial position or results of operations. |
2) | In February 2019, Magal Mexico (the Company’s former subsidiary whose shares were sold as part of the Integrated Solutions Division sale (see Note 1b)) initiated a dispute procedure with the Mexican tax authorities requesting the recognition of deduction of certain expenses as claimed by the former Mexican subsidiary in its annual tax filings. In July 2019, the tax authorities denied the former Mexican subsidiary position. On September 11, 2019, Magal Mexico filed a nullity claim (administrative trial) against the resolution of the Mexican Internal Revenue Service (Servicio de Administración Tributaria) that had requested the former subsidiary to correct its tax situation by virtue that certain invoices did not produce any legal effect. |
F - 14
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
NOTE 4:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
c. | Royalty commitments to the Innovation Authority (formerly the Office of the Chief Scientist) of the Israeli Ministry of Economy, or Innovation Authority: |
F - 15
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
NOTE 4:- | COMMITMENTS AND CONTINGENT LIABILITIES (Cont.) |
a. | Pertinent rights and privileges conferred by Ordinary shares: |
b. | Issued and outstanding share capital: 23,309,987 Ordinary shares as of June 30, 2023 and December 31, 2022. |
c. | Dividends: |
F - 16
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
NOTE 6:- | BASIC AND DILUTED NET EARNINGS (LOSS) PER SHARE |
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
Numerator - continuing operations: | ||||||||
Net loss from continuing operations attributable to Senstar shareholders | $ | (1,600 | ) | $ | (669 | ) | ||
Numerator - discontinued operations: | ||||||||
Net loss from discontinued operations | $ | - | $ | (264 | ) | |||
Denominator: | ||||||||
Denominator for basic net loss per share weighted-average number of shares outstanding | 23,309,987 | 23,305,981 | ||||||
Effect of dilutive securities: | ||||||||
Employee stock options | - | - | ||||||
Denominator for diluted net loss per share - adjusted weighted average shares and assumed exercises | 23,309,987 | 23,305,981 |
NOTE 7:- | BALANCES AND TRANSACTIONS WITH RELATED PARTIES |
F - 17
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
NOTE 8:- | SEGMENT INFORMATION |
1. | Revenues: |
Six months ended June 30, | ||||||||
2023 | 2022 | |||||||
North America | $ | 7,727 | $ | 6,496 | ||||
Europe | 5,320 | 5,134 | ||||||
APAC | 1,236 | 3,716 | ||||||
South and Latin America | 553 | 422 | ||||||
Israel | 48 | 50 | ||||||
Others | 2 | 91 | ||||||
$ | 14,886 | $ | 15,909 |
2. | Long-lived assets: |
June 30, 2023 | December 31, 2022 | |||||||
Unaudited | ||||||||
Israel | $ | 119 | $ | 170 | ||||
Europe | 1,318 | 1,268 | ||||||
USA | 1,774 | 1,764 | ||||||
Canada | 11,381 | 11,375 | ||||||
Others | 51 | 69 | ||||||
$ | 14,643 | $ | 14,646 |
F - 18
SENSTAR TECHNOLOGIES LTD. AND ITS SUBSIDIARIES
(Formerly: Magal Security Systems Ltd.)
U.S. dollars in thousands (except share and per share data)
NOTE 9:- | SUBSEQUENT EVENTS |
F - 19