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16.05.2017 22:05:00
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Ability Inc. Reports Fourth Quarter and Full Year 2016 Financial Results
TEL AVIV, Israel, May 16, 2017 /PRNewswire/ -- Ability Inc. (NASDAQ: ABIL) (the "Company"), a leading provider of innovative tactical communications intelligence solutions, today announced its financial results for the three and 12 months ended December 31, 2016. The Company also filed today with the Securities and Exchange Commission (the "SEC") its Annual Report on Form 20-F for the year ended December 31, 2016 (the "Annual Report'). This press release should be read in conjunction with the Annual Report. The Annual Report can be accessed on the SEC's website at http://www.sec.gov as well as on the Investor Relations page of the Company's web site at http://ir.interceptors.com/sec-filings. Shareholders may receive a hard copy of the Annual Report, free of charge, upon request.
Anatoly Hurgin, Ability's Chief Executive Officer commented: "Although the market penetration of the ULIN technology has been more challenging than we had expected, we continue to be encouraged by the great interest in ULIN around the world and we are hopeful that this interest will translate into revenues over the next quarters. I believe our new directors, Levi Ilsar, Brigadier General (Ret.) Eli Polak and Nimrod Schwartz, all of whom have meaningful experience, will create significant value to our company."
2016 Fourth Quarter Financial Summary
Revenues for the fourth quarter of 2016 were $2.5 million compared with $2.0 million for the fourth quarter of 2015. Revenues include the contribution from the first ULIN sale, which amounted to approximately $1.3 million in the fourth quarter of 2016.
Gross margin for the fourth quarter of 2016 increased to 54.1% compared to 13.3% in the same period the previous year. The increase was primarily due to the absence of cost of revenues in the fourth quarter of 2016 in connection with the first sale of ULIN due to the waiver of the ULIN supplier of its right to the excess of the 50% of the net revenues generated from such sale over the minimum commitment amount such supplier is entitled to.
Net loss for the three months ended December 31, 2016 was $(3.8) million, or $(0.16) per basic and diluted share, compared with $(380,000), or $(0.02) per basic and diluted share, for the fourth quarter of 2015. Negative EBITDA for the three months ended December 31, 2016 was $(3.3) million compared to $(381,000) in the fourth quarter of 2015. Please refer to the financial tables below for a reconciliation of GAAP to Non-GAAP results.
The results for the fourth quarter of 2016 reflect approximately $1.7 million in non-operational costs in connection with the internal investigation that the Company conducted that was overseen by the Company's Audit Committee regarding the previously announced restatement. No similar expenses were incurred in the year-ago period. In addition, the Company expensed approximately $300,000 of legal fees in connection with the previously announced $1.8 million legal settlement regarding a claim brought against Ability Computer & Software Industries Ltd., a wholly-owned subsidiary of the Company, and the Company's controlling shareholders, Messrs. Anatoly Hurgin and Alexander Aurovsky. The amount was reduced in the fourth quarter of 2016 by approximately $100,000 primarily due to the final allocation of the settlement amount between Ability Computer & Software Industries Ltd. and the Company's controlling shareholders. The aggregate settlement amount for the claim was settled at $2.12 million plus VAT, of which the Company was required to pay 70% and the aggregate VAT, and Messrs. Hurgin and Aurovsky were each required to pay half of the remaining balance.
2016 Full-Year Financial Summary
Due to the significant decline in revenues and an increase in legal and professional services fees, the Company has suffered losses from operations, and has a net capital deficiency that, along with other matters, raises a substantial doubt about its ability to continue as a going concern.
Revenues for the full-year 2016 were $16.5 million compared with $52.2 million for 2015. The decrease was primarily due to customer adoption of ULIN, which has been much slower than the Company had anticipated, the project-oriented nature of Company's business and the completion of a number of large projects in 2015, as well as the ongoing transition to a revenue stream more focused on ULIN.
Gross margin for 2016 was 47.8% compared with 43.1% for 2015. The increase was primarily due to the absence of cost of revenues in 2016 in connection with the first sale of ULIN due to the waiver of the ULIN supplier of its right to the excess of the 50% of the net revenues generated from such sale over the minimum commitment amount such supplier is entitled to.
Net loss for the year ended December 31, 2016 was $(8.1) million, or $(0.33) per basic and diluted share, compared with net income of $14.8 million, or $0.60 per basic and diluted share, for the year ended December 31, 2015. Negative EBITDA for the full year 2016 was $(6.4) million compared to a positive $18.0 million in 2015. Please refer to the financial tables below for a reconciliation of GAAP to Non-GAAP results. For the year ended December 31, 2016, the Company incurred $4.6 million in non-operating expenses, including $2.6 million in legal and professional services fees in connection with the internal investigation the Company conducted that was overseen by Company's Audit Committee and $2.0 million in connection with a legal settlement and related legal fees, as mentioned above.
Balance Sheet Highlights
Cash and cash equivalents at December 31, 2016 totaled $11.8 million compared to $25.8 million as of December 31, 2015. Cash used in operating activities was $10.6 million for the full year 2016 compared with cash provided by operating activities of $10.2 million for the full year 2015. Shareholders' equity totaled $9.7 million as of December 31, 2016 compared with $17.8 million as of December 31, 2015.
About Ability Inc.
Ability Inc. is the sole owner of Ability Computer & Software Industries Ltd. ("Ability") and Ability Security Systems Ltd.
Headquartered in Tel Aviv, Israel, Ability was founded in 1994. Ability provides advanced interception, geolocation and cyber intelligence tools used by security and intelligence agencies, military forces, law enforcement and homeland security agencies worldwide. Ability has sold to governments and government agencies in over 50 countries. Ability offers a broad range of lawful interception, decryption, cyber and geolocation solutions for cellular and satellite communication, including ULIN, or Ultimate Interceptor, which to our knowledge, is the first-to-market SaaS strategic interception system with voice and geolocation capabilities without geographic limitation. State-of-the-art technology underpins Ability's scalable offerings, which can be tactical-and-portable, or strategic-and-fixed, depending on its customers' needs. Additional information regarding Ability may be found at http://www.interceptors.com.
Caution Regarding Forward-Looking Statements
This press release contains "forward-looking statements." Words such as "may," "should," "could," "would," "predicts," "potential," "continue," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," and similar expressions, as well as statements in future tense, often signify forward-looking statements. Forward-looking statements should not be read as a guarantee of future performance or results and may not be accurate indications of when such performance or results will be achieved. Forward-looking statements are based on information that the Company has when those statements are made or management's good faith belief as of that time with respect to future events, and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. The Company assumes no obligation to publicly update or revise its forward-looking statements as a result of new information, future events or otherwise.
Investor Relations Contacts:
Hayden/ MS-IR LLC
Miri Segal
Tel: 917-607-8654
msegal@ms-ir.com
or
Brett Maas
Tel: 646-536-7331
brett@haydenir.com
Ability Inc. | ||||||
Consolidated Statements of Balance Sheets | ||||||
Audited | ||||||
December 31, | December 31, | |||||
2016 | 2015 | |||||
ASSETS | U.S. Dollar in thousands | |||||
CURRENT ASSETS: | ||||||
Cash and cash equivalents (VIE - $764 thousand as of December 31, 2015) | $ | 11,840 | $ | 25,829 | ||
Restricted deposits | $ | 1,758 | $ | 325 | ||
Restricted deposit for put option | $ | 12,028 | $ | - | ||
Accounts receivable (VIE - $593 thousand as of December 31, 2015) | $ | 3,173 | $ | 3,804 | ||
Inventory* | $ | 481 | $ | 1,476 | ||
Accumulated costs with respect to projects in excess of progress payments | $ | 151 | $ | - | ||
Due from Controlling Shareholders | $ | 196 | $ | 574 | ||
Income tax receivable | $ | 267 | $ | - | ||
Other current assets (VIE - $137 thousand as of December 31, 2015) | $ | 353 | $ | 1,812 | ||
Total Current Assets* | $ | 30,247 | $ | 33,820 | ||
NON-CURRENT ASSETS: | ||||||
Other long term assets | $ | - | $ | 112 | ||
Restricted deposit for put option | $ | - | $ | 11,900 | ||
Property and equipment, net | $ | 1,588 | $ | 757 | ||
Total Non-Current Assets | $ | 1,588 | $ | 12,769 | ||
Total Assets* | $ | 31,835 | $ | 46,589 | ||
LIABILITIES & SHAREHOLDER'S EQUITY: | ||||||
CURRENT LIABILITIES: | ||||||
Accrued payroll and other compensation related accruals | $ | 270 | $ | 60 | ||
Accounts payable, accrued expenses and other accounts payable* | $ | 4,952 | $ | 1,844 | ||
Put option liability | $ | 11,900 | $ | - | ||
Income tax payable | $ | 32 | $ | 6,062 | ||
Accrued expenses and accounts payable with respect to Projects (VIE - $588 thousand as of December 31, 2015)* | $ | 4,734 | $ | 6,967 | ||
Due to related company | $ | - | $ | 600 | ||
Progress payments in excess of accumulated costs with respect to Projects* | $ | - | $ | 1,019 | ||
Total Current Liabilities* | $ | 21,888 | $ | 16,552 | ||
NON CURRENT LIABILITIES: | ||||||
Other accounts payable | $ | - | $ | 112 | ||
Put option liability | $ | - | $ | 11,900 | ||
Accrued severance pay | $ | 245 | $ | 270 | ||
Total Non Current Liabilities | $ | 245 | $ | 12,282 | ||
Total Liabilities* | $ | 22,133 | $ | 28,834 | ||
SHAREHOLDERS' EQUITY | ||||||
Preferred shares $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding at December 31, 2016 and December 31, 2015. | $ | - | $ | - | ||
Ordinary shares $0.0001 par value, 200,000,000 shares authorized, 25,756,142 and 25,276,142 shares issued and outstanding at December 31, 2016 and December 31, 2015, respectively. | $ | 3 | $ | 3 | ||
Additional paid in capital | $ | 18,560 | $ | 18,560 | ||
Accumulated deficit (VIE - $906 thousand as of December 31, 2015) | $ | (8,861) | $ | (808) | ||
Total Shareholders' Equity | $ | 9,702 | $ | 17,755 | ||
Total Liabilities and Shareholders' Equity* | $ | 31,835 | $ | 46,589 | ||
* Reclassified |
Ability Inc. | ||||||||||||
Consolidated Statements of Comprehensive Income (Loss) | ||||||||||||
Unaudited | Audited | |||||||||||
Three months ended | Year ended | |||||||||||
December 31, | December 31, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
U.S. Dollar in thousands, except per share data | ||||||||||||
Revenues | $ | 2,538 | $ | 1,967 | $ | 16,508 | $ | 52,151 | ||||
Cost of revenues | $ | 1,164 | $ | 1,705 | $ | 8,617 | $ | 29,654 | ||||
Gross profit | $ | 1,374 | $ | 262 | $ | 7,891 | $ | 22,497 | ||||
Sales and marketing expenses | $ | 1,317 | $ | 440 | $ | 5,323 | $ | 3,305 | ||||
General and administrative expenses | $ | 3,795 | $ | 259 | $ | 9,662 | $ | 1,317 | ||||
Operating income (loss) | $ | (3,738) | $ | (437) | $ | (7,094) | $ | 17,875 | ||||
Finance (income) expenses, net | $ | (116) | $ | 57 | $ | (127) | $ | 99 | ||||
Income (loss) before income taxes | $ | (3,622) | $ | (494) | $ | (6,967) | $ | 17,776 | ||||
Income taxes (benefit) expenses | $ | 210 | $ | (114) | $ | 1,086 | $ | 3,023 | ||||
Net Income (loss) | $ | (3,832) | $ | (380) | $ | (8,053) | $ | 14,753 | ||||
Weighted-average ordinary shares outstanding - Basic and diluted | 24,582,874 | 24,582,874 | 24,582,874 | 24,582,874 | ||||||||
Earnings (loss) per ordinary basic and diluted | $ | (0.16) | $ | (0.02) | $ | (0.33) | $ | 0.60 | ||||
Ability Inc. | ||||||
Consolidated Statements of Cash Flows | ||||||
Audited | ||||||
Year ended | ||||||
December 31, | ||||||
2016 | 2015 | |||||
U.S. Dollar in thousands | ||||||
CASH FLOW FROM OPERATING ACTIVITIES | ||||||
Net income (loss) | $ | (8,053) | $ | 14,753 | ||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||
Depreciation | $ | 149 | $ | 132 | ||
Amortization | $ | 193 | - | |||
Impairment of inventory | $ | 201 | - | |||
Impairment of fixed assets | $ | 114 | - | |||
Capital (gain) loss | $ | (10) | $ | 18 | ||
Change in operating assets and liabilities: | ||||||
Restricted deposits | $ | (1,433) | $ | 162 | ||
Accounts receivable | $ | 631 | $ | (3,756) | ||
Inventory* | $ | (311) | (799) | |||
Deferred taxes | $ | - | $ | (423) | ||
Other current assets | $ | 1,459 | $ | (1,180) | ||
Restricted deposit for put option | $ | (128) | $ | - | ||
Accrued payroll and other compensation related accruals* | $ | 210 | $ | (291) | ||
Accounts payable, accrued expenses and other accounts payable* | $ | 3,108 | $ | 1,030 | ||
Income tax payable | $ | (2,674) | $ | 2,426 | ||
Accrued expenses and accounts payable with respect to Projects* | $ | (2,233) | $ | 2,618 | ||
Due to related company | $ | (600) | $ | 600 | ||
Progress payments in excess of accumulated costs with respect to Projects* | $ | (1,170) | $ | (5,304) | ||
Accrued severance pay | $ | (25) | $ | 171 | ||
Total adjustments | $ | (2,519) | $ | (4,596) | ||
Net cash provided by (used in) operating activities | $ | (10,572) | $ | 10,157 | ||
CASH FLOW FROM INVESTING ACTIVITIES | ||||||
Purchase of Property and equipment | $ | (182) | $ | (353) | ||
Proceeds from sale of Property and equipment | $ | 10 | $ | 158 | ||
Loans repaid by related company, net | $ | - | $ | 709 | ||
Net cash provided by (used in) investing activities | $ | (172) | $ | 514 | ||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Proceeds from the Reverse Merger, net of transactions costs | $ | - | $ | 18,995 | ||
Dividends paid | $ | - | $ | (14,951) | ||
Due from/to Controlling Shareholders, net * | $ | 378 | $ | (595) | ||
Withholding taxes paid by the Company on behalf of the Controlling shareholders' with respect to dividends distributed | $ | (4,393) | - | |||
Withholding taxes paid by the Controlling Shareholders to the Company with respect to dividends distributed, to be paid by the Company to the Israeli Tax Authorities | $ | 770 | $ | - | ||
Net cash provided by (used in) financing activities | $ | (3,245) | $ | 3,449 | ||
Net Change In Cash | $ | (13,989) | $ | 14,120 | ||
CASH AT BEGINNING OF THE YEAR | $ | 25,829 | $ | 11,709 | ||
CASH AND CASH EQUIVALENTS AT END OF THE FISCAL PERIOD | $ | 11,840 | $ | 25,829 | ||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||
Cash paid: | ||||||
Interest and banks' charges | $ | 36 | $ | 40 | ||
Income tax | $ | 3,758 | $ | 568 | ||
* Reclassified |
Ability Inc. | ||||||||||||
Consolidated Statements of EBITDA | ||||||||||||
Unaudited | Audited | |||||||||||
Three months ended | Year ended | |||||||||||
December 31, | December 31, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
U.S. Dollar in thousands | ||||||||||||
Operating income (loss) | $ | (3,738) | $ | (437) | $ | (7,094) | $ | 17,875 | ||||
Depreciation | $ | 37 | $ | 56 | $ | 149 | $ | 132 | ||||
Amortization | $ | 193 | $ | - | $ | 193 | $ | - | ||||
Impairment of inventory | $ | 201 | $ | - | $ | 201 | $ | - | ||||
Impairment of fixed assets | $ | - | $ | - | $ | 114 | $ | - | ||||
EBITDA income (loss) | $ | (3,307) | $ | (381) | $ | (6,437) | $ | 18,007 | ||||
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ability-inc-reports-fourth-quarter-and-full-year-2016-financial-results-300458686.html
SOURCE Ability Inc.
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