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
|
|
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
|
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.