SatixFy(SATX) - 2024 Q4 - Annual Report

PART I Key Information The company faces significant financial and operational risks, including a history of losses and dependence on key customers - The company's financial statements include an explanatory paragraph expressing substantial doubt about its ability to continue as a going concern[32][42][86] - SatixFy has a history of incurring net losses, with losses of approximately $45.7 million in 2024 and $29.7 million in 2023[42][50][83] - The company is subject to risks associated with its pending merger with MDA Space, which if not completed could negatively impact its stock and operations[44][207][208] - Operations are highly dependent on third-party manufacturers, particularly a single foundry, without long-term supply contracts[42][56][57] - In 2024, the three largest customers accounted for approximately 95% of total revenue, creating significant customer concentration risk[64][75][310] Information on the Company The company operates as a fabless semiconductor designer for the satellite communications industry, focusing on its core chip technology - SatixFy is a fabless semiconductor company designing advanced chips (ASICs and RFICs) for the entire satellite communications value chain[228][230][232] - The company has invested over $271 million in R&D since its inception through December 31, 2024, supported by significant grants[228][265][315] - A strategic sale of its satellite payload subsidiary to MDA Space for $40 million plus $20 million in prepayments occurred in August 2023[245][246][247] - On April 1, 2025, SatixFy entered a merger agreement with MDA Space, where each share will be converted into the right to receive $2.10 in cash[344][345] Revenue Performance (2023-2024) | Year Ended December 31, | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenues | $20.6 million | $10.7 million | - As of December 31, 2024, the company had a revenue backlog of approximately $88 million[311] Operating and Financial Review and Prospects Management discusses rising revenues, continued net losses, and critical dependence on the pending MDA merger for future viability Key Financial Metrics (2023 vs. 2024) | Metric | 2024 (in thousands USD) | 2023 (in thousands USD) | | :--- | :--- | :--- | | Total Revenues | $20,648 | $10,730 | | Gross Profit | $12,327 | $4,792 | | Loss from Operations | $(22,789) | $(41,761) | | Net Loss | $(45,665) | $(29,715) | - Total revenues increased by 92% in 2024, driven by a 204% increase in product sales and a 59% increase in development services revenue[399][400][401] - Net R&D expenses decreased by 24% to $22.2 million in 2024, mainly due to a subsidiary sale and increased grants[405] - The company's auditors issued a "going concern" opinion, citing deficits and debt, with recovery dependent on the MDA merger or new capital[415][770] - As of December 31, 2024, the company had cash of $14.4 million and total borrowings of approximately $70 million[414][418] Directors, Senior Management and Employees This section details the company's leadership, compensation, board structure, and employee base - The leadership team includes Yoav Leibovitch as Executive Chairman and Nir Barkan as Chief Executive Officer[467][469][470] - Aggregate compensation for executive officers and directors in 2024 was approximately $4.5 million, excluding share-based compensation[484] - As of December 31, 2024, the company had 162 full-time employees, with 103 being engineers[582] - The Board of Directors is divided into three classes with staggered three-year terms and maintains Audit and Compensation Committees[507][539] - The company has adopted a compensation policy in line with Israeli law, requiring board and shareholder approval at least every three years[550] Major Shareholders and Related Party Transactions This section outlines the company's ownership structure and significant dealings with related parties Major Shareholders' Beneficial Ownership (as of March 31, 2025) | Shareholder | Percentage Owned | | :--- | :--- | | Yoav Leibovitch (Executive Chairman) | 26.4% | | Simona Gat | 19.9% | | Endurance Antarctica Partners, LLC | 11.4% | | FP Credit Partners II, L.P. | 6.8% | - The company issued 27.5 million Price Adjustment Shares to founders, which vest upon achieving specific stock price targets or a change of control[601][602] - Grants from the European Space Agency (ESA) are disclosed as a related party transaction due to a board member's role at the UK Space Agency[607] - The company has entered into indemnification agreements with all its directors and executive officers[608] Financial Information This section covers legal proceedings and the company's dividend policy - The company is contesting an ongoing lawsuit where plaintiffs claim entitlement to an aggregate of two million Ordinary Shares[611][1090][1091] - A legal complaint regarding warrants was settled in December 2023 for a total payment of $2.3 million[613][1096] - The company has never paid cash dividends and does not anticipate doing so, partly due to restrictions in its Credit Agreement[188][614] The Offer and Listing This section provides details about the trading of the company's securities - The company's Ordinary Shares are traded on the NYSE American under the trading symbol 'SATX'[4][616] Additional Information This section covers material contracts, exchange controls, and key tax considerations for shareholders - The company has not entered into any material contracts outside the ordinary course of business in the last two years[623] - There are no material foreign exchange restrictions under Israeli law for Israeli holders of the company's Ordinary Shares[624] - The company may be eligible for a reduced corporate tax rate of 12% as a "Preferred Technological Enterprise" under Israeli law[184][643][646] - For U.S. tax purposes, there is a risk the company could be classified as a Passive Foreign Investment Company (PFIC), which could adversely affect U.S. investors[156][680] Quantitative and Qualitative Disclosures About Market Risk This section outlines the company's exposure to foreign currency and interest rate risks - The company is primarily exposed to market risks from foreign currency exchange rates and interest rates[706] - A hypothetical 10% change in the NIS, GBP, and EUR exchange rates in 2024 would have impacted the operating loss by approximately $2 million[707] - Interest rate risk is limited as all outstanding debt is at fixed rates, though subject to certain adjustments[709] Description of Securities Other than Equity Securities This section indicates that the item is not applicable to the company - This item is not applicable to the company[710][711][712] PART II Controls and Procedures This section addresses the effectiveness of the company's internal and disclosure controls - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2024[717] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2024[718] - The annual report does not include an auditor attestation report on internal controls, as the company is an exempt emerging growth company[719] Corporate Governance and Other Matters This section covers various corporate governance, compliance, and cybersecurity topics - The Board has identified two audit committee financial experts, Mr. Moshe Eisenberg and Ms. Mary P. Cotton[721] - As a foreign private issuer, the company follows certain Israeli home country governance practices in lieu of NYSE American requirements[731][734] - The company has an insider trading policy that establishes blackout periods and pre-clearance procedures for senior management[735][736] - Cybersecurity risk is overseen by the Board and managed by a Risk Management Team, with no material incidents to date[738][740][745] Principal Accountant Fees (2023-2024) | Services Rendered (in thousands USD) | 2024 | 2023 | | :--- | :--- | :--- | | Audit fees | $294 | $230 | | Audit-related fees | $108 | $69 | | Tax fees | $0 | $20 | | Total | $403 | $319 | PART III Financial Statements This section contains the audited consolidated financial statements, which highlight a going concern uncertainty - The independent auditor's report highlights a "Substantial Doubt About the Company's Ability to Continue as a Going Concern"[770] Consolidated Statement of Financial Position (as of Dec 31) | Metric (in thousands USD) | 2024 | 2023 | | :--- | :--- | :--- | | Total Assets | $35,274 | $54,702 | | Total Liabilities | $137,566 | $113,488 | | Total Shareholders' Deficit | $(102,292) | $(58,786) | Consolidated Statement of Comprehensive Loss (Year Ended Dec 31) | Metric (in thousands USD) | 2024 | 2023 | | :--- | :--- | :--- | | Total Revenues | $20,648 | $10,730 | | Gross Profit | $12,327 | $4,792 | | Loss for the period | $(45,665) | $(29,715) | | Basic and diluted loss per share | $(0.54) | $(0.37) | - Net cash used in operating activities was $17.7 million in 2024, while net cash provided by investing activities was $18.8 million[438][439][441] Exhibits This section provides an index of all exhibits filed with the annual report - Key exhibits filed include the company's Articles of Association, the Credit Agreement, and the 2025 Merger Agreement with MDA Space[755][756][758]