Star Energy Regulatory News (STAR)

 June 30

December 31

Note

2018

2017

2017

Unaudited

Unaudited

Audited

ASSETS

NON-CURRENT ASSETS:

Property, plant and equipment, net

502

343

303

Intangible assets, net

3

2,376

2,508

2,457

Income Tax Authorities

46

43

44

Total Non-Current Assets

2,924

2,894

2,804

CURRENT ASSETS:

Inventories

2,329

1,993

1,485

Trade receivables (net of allowance for doubtful accounts of $39, $137 and $48 thousand as of June 30, 2018 and 2017 and December 31,2017)

1,443

1,011

1,772

Other receivables

129

36

101

Short-term deposit

54

53

55

Cash and cash equivalents

178

281

93

Total Current Assets

4,133

3,374

3,506

TOTAL ASSETS

7,057

6,268

6,310

LIABILITIES AND EQUITY

EQUITY

3,738

2,752

3,032

NON-CURRENT LIABILITIES:

Long-term loans from banks

101

302

155

Leasehold Liabilities

84

-

-

Total Non-Current Liabilities

185

302

155

CURRENT LIABILITIES:

Short-term bank credit

44

108

227

Short-term loans and current maturities of long-term loans

232

381

279

Convertible debentures

-

102

131

Trade payables

1,819

2,101

1,522

Shareholders and related parties

5

714

288

713

Other payables

219

234

251

Leasehold Liabilities

106

-

-

Total Current Liabilities

3,028

3,214

3,123

TOTAL LIABILITIES AND EQUITY

7,057

6,268

6,310

Six Months Ended June 30

Year Ended December 31

Note

2018

2017

2017

Unaudited

Unaudited

Audited

Revenues

3,092

1,922

5,440

Cost of sales

(1,864)

(1,019)

(3,360)

Gross profit

1,228

903

2,080

Operating expenses:

Research and development, net

(124)

(134)

(237)

Selling and marketing

(292)

(264)

(558)

General and administrative

(1,288)

(1,095)

(2,196)

Other income (expenses)

(34)

22

 22

(1,738)

(1,471)

(2,969)

Operating loss

(510)

(568)

(889)

Net finance income (expenses)

6

33

(357)

(461)

Total comprehensive loss for the period

(477)

(925)

(1,350)

 Loss per share:

Basic and diluted loss per share (in dollars)

4

(0.002)

(0.006)

(0.007)

Share

Capital *

Premium on Shares

Capital Reserve

Capital Reserve for Share-based payment

Accumulated Loss

Total

(Unaudited)

Balance- January 1, 2018

-

9,796

89

602

(7,455)

3,032

Issue of share capital, net of expenses - see Notes 1(a)3 - 1(a)5

-

1,049

-

-

-

1,049

Share based payment - Note 4

-

-

-

134

-

134

Expiry options and warrants - Note 4

-

135

-

(135)

-

-

Comprehensive loss for the period

-

-

-

-

 (477)

(477)

Balance- June 30, 2018

-

10,980

89

601

(7,918)

3,738

(Unaudited)

Balance- January 1, 2017

-

8,332

89

428

(6,105)

2,744

Issue of share capital, net of expenses

-

912

-

-

-

912

Issue of convertible debentures

-

-

2

-

-

2

Share based payment

-

-

-

19

-

19

Comprehensive loss for the period

-

-

-

-

(925)

(925)

Balance- June 30, 2017

-

9,244

91

447

(7,030)

2,752

(Audited)

Balance- January 1, 2017

-

8,332

89

428

(6,105)

2,744

Proceeds from issued share capital, net of expenses

-

1,464

-

-

-

1,464

Share based payment

-

-

-

174

-

174

Comprehensive loss for the year

-

-

-

-

(1,350)

(1,350)

Balance- December 31, 2017

-

9,796

89

602

(7,455)

3,032

Six Months Ended

June 30

Year Ended December 31

2018

2017

2017

CASH FLOWS FROM OPERATING ACTIVITIES:

Unaudited

Unaudited

Audited

Comprehensive loss

(477)

(925)

(1,350)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

303

267

510

Interest expense and exchange rate differences

(50)

89

92

Equity settled option-based payment expense

134

19

174

Capital loss (gain)

33

(19)

(19)

Changes in assets and liabilities:

Increase in inventories

(844)

(737)

(229)

Decrease (Increase) in trade receivables

329

380

(381)

Decrease (Increase) in other receivables

(28)

29

(36)

Increase in Income Tax Authorities

(3)

(9)

(10)

Increase in trade payables

297

676

96

Increase (Decrease) in other payables

(32)

56

 73

Net cash used in operating activities

(338)

(174)

(1,080)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property and equipment

(46)

(150)

(144)

Proceeds from sales of property, plant and equipment

-

62

61

Increase (Decrease) in short-term deposits

1

4

2

Purchase of intangible assets

(136)

(107)

(264)

Net cash used in investing activities

(181)

(191)

(345)

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of short-term bank credit, net

(183)

(40)

(38)

Proceeds from (Repayment of) a convertible debenture, net

(131)

92

131

Repayment of Short-term loans from banks

-

(31)

-

Receipt of long-term loans

97

46

46

Proceeds from shareholders and related parties, net

1

14

406

Repayment of Leasehold liability

(49)

Repayment of long-term loans

(180)

(216)

(357)

Consideration from issue of shares

1,049

746

1,295

Net cash provided by financing activities

604

611

1,483

Increase in cash and cash equivalents

85

246

58

Cash and cash equivalents at the beginning of the period

93

35

35

Cash and cash equivalents at the end of the period

178

281

93

Appendix A - Additional Information

Interest paid during the period

(25)

 (46)

(101)

Appendix B - Non-cash financing activities

Issuance of shares to related parties in payment of salaries from current periods

-

100

100

Issuance of shares to supplier in payment of partial debt

-

70

69

Conversion to shares of convertible debentures and unsecured loans

-

-

-

NOTE 1 -

GENERAL INFORMATION

a.

The Reporting Entity

1. Starcom plc ("the Company") was incorporated in Jersey on November 28, 2012. The Group specializes in easy-to-use practical wireless solutions that combine advanced technology, telecommunications and digital data for the protection and management of people, fleets of vehicles, containers and assets and engages in production, marketing, distribution, research and development of G.P.S. systems.

The Company fully owns Starcom G.P.S. Systems Ltd., an Israeli company that engages in the same field, and Starcom Systems Limited, a company in Jersey.During the reported period, Starcom Systems America Inc. terminated its activity, which caused a loss of $34 thousand to the group results.

The Company's shares are admitted for trading on London's Stock Exchange Alternative Investment Market ("AIM").

Address of the official Company office in Israel of Starcom G.P.S. Systems Ltd. is:

16 Hata'as St., Kfar-Saba, Israel.

Address of the Company's registered office in Jersey of Starcom Systems Limited is:

Forum 4, Grenville Street, St Helier, Jersey, Channel Islands, JE4 8TQ

2. During January 2018 the Company raised £ 315 ($439) thousand before expenses, through a placing of 14,000,000 new Ordinary Shares of no par value at a price of 2.25p per Placing Share. 

3. During May 2018 the Company raised £ 365 ($486) thousand before expenses, through a placing of 14,600,000 new Ordinary Shares of no par value at a price of 2.5p per Placing Share.

4. On April 2018 the company granted its senior management and directors' options to subscribe for 10,500,000 new Ordinary Shares at 3.25p per share.

The Options vest as to 50 per cent. one year after grant and, as to the balance, two years after grant, except for the options granted to the Company's CFO, which vest over three years as to one third at the end of each respective year. Any unexercised options expire at the end of 10 years from grant. 

5. During the reported period, 4,440,000 warrants were exercised into Ordinary Shares in consideration of £111 ($155) thousand before expenses. The remaining 4,226,667 warrants expired - see also note 4.

b.

Definitions in these financial statements:

1.

International Financial Reporting Standards (hereinafter: "IFRS") - Standards and interpretations adopted by the International Accounting Standards Board (hereafter: "IASB") that include international financial reporting standards (IFRS) and international accounting standards (IAS), with the addition of interpretations to these Standards as determined by the International Financial Reporting Interpretations Committee (IFRIC) or interpretations determined by the Standards Interpretation Committee (SIC), respectively.

2.

The Company - Starcom Plc.

3. 

The subsidiaries - Starcom G.P.S. Systems Ltd. And Starcom Systems Limited.

4.

Starcom Jersey - Starcom Systems Limited.

5.

Starcom Israel - Starcom G.P.S. Systems Ltd.

6.

The Group - Starcom Plc. and the Subsidiaries.

7.

Related party - As determined by International Accounting Standard No. 24 in regard to related parties.

NOTE 2 -

BASIS OF PREPARATION AND CHANGE IN THE GROUP'S ACCOUNTING POLICIES

a.

Basis of preparation

b.

The interim consolidated financial statements have been prepared in accordance with generally accepted accounting principles for the preparation of financial statements for interim periods, as prescribed in International Accounting Standard No. 34 ("Interim Financial Reporting").

The interim consolidated financial information should be read in conjunction with the annual financial statements as of December 31, 2017 and for the year ended on that date and with the notes thereto.

The significant accounting policies applied in the annual financial statements of the Company as of December 31, 2017 are applied consistently in these interim consolidated financial statements.

 Use of estimates and judgments

The preparation of financial statements in conformity with IFRS requires management of the Company to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

The judgment of management, when implementing the Group accounting policies and the basic assumptions utilized in the estimates that are bound up in uncertainties are consistent with those that were utilized to prepare the annual financial statements.

c.

New standards, interpretations and amendments adopted by the Group

The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual consolidated financial statements for the year ended 31 December 2017, except for the adoption of new standards effective as of 1 January 2018.

The Group has early adopted IFRS 16 as follows:

The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported under IAS 17 and IFRIC 4. The details of accounting policies under IAS 17 and IFRIC 4 are disclosed separately if they are different from those under IFRS 16 and the impact of changes is disclosed in Note 3.

Significant accounting policy

Policy applicable from 1 January 2018:

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:

· the contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified;

· the Group has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

· the Group has the right to direct the use of the asset. The Group has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Group has the right to direct the use of the asset if either:

· the Group has the right to operate the asset; or

· the Group designed the asset in a way that predetermines how and for what purpose it will be used.

This policy is applied to contracts entered into, or changed, on or after 1 January 2018.

At inception or on reassessment of a contract that contains a lease component, the Group

allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, the Group has elected not to separate non-lease components and account for the lease and non-lease components as a single lease component.

Policy applicable before 1 January 2018

For contracts entered into before 1 January 2018, the Group determined whether the arrangement was or contained a lease based on the assessment of whether:

· fulfilment of the arrangement was dependent on the use of a specific asset or assets; and

· the arrangement had conveyed a right to use the asset. An arrangement conveyed the right to use the asset if one of the following was met:

· the purchaser had the ability or right to operate the asset while obtaining or controlling more than an insignificant amount of the output;

· the purchaser had the ability or right to control physical access to the asset while obtaining or controlling more than an insignificant amount of the output; or

· facts and circumstances indicated that it was remote that other parties would take more

than an insignificant amount of the output, and the price per unit was neither fixed per unit of output nor equal to the current market price per unit of output.

As a lessee

The Group recognizes a right-of-use asset and a lease liability at the lease commencement

date. The right-of-use asset is initially measured at cost, which comprises the initial amount

of the lease liability adjusted for any lease payments made at or before the commencement

date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the

commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

-- fixed payments, including in-substance fixed payments;

-- variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date;

-- amounts expected to be payable under a residual value guarantee; and

-- the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortized cost using the effective interest method. It is

remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets that do not meet the definition of investment property in 'property, plant and equipment' and lease liabilities in 'loans and borrowings' in the statement of financial position.

Short-term leases and leases of low-value assets

The Group has elected not to recognize right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less and leases of low-value assets, including IT equipment. The Group recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.

 In the comparative period, as a lessee the Group classified leases that transfer substantially all of the risks and rewards of ownership as finance leases. When this was the case, the leased assets were measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Minimum lease payments were the payments over the lease term that the lessee was required to make, excluding any contingent rent.

Subsequently, the assets were accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases were classified as operating leases and were not recognized in the Group's statement of financial position. Payments made under operating leases were recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received were recognized as an integral part of the total lease expense, over the term of the lease.

Under IAS 17

In the comparative period, as a lessee the Group classified leases that transfer substantially all of the risks and rewards of ownership as finance leases. When this was the case, the leased assets were measured initially at an amount equal to the lower of their fair value and the present value of the minimum lease payments. Minimum lease payments were the payments over the lease term that the lessee was required to make, excluding any contingent rent.

Subsequently, the assets were accounted for in accordance with the accounting policy applicable to that asset.

Assets held under other leases were classified as operating leases and were not recognized in the Group's statement of financial position. Payments made under operating leases were recognized in profit or loss on a straight-line basis over the term of the lease. Lease incentives received were recognized as an integral part of the total lease expense, over the term of the lease.

As a lessee

'Property, plant and equipment' comprise owned and leased assets that do not meet the definition of investment property.

The Group leases assets including buildings and vehicles. Information about leases for which the Group is a lessee is presented below.

Right-of-use assets

Property

Vehicles

Total

Balance at January 1, 2018

159

80

239

Depreciation charge for the period

(40)

(17)

(57)

Balance at June 30, 2018

119

63

182

Additions to the right-of-use assets during 2018 were in zero thousand.

Lease liabilities

Maturity analysis - contractual undiscounted cash flows

Less than one year

111

One to five years

87

Total undiscounted lease liabilities at June 30, 2018

198

Lease liabilities included in the statement of financial position at June 30, 2018

Current

106

Non-current

84

190

Amounts recognized in profit or loss

Interest on lease liabilities

(5)

Expenses relating to short-term leases

(7)

Amounts recognised in statement of cash flows

Total cash outflow for leases

(54)

Total

Cost:

Balance as of January 1 2018

4,202

Additions during the year

136

Balance as of June 30 2018

4,338

Accumulated Amortization:

Balance as of January 1 2018

(1,543)

Amortization during the year

(217)

Balance as of June 30 2018

(1,760)

Impairment of assets

(202)

Net book value as of June 30 2018

2,376

Total

Cost:

Balance as of January 1 2017

3,938

Additions during the year

107

Balance as of June 30 2017

4,045

Accumulated Amortization:

Balance as of January 1 2017

(1,135)

Amortization during the year

(200)

Balance as of June 30 2017

(1,335)

Impairment of assets

(202)

Net book value as of June 30 2017

2,508

Total

Cost:

Balance as of January 1 2017

3,938

Additions during the year

264

Balance as of December 31 2017

4,202

Accumulated Amortization:

Balance as of January 1 2017

(1,135)

Amortization during the year

(408)

Balance as of December 31 2017

(1,543)

Impairment of assets

(202)

Net book value as of December 31 2017

2,457

NOTE 4 -

SHARE CAPITAL

a.

Composition - common stock of no par value, issued and outstanding - 273,449,513 shares and 240,409,513 shares as of June 30, 2018 and December 31, 2017, respectively.

b.

A Company share grants to its holder voting rights, rights to receive dividends and rights to net assets upon dissolution.

c.

See Note 1(a).

d.

Weighted average number of shares used for calculation of basic and diluted loss per share:

June 30 June 30

December 31

2018

2017

2017

Number

265,960,494

157,156,219

187,031,676

e.

Share-based payment

The following table lists the number of share options and the exercise prices of share options during the reported period: