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Financial Instruments and Financial Risk Management | 12 Months Ended
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Dec. 31, 2024
Financial Instruments and Financial Risk Management [Abstract] |
FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT | NOTE 3 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT: Financial risk management The Company’s activities expose it to a variety of financial risks. The Company’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Company’s financial performance. Risk management is carried out by the Company’s finance department in accordance with a policy approved by the Board of Directors. The Company’s finance department identifies, evaluates and hedges the financial risks. The Board of Directors provides written principles for the overall management of the risks. Credit risk Credit risk arises mainly from cash and cash equivalents, bank deposits, trade receivables and debt investments measured at fair value through OCI. For cash, cash equivalents and bank deposits, the Company estimates that since the liquid instruments are mainly invested with highly rated institutions, the credit and interest risks associated with these balances are low. Credit risk of trade receivables is the risk that customers may fail to pay their debts. The Company mitigates the risk by ensuring its customers have sufficient funds to meet their needs and by selling to customers of high credit quality. The Company has not historically experienced material credit losses. Additionally, all of the Company’s debt investments measured at fair value through OCI are considered to have low credit risk. Management considers “low credit risk” for marketable bonds to be an investment grade credit rating with at least one major rating agency. Foreign exchange risk The Company operates internationally and is exposed to foreign exchange risk arising from foreign currency transactions, primarily with respect to the New Israeli Shekel (“NIS”). Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities denominated in foreign currency. These foreign currency-denominated transactions consist primarily of personnel, leases and other overhead costs. For the 2024, 2023 and 2022 reporting periods, foreign currency exchange gains and losses were immaterial. Liquidity risk Prudent liquidity risk management requires maintaining sufficient cash and cash equivalents. The Company works to maintain sufficient cash and cash equivalents, taking into account forecasts as to the cash flows required to fund its activities, in order to minimize the liquidity risk to which it is exposed. Cash flow forecasting is performed by the Company’s finance department on a consolidated basis. The Company monitors rolling forecasts of the Company’s liquidity requirements to ensure it has sufficient cash to meet operational needs. Surplus cash held by the operating entities of the Company over and above the balance required for working capital management is invested in interest bearing current accounts and time deposits, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the abovementioned forecasts. The table below categorizes non-derivative financial liabilities into relevant maturity groupings based on the remaining period at financial position date to the contractual maturity date.
|  | Less than one year |  |  | Between one to two years |  |  | More than two years |
|  | U.S. dollars in thousands |
December 31, 2024: |  |  |  |  |  |  |  |  |
Lease liabilities |  |  | 359 |  |  |  | 261 |  |  |  | - |
Long-term loans |  |  | 938 |  |  |  | 32 |  |  |  | - |
Accounts payable and accruals |  |  | 4,735 |  |  |  | - |  |  |  | - |
|  |  | 6,032 |  |  |  | 293 |  |  |  | - |
December 31, 2023: |  |  |  |  |  |  |  |  |  |  |  |
Lease liabilities |  |  | 370 |  |  |  | 303 |  |  |  | 220 |
Long-term loans |  |  | 290 |  |  |  | 782 |  |  |  | 20 |
Accounts payable and accruals |  |  | 2,808 |  |  |  | - |  |  |  | - |
|  |  | 3,468 |  |  |  | 1,085 |  |  |  | 240 |
Fair value estimation Below analyzes financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:
| ● | Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
| ● | Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and
| ● | Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The following tables present the Company’s financial instruments measured at fair value by levels as of December 31, 2024 and 2023:
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | U.S. dollars in thousands |
As of December 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |
Debt investments at fair value through profit or loss |  |  |  |  |  |  |  |  |  |  |  |
Mutual Fund |  |  | 555 |  |  |  | - |  |  |  | - |  |  |  | 555 |
Unlisted equity securities |  |  | - |  |  |  | - |  |  |  | 82 |  |  |  | 82 |
Debt investments at fair value through OCI |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
U.S. corporate bonds |  |  | - |  |  |  | 3,534 |  |  |  | - |  |  |  | 3,534 |
Israel corporate bonds |  |  | - |  |  |  | 1,378 |  |  |  | - |  |  |  | 1,378 |
U.K. corporate bonds |  |  | - |  |  |  | 907 |  |  |  | - |  |  |  | 907 |
Other corporate bonds |  |  | - |  |  |  | 3,137 |  |  |  | - |  |  |  | 3,137 |
Israel government bonds |  |  | - |  |  |  | 300 |  |  |  | - |  |  |  | 300 |
Total financial assets |  |  | 555 |  |  |  | 9,256 |  |  |  | 82 |  |  |  | 9,893 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative financial instruments |  |  | - |  |  |  | - |  |  |  | 148 |  |  |  | 148 |
Total financial liabilities |  |  | - |  |  |  | - |  |  |  | 148 |  |  |  | 148 |
As of December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Financial assets |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unlisted equity securities |  |  | - |  |  |  | - |  |  |  | 82 |  |  |  | 82 |
Total financial assets |  |  | - |  |  |  | - |  |  |  | 82 |  |  |  | 82 |
Financial liabilities |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Derivative financial instruments |  |  | - |  |  |  | - |  |  |  | 109 |  |  |  | 109 |
Total financial liabilities |  |  | - |  |  |  | - |  |  |  | 109 |  |  |  | 109 |
Level 3 financial instruments The following table presents the changes in level 3 financial liabilities for each of the three years in the period ended December 31, 2024:
|  | Derivative financial instruments |  |  | Total |
|  | U.S. dollars in thousands |
Balance as of January 1, 2024 |  |  | 109 |  |  |  | 109 |
Changes within profit or loss |  |  | 39 |  |  |  | 39 |
Balance as of December 31, 2024 |  |  | 148 |  |  |  | 148 |
Balance as of January 1, 2023 |  |  | 26 |  |  |  | 26 |
Initial recognition |  |  | 1,197 |  |  |  | 1,197 |
Classification to equity |  |  | (1,116 | ) |  |  | (1,116 | )
Changes within profit or loss |  |  | 2 |  |  |  | 2 |
Balance as of December 31, 2023 |  |  | 109 |  |  |  | 109 |
Balance as of January 1, 2022 |  |  | 488 |  |  |  | 488 |
Changes within profit or loss |  |  | (462 | ) |  |  | (462 | )
Balance as of December 31, 2022 |  |  | 26 |  |  |  | 26 |
Valuation processes of the Company The Company used the Black-Scholes model to evaluate the fair value of derivative financial instruments related to several warrants previously granted to investors as of December 31, 2024 and 2023, using the following principal assumptions:
|  | Year ended December 31
|  | 2024 |  | 2023
Risk-free interest rate |  | 4.13%-4.25% |  | 4.01%-4.92%
Expected term (in years) |  | 0.48–1.99 |  | 0.86–2.99
Expected volatility |  | 110.83%–116.14% |  | 81.07%–94.33%
The Company also used the binomial model to evaluate the fair value of derivative financial instruments related to warrants previously granted to investors as of December 31, 2023, using the following principal assumptions:
|  | Year ended December 31
|  | 2023
Risk-free interest rate |  | 5.32%
Expected term (in years) |  | 0.43
Expected volatility |  | 91%
In addition, the Company used the Black-Scholes model to evaluate the fair value of warrants issued to investors under a private placement on September 14, 2023. See Note 13 for details regarding the valuation processes of the Company with respect to these warrants. Financial instruments Financial assets
|  | Financial assets at fair value through profit or loss |  |  | Financial assets at fair value through OCI |  |  | Financial assets at amortized cost |  |  | Total |
|  | U.S. dollars in thousands |
December 31, 2024 |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | - |  |  |  | - |  |  |  | 15,081 |  |  |  | 15,081 |
Accounts receivable (excluding prepaid expenses) |  |  | - |  |  |  | - |  |  |  | 3,446 |  |  |  | 3,446 |
Long-term deposits and restricted deposits |  |  | - |  |  |  | - |  |  |  | 124 |  |  |  | 124 |
Debt investments at fair value through profit or loss |  |  | 555 |  |  |  | - |  |  |  | - |  |  |  | 555 |
Unlisted equity securities |  |  | 82 |  |  |  | - |  |  |  | - |  |  |  | 82 |
Debt investments at fair value through OCI |  |  | - |  |  |  | 9,256 |  |  |  | - |  |  |  | 9,256 |
|  |  | 637 |  |  |  | 9,256 |  |  |  | 18,651 |  |  |  | 28,544 |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | - |  |  |  | - |  |  |  | 10,872 |  |  |  | 10,872 |
Accounts receivable (excluding prepaid expenses) |  |  | - |  |  |  | - |  |  |  | 2,194 |  |  |  | 2,194 |
Long-term deposits and restricted deposits |  |  | - |  |  |  | - |  |  |  | 107 |  |  |  | 107 |
Unlisted equity securities |  |  | 82 |  |  |  | - |  |  |  | - |  |  |  | 82 |
|  |  | 82 |  |  |  | - |  |  |  | 13,173 |  |  |  | 13,255 |
Financial liabilities
|  | Financial liabilities at fair value through profit or loss |  |  | Financial liabilities at amortized cost |  |  | Total |
|  | U.S. dollars in thousands |
December 31, 2024 |  |  |  |  |  |  |  |  |
Lease liabilities |  |  | - |  |  |  | 620 |  |  |  | 620 |
Accounts payable and accruals |  |  | - |  |  |  | 4,735 |  |  |  | 4,735 |
Long-term loans |  |  | - |  |  |  | 970 |  |  |  | 970 |
Derivative financial instruments |  |  | 148 |  |  |  | - |  |  |  | 148 |
|  |  | 148 |  |  |  | 6,325 |  |  |  | 6,473 |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |
Lease liabilities |  |  | - |  |  |  | 893 |  |  |  | 893 |
Accounts payable and accruals |  |  | - |  |  |  | 2,808 |  |  |  | 2,808 |
Long-term loans |  |  | - |  |  |  | 1,092 |  |  |  | 1,092 |
Derivative financial instruments |  |  | 109 |  |  |  | - |  |  |  | 109 |
|  |  | 109 |  |  |  | 4,793 |  |  |  | 4,902 |
Assets and liabilities which are not measured on a recurring basis at fair value, are presented at their carrying amount, which approximates their fair value.

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