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WISeKey Reports FY 2018 Audited Consolidated Financial Results

WISeKey – To host a conference call on Tuesday, March 26th at 3:00 pm CET (10:00am ET)


  • Strong revenue growth and improved margins (FY 2018 vs. FY 2017)
    • 24.6% increase in total revenue to $53.7 million
    • 41% increase in total gross profit to $29.2 million
    • Significantly decreased net losses to $16.3 million
  • FY 2018 adjusted EBITDA of $6.2 million for the WISeKey Group excluding WISeCoin AG and discontinued operations following the sale of the QuoVadis SSL and PKI businesses (“QuoVadis Group”)
  • $45 million cash proceeds from the sale of QuoVadis Group in Q1 2019 paved the way for significant investments in IoT, Blockchain and AI growth initiatives required to increase monetization, and for full repayment of the Line of Credit with ExWorks Capital Fund I, L.P. in the amount of $25.3 million
  • 2019 expected to be another year of solid IoT operational performance due to strong offerings for securing Connected Cars with the ISTANA platform

ZUG, Switzerland, March 25, 2019 – WISeKey International Holding Ltd (“WISeKey Group” or the “Company”) (SIX: WIHN), a leading Swiss cybersecurity and IoT company, announced today its audited consolidated financial results for full year (FY) 2018 (period ended December 31, 2018).

FY 2018 Key Financials – WISeKey Group

(Million US$)
US GAAP20182017
Net sales from continuing operations34.333.7
Net sales from discontinued operations19.49.4
Gross profit from continuing operations16.015.8
Gross profit from discontinued operations13.24.9
Operating loss as reported (continuing)(9.1)(7.9)
Net loss attributable to WISeKey as reported(16.3)(24.3)
Adjusted EBITDA(3.5)(1.8)
Adjusted net income/(loss) attributable to WISeKey(3.5)(0.2)
Total Cash and restricted cash11.212.2

FY 2018 Key Financials – WISeKey Group excluding WISeCoin AG and discontinued operations (QuoVadis Group)

FY 2018
Net sales43,285
Cost of sales(18,319)
Gross profit24,966
Other operating income289
Research & development expenses(5,306)
Selling & marketing expenses(5,772)
General & administrative expenses(12,842)
Non-GAAP adjustments: 
Non-cash items 
Stock-based compensation1,660
Expenses settled in equity1,685
Non-recurring items
M&A-related legal fees1,294
M&A-related professional fees183
Adjusted EBITDA6,157

WISeKey Group – FY 2018 total revenue grew 24.6%

Carlos Moreira, Founder and CEO of WISeKey Group noted, “Our FY 2018 total revenue grew by $10.6 million or 24.6% from FY 2017.  Growth was driven by higher revenues from both the Cybersecurity and IoT businesses, from existing and new clients.  Customer adoption continued to accelerate reaching more than 4,500 customers across all regions at the end of 2018.”

Mr. Moreira continued, “We saw strong demand and higher adoption of WISeKey’s Semiconductor products for IoT with embedded security, products which are immune to cybersecurity attacks, in segments such as Connected Cars, Blockchain, illicit trade, luxury industry and industrial IoT.

Revenue growth was mainly due higher revenues generated from the development of the ISTANA platform and the subsequent license and rights sale to Daimler, the development of our partnership with Cisco for semiconductor products, new customer wins in the banking and legal sectors, and a larger geographic footprint in Europe, including Germany.  Also, our FY 2018 revenue included a full year of QuoVadis Group revenue, as compared to approximately nine months in FY 2017 (QuoVadis Group acquisition was completed in April 2017).

WISeKey Group – Net sales by region12 months ended December 31,
Million US$2018% of Total2017% of Total
North America19.436%16.338%
Asia Pacific2.65%3.78%
Latin America0.20%1.33%
Total Non-GAAP Net sales53.7100%43.1100%

In Europe, the main factors behind our growth were higher revenue generated from the ISTANA platform and Daimler opportunities, exceeding $4 million in total. Our presence for identification services in the banking and legal sectors increased to over $0.7 million and $0.5 million respectively, whilst the growth of our busines in Germany generated a revenue increase of over $1.0 million.

FY 2018 revenue from clients in North America grew by 19% or $3.1 million to $19.4 million.  Over $2 million of the growth in North America was driven by the development of our partnership with Cisco in our Semiconductors business. The remaining growth is attributable to the mPKI business with a year-on-year revenue increase of 6% in our Bermuda-based business, and the revenue of the QuoVadis entities acquired in April 2017 being recognized for the full 12 months in 2018, whereas in FY 2017 they were only consolidated for the period April 03 to December 31, 2017.

WISeKey Group – 41% increase in gross profit

In line with the increase in revenue, our gross profit increased by $8.5 million.  Our gross profit margin reached 54.3% in FY 2018 as compared to 48.0% in FY 2017. This is primarily due to the increased contribution of our mPKI activity which is software-based and, as such, has lower cost of sales.

WISeKey Group – EBITDA 

EBITDA for the WISeKey Group remained stable at a loss of $8.5 million in FY 2018, as compared to a loss of $8.4 million in FY 2017.

Excluding WISeCoin AG and discontinued operations, FY 2018 EBITDA was $1.3 million positive and adjusted EBITDA (excluding non-cash and non-recurring expenses) was $6.2 million positive.

WISeKey Group – significantly reduced net losses

Non-GAAP Consolidated Statement of Income / (Loss)12 months ended December 31,
USD’0002018 2017
Net sales53,69243,078
Cost of sales(24,515)(22,386)
Gross profit29,177 20,692
Other operating income3161,526
Research & development expenses(8,106)(7,386)
Selling & marketing expenses(8,598)(6,254)
General & administrative expenses(24,741)(22,088)
Total operating expenses(41,129) (34,202)
Operating income / (loss)(11,952) (13,510)
Non-operating income2,243769
Gain / (loss) on derivative liability(98)
Gain / (loss) on debt extinguishment(7,067)
Interest and amortization of debt discount(1,206)(1,501)
Non-operating expenses(5,502)(4,380)
Income / (loss) before income tax expense(16,417) (25,787)
Income tax (expense)/recovery1521,037
Net income/ (loss)(16,265) (24,750)

Net losses for FY 2018 were significantly reduced to $16.3 million as compared to losses of $24.8 million for FY 2017.  This was primarily due to a decrease in non-operating expenses of $7.8 million related to non-recurring financial charges incurred in FY 2017, including a $7.1 million debt extinguishment from the amendment of the ExWorks credit line.

WISeKey Group continues to show a heavy cost structure due to its investment strategy and new and innovative lines of business, such as WISeCoin. The sections below on the operating expenses provide additional details.

WISeKey Group – analysis of FY 2018 operating expenses

Total operating expenses increased by 20.2% or $6.9 million, from $34.2 million to $41.1 million, to meet WISeKey’s development strategy. Moreover, in FY 2018 operating expenses relating to the QuoVadis entities were consolidated for the full year, whereas in FY 2017 they were only consolidated for the period April 03 to December 31, 2017 (i.e. from the acquisition date). Operating expenses for the QuoVadis entities in the period April 03 to December 31, 2017 amounted to $3.1 million, hence a net increase in operating expenses of 11.1% or $3.8 million, when excluding this factor.

R&D expenses increased by $0.7 million, or by $0.3 million when excluding the impact of the QuoVadis R&D expenses not consolidated into WISeKey in FY 2017 ($0.4 million). An R&D stock-based compensation of $0.1 million was recorded in FY 2018 (Vs $nil in FY 2017). The remaining additional R&D expenses are designed to support the development of new and existing product lines such as the ISTANA platform for the automotive industry and WISePhone.

Selling & marketing (“S&M”) expenses increased by $2.3 million, or by $2.2 million when excluding the impact of the QuoVadis S&M expenses not consolidated into WISeKey in FY 2017 ($0.1 million). Regarding selling expenses, the expansion of our sales force in Europe and North America resulted in an additional $1.5 million charge. On the marketing side, our $0.6 million investment in several critical ventures including the Blockchain Research Initiative and our successful Blockchain Davos Round Table events were designed to raise awareness on the benefits of the Blockchain technology which will be a core service offering of WISeCoin. A stock-based compensation of $0.6 million was recorded in FY 2018 compared with $0.5 million in FY 2017, hence an increase by $0.1 million.

General and Administrative (“G&A”) expenses increased by $2.6 million, but actually remained stable when excluding the impact of QuoVadis G&A expenses not consolidated into WISeKey in FY 2017 ($2.6 million).

We incurred approximately $1.2 million in costs associated with the development and launch of WISeCoin leading to the receipt of the Non-Action letter from FINMA that will enable us to move forward with our Security Token Offering (“STO”) in 2019. However, we managed to offset costs associated with the development of WISeCoin by effectively reducing other components of G&A expenses: our legal fees were reduced by $1.0 million due to the recruitment of a Legal Chief Counsel, stock-based compensation expenses decreased by $0.8 million, non-income tax expenses were lowered by $0.3 million and we had no acquisition in FY 2018, as compared to FY 2017.

The main components of our G&A costs are detailed below:

 Total Non-GAAP General & administrative expenses12 months ended December 31, 12 months ended December 31,
USD’0002018 2017
Staff-related costs12,84510,152
Depreciation & amortization classified under G&A2,2311,884
Legal and professional fees4,6504,456
Rental, office, IT & insurance2,7402,291
Stock based compensation classified under G&A9671,765
Non-income tax expense380643
Customer contract impairment losses276188
Other G&A Operating Costs652709
Total Group G&A expenses24,741 22,088

We expect G&A expenses to continue to rise in future periods to support our growth and strategic initiatives. Anticipated costs include those relating to:

  • Expansion strategy:  potential acquisitions will require additional legal, auditing and accounting, and other professional G&A costs
  • WISeKey STO:  additional legal and professional costs are expected to be incurred during the issuance of WISeCoin
  • Employee Stock Option Plan: grants to support our staff retention strategy will impact all cost categories including G&A

Also, as we continue our expansion strategy, expenses related to sales & marketing, and R&D will continue to increase.

As the business stabilizes we will direct our efforts to reduce our cost structure.

Of note, in FY 2017 we recorded in Other Operating Income a one-time credit of $1.4 million received by our French business following the renegotiation of an unfavorable contract, which lowered our total operating expenses in that year, whilst there was no similar release in FY 2018.

Strong cash position supports growth initiatives

Cash and cash equivalents at December 31, 2018 was $11.2 million compared to $12.2 million at December 31, 2017, with the small decline due to the settlement of certain commitments related to the sale of the QuoVadis Group.

In early 2019, we received net cash proceeds of $37.7 million (total proceeds of $45 million) from the sale of the QuoVadis Group to Digicert. WISeKey used the cash proceeds to repay in full the Line of Credit with ExWorks Capital Fund I, L.P. in the amount of $25.3 million. This substantially improved the Company’s financial position and paved the way for significant investments in growth initiatives.

Outlook for 2019 and beyond remains strong

We have taken several initiatives to generate new revenue sources, grow our client base and expand our geographic footprint.  These initiatives should gradually offset the impact of the sale of QuoVadis SSL and PKI businesses to Digicert.

These initiatives include:

  • Significantly larger sales force to take advantage of the higher demand for strong security, authentication, brand protection and anti-counterfeiting services as Cybersecurity / IoT becomes more pervasive for segments such as connected devices, connected cars, luxury products, pharmaceuticals and banking/financial sector.
  • Development of the WISeKey Foresight platform that will use APIs and keys generated on VaultIC IoT chips, as the basis for Cybersecurity IoT services.
  • Investments in R&D and core IoT business by developing and offering additional innovative products and solutions to further reinforce our position as a major player offering secured and trusted Blockchain architectures.

Thus, we expect 2019 to be another year of strong financial and operational performance across our Cybersecurity and IoT businesses due to:

  • Higher revenue from the ISTANA platform from strategic contract deals, particularly for the Chinese market
    • WISeKey entered the Connected Car industry in 2017 by offering Daimler AG a secure way to validate the authenticity of different vehicle components, protect onboard communication and provide over-the-air software updates.  Also, ISTANA PKI allows employees, dealers and suppliers to access car components to diagnose mechanical/technical issues and update software from any location, and users to securely interact with a car’s smart features using smartphones and other devices.
    • In late 2018, WISeKey cemented its role in the Connected Car industry by granting Daimler a perpetual license for the use of certain ISTANA PKI modules in its vehicles.
    • WISeKey will continue to further upgrade its ISTANA PKI platform into an attractive solution to secure a variety of IoT applications.
  • Monetization of the WISeKey Blockchain Platform and related services
    • WISeKey Blockchain Centers of Excellence.  WISeKey in cooperation with the Blockchain Research Institute (BRI) is creating a number of interconnected Blockchain Centers of Excellence around the world, to facilitate the rapid adaptation and on-boarding of blockchain-based solutions and foster stronger collaboration between the public, private and academic sectors.
    • Each Blockchain Center of Excellence is expected to develop a particular expertise that can be shared among all centers. For example, the Blockchain Center of Excellence in Buenos Aires will spearhead the development of particular platforms and applications to fight counterfeiting, illicit trade and corruption, while the Geneva Blockchain Center of Excellence will focus on Fintech, particularly digital private banking and commodity trading applications.
  • High margin revenue from the sale of WISePhone
    • WISePhone, the first ever Blockchain mobile phone, was introduced end of 2018 as the first secure blockchain phone for enterprise-grade security integrating end-to-end encrypted communication and cutting-edge secure storage technology. WISePhone is a cost-effective and flexible platform that empowers efficiency and mobility whilst protecting intellectual property and confidentiality by transforming public networks and mobile devices into highly secure communication channels for enterprises.
  • Revenue from WISeCoin starting in the second half of 2019
    • WISekey received the Non-Action Letter from FIMNA to launch its WISeCoin Security Token Offering (STO). WISeCoin is a method of verification, identification and payment between connected objects.  WISeCoin provides highly secured solutions such as biometrics-driven hardware wallets, integrated exchange platforms, microchips Blockchain enabled semiconductors, and NFC-based contactless payment solutions. WISeKey expects to start generating revenues in the second half of 2019 by charging users a micro service fee for each transaction completed using the platform.
  • Higher revenues from the new Anti-Illicit Trade Technology WISeAuthentic, now expanding from luxury products to other sectors.
    • NanoSEAL: WISeKey has optimized its Brand Protection and Logistics offerings with the New NanoSealRT NFC Secure Element, an innovative solution that provides objects with a unique identity, allows them to authenticate each other and communicate online.   By combining in tiny tags original innovative features such as an Android & iOS 12 compatible authentication algorithm, tamper/opening detection and efficient radio communication, WISeKey’s NanoSealRT is able to enhance goods traceability and brand-to-consumer direct reach.
    • WISeTrustBoot: In January 2019, WISeKey introduced WISeTrustBoot, a versatile platform independent solution to provide trust in IoT devices through verifying the authenticity of the boot sequence and firmware, built on a combination of the strength of our tamper resistant secure elements, state-of-the-art crypto libraries and strong digital signatures.
  • Larger market share and accelerated sales in the US where we already have a strong presence.
  • Larger geographical footprint as we continue to enter new territories via MOUs in China and in Saudi Arabia.
  • Untapped potential synergies with global organizations thanks to a partnership agreement with DigiCert to explore common opportunities in the IoT market, using our combined products to enhance mutual offerings.
  • Potential acquisitions to support our business plan of expansion into existing or new areas.

Finally, we continue to pursue our goal to list on the NASDAQ, and we believe such listing will broaden our shareholder base, elevate our profile amongst existing and potential investors and provide liquidity.

Conference Call & Webcast
Carlos Moreira, CEO and Peter Ward, CFO will host a conference call on Tuesday, March 26, 2019, at 3:00 pm CET / 10:00 a.m. ET) to discuss these results, recent business developments and growth initiativesA Q&A session will follow the prepared remarks.

Interested parties may participate in the call by dialing:

United States & Canada:                               877 445-9755
Switzerland (fixed/mobile):                        0 800 835 525 / 0 800 891 374
Spain (fixed/mobile):                                     900 834 236 / 900 834 876
United Kingdom (fixed):                                               0 800 756 3429
Germany (fixed/mobile):                             0 800 182 0040 / 0 800 184 4713
France (fixed)/excl. Monaco:                     0 800 912 848
Netherlands (fixed/mobile):                       0 800 023 4340 / 0 800 022 3580
Italy (fixed/mobile):                                       800 791 612 / 800 796 508

To access the call, please dial-in approximately five minutes before the start time.  The call will also be simultaneously webcast over the Internet via the following link and such link will also be made available in the “Investor Relations” section of WISeKey’s website

Non-GAAP Financial Measures

On December 21, 2018, WISeKey signed a sale and purchase agreement (the “SPA”) to sell QuoVadis SSL and PKI businesses to Digicert Inc (the QuoVadis Group).  While the sale was completed in the first quarter of 2019, WISeKey assessed the SPA under ASC 205 and concluded that the operation met the requirement to be classified as held for sale (at December 31, 2018) and as such qualified as discontinued operations. This led to the results and assets and liabilities of the QuoVadis Group to be presented separately in the consolidated income statement and consolidated balance sheet.  However, WISeKey management reviewed 2018 financials on a consolidated basis, including discontinued operations results.

In managing WISeKey’s business on a consolidated basis, WISeKey management develops an annual operating plan, which is approved by our Board of Directors, using non-GAAP financial measures. In measuring performance against this plan, management considers the actual or potential impacts on these non-GAAP financial measures from actions taken to reduce costs with the goal of increasing our gross margin and operating margin and when assessing appropriate levels of research and development efforts. In addition, management relies upon these non-GAAP financial measures when making decisions about product spending, administrative budgets, and other operating expenses. We believe that these non-GAAP financial measures, when coupled with the GAAP results and the reconciliations to corresponding GAAP financial measures, provide a more complete understanding of the Company’s results of operations and the factors and trends affecting WISeKey’s business. We believe that they enable investors to perform additional comparisons of our operating results, to assess our liquidity and capital position and to analyze financial performance excluding the effect of expenses unrelated to operations, certain non-cash expenses related to acquisitions and share-based compensation expense, which may obscure trends in WISeKey’s underlying performance.  This information also enables investors to compare financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key metrics used by management.

These non-GAAP financial measures are provided in addition to, and not as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. The presentation of these and other similar items in WISeKey’s non-GAAP financial results should not be interpreted as implying that these items are non-recurring, infrequent, or unusual.  Reconciliations of these non-GAAP measures to the most comparable measures calculated in accordance with GAAP are provided in the financial statements portion of this release in a schedule entitled “Financial Reconciliation of GAAP to non-GAAP Results (unaudited).”

Non-GAAP to GAAP Reconciliations

12 months ended December 31, 2018 12 months ended December 31, 2017
Consolidated Statement of Income / (Loss) Non-GAAP adjusting entries   Non-GAAP adjusting entries 
USD’000Non-GAAPReclassification of discontinued operationsUS GAAP Non-GAAPReclassification of discontinued operationsUS GAAP
Net sales53,692(19,412)34,28043,078(9,404)33,674
Cost of sales(24,515)6,196(18,319)(22,386)4,516(17,870)
Gross profit29,177(13,216)15,961 20,692(4,888)15,804
Other operating income316(28)2881,5261,526
Research & development expenses(8,106)2,801(5,305)(7,386)2,047(5,339)
Selling & marketing expenses(8,598)2,826(5,772)(6,254)1,795(4,459)
General & administrative expenses(24,741)10,509(14,232)(21,945)6,544(15,401)
Total operating expenses(41,129)16,108(25,021) (34,059)10,386(23,673)
Operating income / (loss)(11,952)2,892(9,060) (13,367)5,498(7,869)
Non-operating income2,243(62)2,181769(7)762
Gain / (loss) on derivative liability(98)(98)
Gain / (loss) on debt extinguishment(7,067)6,511(556)
Interest and amortization of debt discount(1,206)1,056(150)(1,501)958(543)
Non-operating expenses(5,502)2,676(2,826)(4,523)2,772(1,751)
Income / (loss) before income tax expense(16,417)6,562(9,855) (25,787)15,732(10,055)
Income tax (expense)/recovery152(205)(53)1,037(1,108)(71)
Income/ (loss) from continuing operations, net(16,265)6,357(9,908) (24,750)14,624(10,126)
Income / (loss) on discontinued operations(6,357)(6,357) (14,624)(14,624)
Net income / (loss)(16,265)(16,265) (24,750)(24,750)
GAAP to Non-GAAP Operating loss and Net loss  
(Million US$)20182017
Operating loss as reported(9.1)(7.9)
Non-GAAP adjustments:
Operating loss from discontinued operations(2.9)(5.5)
Depreciation expense1.41.4
Amortization expense on intangibles0.51.9
PPA amortization expense1.61.7
Non-GAAP adjustments:
Stock-based compensation1.72.2
Expenses settled in equity1.7
M&A-related legal fees1.32.6
M&A-related professional fees0.31.8
Adjusted EBITDA(3.5)(1.8)
Net loss attributable to WISeKey as reported(16.3)(24.3)
Non-GAAP adjustments:
Net loss from discontinued operations
Stock-based compensation1.72.2
Expenses settled in equity1.7
Depreciation expense1.41.4
Amortization expense on intangibles0.51.9
PPA amortization expense1.61.7
M&A-related legal fees1.32.6
M&A-related professional fees0.31.8
Debt extinguishment7.1
Gain from the liquidation of subsidiary
Debt discount amortization1.21.5
Financial charges2.83.9
Deferred tax write-off0.3
Adjusted Net loss attributable to WISeKey(3.5)(0.2)
GAAP to Non-GAAP Cash and cash equivalents  
(Million US$)20182017
Cash and cash equivalents as reported9.29.6
Restricted cash as reported0.6
Non-GAAP adjustments:
Cash and cash equivalents held for sale1.43.6
Total Cash and restricted cash11.212.2
 12 months ended December 31, 2018
Non-GAAP Consolidated Statement of Income / (Loss)Non-GAAPNon-GAAP adjustmentNon-GAAP adjustmentNon-GAAP
USD’000WISeKey Group excluding WISeCoin AG and discontinued operationsWISeCoin AGGroup Consolidation including discontinued operationsWISeKey Group
Net sales43,28510,40753,692
Cost of sales(18,319)(6,196)(24,515)
Gross profit24,9664,21129,177
Other operating income28927316
Research & development expenses(5,306)(2,800)(8,106)
Selling & marketing expenses(5,772)(2,826)(8,598)
General & administrative expenses(12,842)(3,143)(5,272)(21,257)
Non-GAAP adjustments:    
Non-cash items   
Stock-based compensation1,6601,660
Expenses settled in equity1,6851,685
Non-recurring items
M&A-related legal fees1,2941,294
M&A-related professional fees183183
Adjusted EBITDA6,157(3,646)

About WISeKey:
WISeKey (SIX Swiss Exchange: WIHN) is a leading global cybersecurity company currently deploying large scale digital identity ecosystems for people and objects using Blockchain, AI and IoT respecting the Human as the Fulcrum of the Internet. WISeKey Semiconductors secure the pervasive computing shaping today’s Internet of Everything. WISeKey has an installed base of over 1 billion microchips in virtually all IoT sectors (connected cars, smart cities, drones, agricultural sensors, anti-counterfeiting, smart lighting, servers, computers, mobile phones, crypto tokens etc.).  WISeKey is uniquely positioned to be at the edge of IoT as our semiconductors secure a huge amount of Big Data that, when analyzed with Artificial Intelligence (AI), can help industrial applications to predict the failure of their equipment before it happens.

Our technology, trusted by the OISTE/WISeKey’s Swiss based cryptographic Root of Trust (“RoT”) provides secure authentication and identification, in both physical and virtual environments, for the Internet of Things, Blockchain and Artificial Intelligence. The WISeKey RoT serves as a common trust anchor to ensure the integrity of online transactions among objects and between objects and people. For more information, visit

Press and investor contacts:

WISeKey International Holding Ltd 
Company Contact:  Carlos Moreira
Chairman & CEO
Tel: +41 22 594 3000
WISeKey Investor Relations (US) 
Contact:  Lena Cati
The Equity Group Inc.
Tel: +1 212 836-9611

This communication expressly or implicitly contains certain forward-looking statements concerning WISeKey International Holding Ltd and its business. Such statements involve certain known and unknown risks, uncertainties and other factors, which could cause the actual results, financial condition, performance or achievements of WISeKey International Holding Ltd to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. WISeKey International Holding Ltd is providing this communication as of this date and does not undertake to update any forward-looking statements contained herein as a result of new information, future events or otherwise.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any securities, and it does not constitute an offering prospectus within the meaning of article 652a or article 1156 of the Swiss Code of Obligations or a listing prospectus within the meaning of the listing rules of the SIX Swiss Exchange. Investors must rely on their own evaluation of WISeKey and its securities, including the merits and risks involved. Nothing contained herein is, or shall be relied on as, a promise or representation as to the future performance of WISeKey.

Consolidated Statement of Comprehensive Loss

 12 months ended December 31,
USD’0002018 2017
Net sales34,28033,674
Cost of sales(18,319)(17,870)
Gross profit15,961 15,804
Other operating income2891,526
Research & development expenses(5,306)(5,339)
Selling & marketing expenses(5,772)(4,459)
General & administrative expenses(14,232)(15,401)
Total operating expenses(25,021) (23,673)
Operating income / (loss)(9,060) (7,869)
Non-operating income2,181762
Gain / (loss) on derivative liability(98)
Gain / (loss) on debt extinguishment(556)
Interest and amortization of debt discount(150)(543)
Non-operating expenses(2,826)(1,751)
Income / (loss) from continuing operations before income tax expense(9,855) (10,055)
Income tax (expense)/recovery(53)(71)
Income/ (loss) from continuing operations, net(9,908) (10,126)
Discontinued operations:
Net sales from discontinued operations19,4129,404
Cost of sales from discontinued operations(6,196)(4,516)
Total operating and non-operating expenses from discontinued operations(19,778)(20,620)
Income tax (expense)/recovery from discontinued operations2051,108
Income / (loss) on discontinued operations(6,357) (14,624)
Net income / (loss)(16,265) (24,750)
Less: Net income / (loss) attributable to noncontrolling interests13(483)
Net income / (loss) attributable to WISeKey International Holding AG(16,278) (24,267)
Earnings per share
Earnings from continuing operations per share – Basic(0.29)(0.34)
Earnings from continuing operations per share – Diluted(0.29)(0.34)
Earnings from discontinued operations per share – Basic(0.19)(0.50)
Earnings from discontinued operations per share – Diluted(0.19)(0.50)
Earnings per share attributable to WISeKey International Holding AG
Other comprehensive income / (loss), net of tax:
Foreign currency translation adjustments1081,548
Unrealized loss on securities:
 Unrealized holding loss arising during period(375)
Defined benefit pension plans:
 Net loss arising during period287(102)
Other comprehensive income / (loss)395 1,071
Comprehensive income / (loss)(15,870) (23,679)
Other comprehensive income / (loss) attributable to noncontrolling interests(23)(369)
Other comprehensive income / (loss) attributable to WISeKey International Holding AG418 1,440
Comprehensive income / (loss) attributable to noncontrolling interests(10)(851)
Comprehensive income / (loss) attributable to WISeKey International Holding AG(15,860) (22,828)


Consolidated Balance Sheet

 As at December 31,
USD’0002018 2017
Current assets   
Cash and cash equivalents9,1469,583
Restricted cash618
Accounts receivable, net of allowance for doubtful accounts7,6203,954
Notes receivable, related parties8897
Prepaid expenses521752
Deferred charges, current184
Current assets held for sale8,9166,777
Other current assets919645
Total current assets 32,118  26,071
Noncurrent assets
Equity securities, at fair value857592
Deferred income tax assets847
Deferred tax credits2,5412,856
Property, plant and equipment net of accumulated depreciation2,3702,996
Intangible assets, net of accumulated amortization1,1321,591
Deferred charges, noncurrent214
Equity securities, at cost7,000
Noncurrent assets held for sale23,74424,532
Other noncurrent assets152154
Total noncurrent assets 46,335  41,085
TOTAL ASSETS 78,453  67,156
Current Liabilities
Accounts payable12,91712,155
Notes payable6,79784
Deferred revenue, current91306
Income tax payable9120
Current liabilities held for sale14,0858,763
Other current liabilities9762,288
Total current liabilities34,875 23,716
Noncurrent liabilities
Convertible note payable23,94018,592
Deferred revenue, noncurrent9
Indebtedness to related parties, noncurrent985
Employee benefit plan obligation4,4654,585
Deferred income tax liability5
Other deferred tax liabilities4
Noncurrent liabilities held for sale8,5905,667
Other noncurrent liabilities2,595
Total noncurrent liabilities39,603 29,834
Commitments and contingent liabilities   
Redeemable preferred stock 4,880
Common stock – Class A400400
 CHF 0.01 par value
 Authorized – 40,021,988 and 40,021,988 shares
 Issued and outstanding – 40,021,988 and 40,021,988 shares
Common stock – Class B1,4721,261
 CHF 0.05 par value
 Authorized – 41,063,901 and 35,517,168 shares
 Issued – 28,769,797 and 24,590,918 shares
 Outstanding – 26,681,736 and 24,590,918 shares
Teasury stock, at cost (2,088,061 and nil shares held)(1,139) 
Additional paid-in capital201,373189,152
Accumulated other comprehensive income / (loss)100(650)
Accumulated deficit(197,348)(180,554)
Total shareholders’ equity (deficit) attributable to WISeKey shareholders4,858 9,609
Noncontrolling interests in consolidated subsidiaries(883)(883)
Total shareholders’ equity3,975 8,726


Consolidated Statements of Cash Flows

  12 months ended December 31,
USD’0002018 2017
Cash Flows from operating activities:   
Net loss(16,265)(24,750)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Interest and amortization of debt discount1,1651,467
Depreciation of property, plant & equipment1,4371,376
Amortization of intangible assets2,0473,645
Loss / (gain) on derivative liability98
Loss on debt extinguishment7,067
Stock-based compensation1,6602,232
Decrease / (increase) in deferred research & development tax credits, net279
Decrease / (increase) in other noncurrent assets, net(63)
Increase / (decrease) in defined benefit pension liability(109)711
Increase / (decrease) in other noncurrent liabilities(487)
Provision for bad debt expense276537
Inventory obsolescence impairment284(2,277)
Deferred tax asset write-off161132
Loss /(gain) on disposal of property and equipment(49)
Income tax expense / (recovery) net of cash paid(152)(1,115)
Release of provision(218)(1,700)
Other non cash expenses /(income)
Expenses settled in equity1,685
Unrealized and non cash foreign currency transactions(201)(365)
Changes in operating assets and liabilities, net of effects of businesses acquired
Decrease (increase) in accounts receivables(2,898)2,591
Decrease (increase) in inventories(722)(480)
Decrease (increase) in other current assets, net(4,385)(45)
Increase (decrease) in accounts payable(126)1,509
Increase (decrease) in deferred revenue5,9924,625
Increase (decrease) in income taxes payable349149
Increase (decrease) in other current liabilities1,312198
Net cash provided by (used in) operating activities(8,492) (4,931)
Cash Flows from investing activities:
Sale / (acquisition) of equity securities(3,000)
Sale / (acquisition) of property, plant and equipment(1,244)(669)
Decrease / (increase) in notes receivables(554)
Acquisition of a business, net of cash and cash equivalents acquired(11,629)
Net cash provided by (used in) investing activities(4,244) (12,852)
Cash Flows from financing activities:
Proceeds from options exercises21736
Proceeds from issuance of Common Stock2,9045,039
Decrease / (increase) in loan payable(895)1,842
Proceeds from convertible loan issuance3,000
Proceeds from debt7,65619,142
Repayments of debt(106)(550)
Repurchase of treasury shares(900)
Net cash provided by (used in) financing activities11,876 25,509
Effect of exchange rate changes on cash and cash equivalents(200)(733)
Cash and cash equivalents
 Net increase (decrease) during the period(1,060)6,993
 Balance, beginning of period12,2145,221
 Balance, end of period11,154 12,214
Reconciliation to balance sheet
 Cash and cash equivalents from continuing operations9,1469,583
 Restricted cash from continuing operations618
 Cash and cash equivalents from discontinued operations1,3902,631
 Balance, end of period11,154 12,214
Supplemental cash flow information
 Cash paid for interest, net of amounts capitalized772250
 Cash paid for incomes taxes7278
Issuance of shares in relation to the acquisition of QuoVadis4,307
Issuance / (redemption) of redeemable preferred stock(5,021)4,340
Issuance of common stock to purchase non-controlling interest3,9203,474
Deemed dividend141540
Settlement of Carlos Moreira’s loan in shares473
Payment of SEDA fees in shares(500)
Restricted cash received for share subscription in progress2,020
Purchase of equity securities4,000
Conversion of loan receivable into equity securities799

Jung Min-seo

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