Ann: Activity Report and Appendix 4C, page-2

ACTIVITY REPORT
Elsight Limited (ASX: ELS), a provider of ground-breaking hybrid video and data transport services (on-the-move or fixed) for large Safe-City projects, sensitive facilities management, and surveillance and protective activities offers this report on its activities for the quarter ended 30 September 2018. This period was dominated in Israel by major Jewish holidays with Rosh Hashana (New Year), Yom Kippur and Sukkot all falling within the same calendar quarter. The company still managed to progress its plans strongly as outlined below.
Revenues
Unaudited revenue for Q3 2018 was USD $396K, a 91% increase on Q3 2017. The board believes that orders received but not delivered during the holidays will also be processed in Q4. This is already happening with cumulative unaudited revenues passing US$1.6m as at YTD 28 October 2018.
Cash Inflows
Cash collections have been a focus for the company over the past year. In Q3, collections of $283k were lower due to the timing of major Israeli holidays, with only about 30 working days in the quarter. However, this has picked up significantly since the end of holidays, after the reporting period. This mirrors the effect of revenue bookings, either received from overseas during office closures in Israel, or deferred into Q4.
Cash Outflows
Section 1.2 has been amended to reflect R&D expenditures (comprised of staff costs and contractors) in the quarter and in the past nine months. Investments continued in the area of sales and business development as outlined below.
Business operations
Product and Technology
The completion of its major product development program was a major focus of the company in Q3. This expenditure, in line with the Use of Funds outlined in the Prospectus, represents a valuable investment in product development to deliver the ability to embed Elsight technology in many third-party devices. This is intended to open up large addressable market opportunities in many verticals including automotive, drones and further applications in defence and security industries, while lowering costs and driving up margins. In addition, Elsight produced and delivered small quantities of its new Omnisight product for use in Proof of Concept (POC) trials with various customers in the automotive segment.
Sales and Customer success
In Q3 the company continued to grow its sales and business development activities. Orders continued to come in from the Israeli security tender contracts and the company received orders for its multichannel product from customers in various countries. The company continued to drive and support the POCs initiated in Q2 and before, with customersand integrators around the world. This was spread around many segments, all of which have featured in the company’sprevious announcements.
Elsight Limited ACN 616 435 753
T: +61 8 6189 1155 | A: C/- Platinum Corporate Secretariat, Level 2, 46-50 Kings Park Road, West Perth WA 6005
Strategic focus
After numerous visits, customer meetings, trials, POCs and nascent joint integration projects across multiple segments, the company has decided on a strategic shift to focus on the U.S. Market in addition to existing opportunities that have become available in the Asia Pacific region and the UK.
As an example, Senior Management of the Company have made several trips to the U.S. to attend meetings of the International Association of Commissioners of Police (IACP 2018) in Orlando, Florida, Army USA (AUSA 2018) in Washington DC, as well as meetings in New York City and elsewhere in the United States. At these meetings the Company’s applications were demonstrated for the benefit of delegates attending the meetings.
As a direct result, the Company has commenced dialogues with 14 different parties in the U.S. and is confident that they will present viable opportunities for commercial success in the near future. These parties have included Tier-one defence integrators, manufactures of ruggedized mobile tablets for Police and Fire departments, crisis managers, airport and transport operators, providers of international unmanned aerial systems centric security missions, and autonomous tractors for the agriculture market. The company plans to inform the market as material contracts are signed.
The company also believes the delivery of its new products under development will have profound implications for its future success.
Implementing this strategic shift comes at a cost as this has required the company to redeploy substantial resources, that have been previously working on securing deals in the EU, to focus on the U.S. market.
Outlook
While our year-to-year revenue growth will be significant over 2017, the recent shift in focus to the Americas as well as on bringing the new products to market may result in some delays to revenue bookings accepted by the Company in time for the end of Calendar 2018. Nonetheless the Company believes that the U.S. market will deliver significant growthin the near future especially as we have not been able to identify competent or viable alternatives to the Company’stechnology available in the market.
Quarterly Investor Call
CEO Nir Gabay will be conducting an investor briefing conference call on Thursday 8 Nov at 4pm AEDT, the details of which will be provided via the ASX platform.