Exhibit 99.1
MEDIGUS LTD.
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2021
MEDIGUS LTD.
TABLE OF CONTENTS
| Page | |
| Interim Condensed Consolidated Financial Statements – in US Dollars (USD) in thousands: | |
| Interim Condensed Consolidated Balance Sheets | 2-3 |
| Interim Condensed Consolidated Statements of Loss and Other Comprehensive Loss | 4 |
| Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity | 5-7 |
| Interim Condensed Consolidated Statements of Cash Flows | 8-9 |
| Notes to the Interim Condensed Consolidated Financial Statements | 10-41 |
MEDIGUS LTD.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30 | December 31 | |||||||||
| 2021 | 2020 | |||||||||
| Note | Unaudited | Audited | ||||||||
| USD in thousands | ||||||||||
| Assets | ||||||||||
| CURRENT ASSETS: | ||||||||||
| Cash and cash equivalents | ||||||||||
| Short term deposit | ||||||||||
| Held for sale asset | 4.E | |||||||||
| Accounts receivables - trade | ||||||||||
| Inventory | 5 | |||||||||
| Related party prepaid expenses | 10 | |||||||||
| Other current assets | ||||||||||
| NON-CURRENT ASSETS: | ||||||||||
| Contract fulfillment assets | ||||||||||
| Property and equipment, net | ||||||||||
| Right-of-use assets, net | ||||||||||
| Investments accounted for using the equity method | 4.A.1 | |||||||||
| Intangible assets | 6 | |||||||||
| Retirement benefit assets, net | ||||||||||
| Other receivables | ||||||||||
| Financial assets at fair value through profit or loss | 3 | |||||||||
| TOTAL ASSETS | ||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
2
MEDIGUS LTD.
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
| June 30 | December 31 | |||||||||
| 2021 | 2020 | |||||||||
| Note | Unaudited | Audited | ||||||||
| USD in thousands | ||||||||||
| Liabilities and equity | ||||||||||
| ST Short term loan and current portion of long-term loan | 10 | |||||||||
| Accounts payables – trade | ||||||||||
| Lease liabilities | ||||||||||
| Warrants at fair value | 3 | |||||||||
| Contract liability | ||||||||||
| Liability to event producers | ||||||||||
| Accrued expenses and other liabilities | 7 | |||||||||
| Related parties | 10 | |||||||||
| NON-CURRENT LIABILITIES: | ||||||||||
| Lease liabilities | ||||||||||
| Contract liability | ||||||||||
| Loans from related parties | 10 | |||||||||
| Deferred tax liability | ||||||||||
| Retirement benefit obligation, net | ||||||||||
| TOTAL LIABILITIES | ||||||||||
| SHAREHOLDERS’ EQUITY: | 8 | |||||||||
| Share capital – ordinary shares with par value: authorized – June 30, 2021 and December 31, 2020 – | ||||||||||
| Share premium | - | |||||||||
| Other capital reserves | ||||||||||
| Warrants | ||||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||||
| Equity attributable to owners of Medigus Ltd. | ||||||||||
| Non-controlling interests | ||||||||||
| TOTAL SHAREHOLDERS’ EQUITY | ||||||||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
3
MEDIGUS LTD.
INTERIM
CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND
OTHER COMPREHENSIVE LOSS
| Six months ended | Year ended | |||||||||||||
| June 30, | December 31 | |||||||||||||
| 2021 | 2020 | 2020 | ||||||||||||
| Note | Unaudited | Audited | ||||||||||||
| USD in thousands | ||||||||||||||
| Revenues: | ||||||||||||||
| Products | ||||||||||||||
| Revenue from commission | ||||||||||||||
| 9 | ||||||||||||||
| Cost of revenues: | ||||||||||||||
| Products | ||||||||||||||
| Revenue from commission | ||||||||||||||
| Gross Profit /(Loss) | ( | ) | ( | ) | ||||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ||||||||
| Sales and marketing expenses | ( | ) | ( | ) | ( | ) | ||||||||
| General and administrative expenses | ( | ) | ( | ) | ( | ) | ||||||||
| Net change in fair value of financial assets at fair value through profit or loss | ( | ) | ||||||||||||
| Share of net loss of associates accounted for using the equity method | ( | ) | ( | ) | ( | ) | ||||||||
| Amortization of excess purchase price of an associate | ( | ) | ( | ) | ||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ||||||||
| Changes in fair value of warrants issued to investors | ( | ) | ||||||||||||
| Gain upon loss of control in a subsidiary | 4.A | |||||||||||||
| Gain from sale of investment | 4.E | - | - | |||||||||||
| Other income | - | - | ||||||||||||
| Financial income (loss) net | ( | ) | ||||||||||||
| Income Loss before taxes on income | ( | ) | ( | ) | ||||||||||
| Tax benefit (expense) | ( | ) | ||||||||||||
| Net income (loss) for the period | ( | ) | ( | ) | ||||||||||
| Other comprehensive income | ||||||||||||||
| Items that may be reclassified to profit or loss | ||||||||||||||
| Share of other comprehensive income of associates accounted for using the equity method | ( | ) | ||||||||||||
| Items that will not be reclassified to profit or loss | ||||||||||||||
| Share of other comprehensive income of associates accounted for using the equity method | ||||||||||||||
| Other comprehensive income for the period | ( | ) | ||||||||||||
| Total comprehensive income (loss) for the period | ( | ) | ( | ) | ||||||||||
| Net income (loss) for the period is attributable to: | ||||||||||||||
| Owners of Medigus | ( | ) | ( | ) | ||||||||||
| Non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||||
| ( | ) | ( | ) | |||||||||||
| Total comprehensive income (loss) for the period is attributable to: | ||||||||||||||
| Owners of Medigus | ( | ) | ( | ) | ||||||||||
| Non-controlling interest | ( | ) | ( | ) | ( | ) | ||||||||
| ( | ) | ( | ) | |||||||||||
| Earning (Loss) per ordinary share attributed to Medigus ltd | ||||||||||||||
| Basic | ( | ) | ( | ) | ||||||||||
| Diluted | ( | ) | ( | ) | ||||||||||
| Weighted average ordinary shares outstanding (In thousands) | ||||||||||||||
| Basic | ||||||||||||||
| Diluted | ||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
4
MEDIGUS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Equity attributable to owners of Medigus Ltd. | ||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares | Share premium |
Capital reserves from options granted |
Other reserves |
Capital reserves from transactions with non- controlling interest |
Currency translation differences |
Warrants | Accumulated deficit |
Total | Non- controlling interests |
Total equity |
||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||
| USD in thousands | ||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AS OF JANUARY 1, 2021 | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Income (Loss) for the period | ( |
) | ||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive Income (Loss) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
| TOTAL COMPREHENSIVE INCOME (LOSS) FOR THE PERIOD | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| TRANSACTIONS WITH SHAREHOLDERS: | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares and warrants (note 8) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares by Eventer | ||||||||||||||||||||||||||||||||||||||||||||
| Purchase of a subsidiary (note 4C) | ||||||||||||||||||||||||||||||||||||||||||||
| Deemed contributions to a subsidiary (Note 4C) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
| Loss of control in a subsidiary (note 4A) | ( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||
| Cancellation of par value (See Note 7) | ( |
) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||
| Share in capital reserve of an associate | - | - | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation in connection with options granted to employees and service providers | ||||||||||||||||||||||||||||||||||||||||||||
| Expiration of warrants | ( |
) | ||||||||||||||||||||||||||||||||||||||||||
| TOTAL TRANSACTIONS WITH SHAREHOLDERS | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||
| BALANCE AS OF JUNE 30, 2021 | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
5
MEDIGUS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Equity attributable to owners of Medigus Ltd. | ||||||||||||||||||||||||||||||||||||||||||||
| Ordinary shares | Share premium | Capital reserves from options granted | Other reserves | Capital reserves from transactions with non- controlling interest | Currency translation differences | Warrants | Accumulated deficit | Total | Non- controlling interests | Total equity | ||||||||||||||||||||||||||||||||||
| Unaudited | ||||||||||||||||||||||||||||||||||||||||||||
| USD in thousands | ||||||||||||||||||||||||||||||||||||||||||||
| BALANCE AS OF JANUARY 1, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Loss for the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||
| TOTAL COMPREHENSIVE LOSS FOR THE PERIOD | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||
| TRANSACTIONS WITH SHAREHOLDERS: | ||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares and warrants | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrants | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Issuance of shares and warrants by the Subsidiary | ||||||||||||||||||||||||||||||||||||||||||||
| Conversion into shares and warrants of loan granted to the Subsidiary | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation in connection with options granted to employees and service providers | ||||||||||||||||||||||||||||||||||||||||||||
| Expiration of options | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| TOTAL TRANSACTIONS WITH SHAREHOLDERS | ( | ) | ||||||||||||||||||||||||||||||||||||||||||
| BALANCE AS OF JUNE 30, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
6
MEDIGUS LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Equity attributable to owners of Medigus Ltd. | |||||||||||||||||||||||||||||||||||||||||||||||
| Note | Ordinary shares |
Share premium |
Capital reserves from options granted |
Other reserves |
Capital reserves from transactions with non- controlling interest |
Currency translation differences |
Warrants | Accumulated deficit |
Total | Non- controlling interests |
Total equity |
||||||||||||||||||||||||||||||||||||
| BALANCE AS OF JANUARY 1, 2020 | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||
| Loss for the period | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||
| TOTAL COMPREHENSIVE LOSS FOR THE YEAR | ( |
) | ( |
) | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||
| TRANSACTIONS WITH SHAREHOLDERS: | |||||||||||||||||||||||||||||||||||||||||||||||
| Purchase of a subsidiary | |||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares and warrants | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||
| Exercise of warrants | ( |
) | ( |
) | |||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares and warrants by the Subsidiary | |||||||||||||||||||||||||||||||||||||||||||||||
| Conversion into shares and warrants of loan granted to the Subsidiary | ( |
) | ( |
) | - | ||||||||||||||||||||||||||||||||||||||||||
| Share in capital reserve of an associate | |||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation in connection with options granted to employees and service providers | |||||||||||||||||||||||||||||||||||||||||||||||
| Expiration of options | ( |
) | |||||||||||||||||||||||||||||||||||||||||||||
| TOTAL TRANSACTIONS WITH SHAREHOLDERS | ( |
) | - | ( |
) | - | |||||||||||||||||||||||||||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2020 (Audited) | - | ( |
) | ( |
) | ||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
7
MEDIGUS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six months ended | ||||||||
| June 30, | ||||||||
| 2021 | 2020 | |||||||
| Unaudited | ||||||||
| USD in thousands | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Cash flows used in operations (see Appendix A) | ( | ) | ( | ) | ||||
| Interest received | ||||||||
| Interest paid | ( | ) | ( | ) | ||||
| Net cash flow used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Deconsolidation of ScoutCam Inc upon loss of control (see Appendix B and note 4.A) | ( | ) | ||||||
| Consolidation of Jeffs Brands Ltd. upon gain of control (see Appendix C and note 4.C) | ||||||||
| Purchase of intangible assets | ( | ) | ||||||
| Investment in short term deposits | ( | ) | ||||||
| Exercise of ScoutCam’s warrants | ( | ) | ||||||
| Sale of securities in Automax | ||||||||
| Payments for acquisitions of associates and financial assets at fair value through profit or loss | ( | ) | ( | ) | ||||
| Net cash flow used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from issuance of shares and warrants by subsidiaries, net of issuance costs of Subsidiaries (see note 4.B, 4.A) | ||||||||
| Principal elements of lease liability | ( | ) | ||||||
| Increase in short term bank loan | ||||||||
| Increase in long-term loan | ( | ) | ||||||
| Proceeds from issuance of shares and warrants and from exercise of warrants, net of issuance costs (see note 8) | ||||||||
| Net cash flow generated from financing activities | ||||||||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | ||||||||
| BALANCE OF CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD | ||||||||
| GAIN FROM EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS | ( | ) | ||||||
| BALANCE OF CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD | ||||||||
The
accompanying notes are an integral part of these interim condensed consolidated financial statements.
8
MEDIGUS LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
| Six months ended | ||||||||
| June 30, | ||||||||
| 2021 | 2020 | |||||||
| Unaudited | ||||||||
| USD in thousands | ||||||||
| Appendix A to the condensed consolidated statements of cash flows: | ||||||||
| Net cash used in operations: | ||||||||
| Income (Loss) for the period before taxes on income | ( | ) | ||||||
| Adjustment in respect of: | ||||||||
| Gain from exchange differences on cash and cash equivalents | ( | ) | ||||||
| Depreciation and amortization | ||||||||
| Interest received | ( | ) | ||||||
| Interest expenses | ||||||||
| Profit (loss) on change in the fair value of warrants issued to investors | ( | ) | ||||||
| Stock-based compensation in connection with options granted to employees and service providers | ||||||||
| Net change in the fair value of financial assets at fair value through profit or loss (note 3) | ( | ) | ||||||
| Share of net loss of associates accounted for using the equity method | ||||||||
| Amortization of excess purchase price of an associate | ||||||||
| Gain arising from deconsolidation of a subsidiary upon loss of control (see note 4.A) | ( | ) | ||||||
| Gain from sales of investment (see note 4.E) | ( | ) | - | |||||
| Changes in operating asset and liability items: | ||||||||
| Increase (Decrease) in accounts receivable - trade | ( | ) | ||||||
| Decrease in other current assets | ( | ) | ( | ) | ||||
| Increase in accounts payables - trade and customer advance payment | ||||||||
| Increase (Decrease) in accrued compensation expenses | ( | ) | ||||||
| Increase in contract liabilities | ||||||||
| Increase in Contract fulfillment assets | ( | ) | ( | ) | ||||
| Increase (Decrease) in other current liabilities | ( | ) | ||||||
| Decrease (Increase) in inventory | ( | ) | ||||||
| Net cash used in operations | ( | ) | ( | ) | ||||
| March 31, 2021 | ||||
| Appendix B to the condensed consolidated statements of cash flows: | ||||
| Deconsolidation of ScoutCam upon loss of control: | ||||
| Working capital other than cash | ||||
| Property and equipment , net | ( | |||
| Lease liability- long term | ||||
| ScoutCam investment in fair value | ||||
| Derecognition of non-controlling interest | ||||
| Gain arising from deconsolidation upon loss of control | ( | ) | ||
| Net cash deconsolidated upon loss of control | ||||
| January 04, | ||||
| 2021 | ||||
| Appendix C to the condensed consolidated statements of cash flows: | ||||
| Consolidation of Jeffs Brands Ltd. upon gain of control: | ||||
| Net working capital other than cash and inventory | ( | ) | ||
| Intangible assets | ||||
| Inventory | ||||
| deferred taxes | ( | ) | ||
| Non-controlling interests | ( | ) | ||
| Borrowings | ( | ) | ||
| Non-cash consideration | ( | ) | ||
| Goodwill | ||||
| Net cash acquired | ( | ) | ||
Appendix D to the condensed consolidated statements of cash flow :non-cash transaction:
| Issuance of shares in exchange for media and advertising services rights (Note 10.B1) | ||||
| Purchase a software license on credit (Note 10 .B2) |
The accompanying notes are an integral part of these interim condensed consolidated financial statements.
9
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
| A. | Medigus Ltd. (the “Company” or “Medigus”) was incorporated in Israel on December 9, 1999. The Company’s registered office and principal place of business are located in Israel. The address of its registered office is P.O. Box 3030, Omer, Israel 8496500. |
“Group” - the Company together with, Jeff’s Brands Ltd., Charging Robotics Ltd., GERD IP and Eventer Ltd..
“Subsidiaries” – Entities under the control of the Company.
These interim condensed consolidated financial statements were approved on September 20, 2021.
ScoutCam
ScoutCam has made a number of capital
raising during 2021, when the last occurred on March 22, 2021. Therefore the company diluted the holding into
GERD IP , INC
On
January 13, 2020, together with the Company’s advisor Mr. Kfir Zilberman the Company formed a subsidiary in Delaware, of which
the Company holds
10
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL (Cont.)
| A. | (Cont.) |
Eventer:
As of June 30, 2021, the Company holds
approximately
Gix Internet Ltd.:
As
of June 30, 2021, the Company own
Charging Robotics:
On February 19, 2021, the Company entered into the Joint Venture Agreement, with Amir Zaid and Weijian Zhou and the Company’s wholly-owned subsidiary Charging Robotics, under which the Company formed a joint venture, under the name Revoltz. For additional information, see note 4.G.
Interest in other entities:
As of June 30, 2021, the Company also
owns
11
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL (Cont.)
| A. | (Cont.) |
On June 3, 2019, the Company entered
into a Licensing and Sale Agreement with Shanghai Golden Grand-Medical Instruments Ltd. (hereinafter - “Golden Grand”) for
the know-how licensing and sale of goods relating to MUSE systems in China, Hong Kong, Taiwan and Macao. Under the agreement, the Company
committed to provide a license, training services and goods to Golden Grand in consideration for USD
The Company’s shares were listed on the Tel Aviv Stock Exchange Ltd. (hereinafter - “TASE”) and since May 20, 2015, the Company’s American Depository Shares (hereinafter – “ADSs”) evidenced by American Depositary Receipts (hereinafter – “ADRs”) are listed on the Nasdaq Capital Market. The Company’s depositary agent for the ADR program is The Bank of New York Mellon. Since July 2018, the Company’s Series C Warrants are traded on Nasdaq Capital Market. On January 25, 2021, the Company voluntarily delisted its shares from trading on the TASE. Following the delisting, the Company ADSs continue to trade on the Nasdaq and the Company continue to file public reports and make public disclosures in accordance with the rules and regulations of the SEC and Nasdaq.
During the period of six months ended June 30, 2021 the Company entered into several underwriting agreements with Aegis Capital Corp. (hereinafter – “Aegis”) For additional information, see note 8 (2).
12
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL (Cont.)
| B. | As of the approval date of these financial statements, the Company had cash and cash equivalent, which the Company anticipates will provide sufficient liquidity for more than a twelve-month period from the date of these financial statements. |
However, since inception, the Company’s activities have been funded mainly by its shareholders. Furthermore, in the recent years the Company has suffered recurring losses from operations, negative cash flows from operating activities, and has an accumulated deficit as of June 30, 2021. As such, the Company’s ability to continue operating may be dependent on several factors, amongst which is its ability to raise sufficient additional funding, which funding may not necessarily be available to the Company, obtained on terms favorable to the Company, or provide the Company with sufficient funds to meet its objectives.
| C. | The COVID-19 pandemic, including the efforts to combat it, has had and may continue to have a widespread effect on the Company’s business. In response to the pandemic, public health authorities and local and national governments, including Israel’s, have implemented measures that have and may continue to have an impact the Company’s business, including voluntary or mandatory quarantines, restrictions on travel and orders to limit the activities of non-essential workforce personnel. As of the date of this report, the COVID-19 (coronavirus) pandemic had made and continues to have a significant impact on global economic activity., with governments around the world, including Israel. Since the pandemic’s effect on the macroeconomic environment has yet to be fully determined and could continue for months or years, the Company is actively monitoring the pandemic and the Company is taking any necessary measures to respond to the situation in cooperation with the various stakeholders. |
In light of the evolving nature of the pandemic and the uncertainty it has produced around the world, the Company does not believe it is possible to precisely predict the pandemic’s cumulative and ultimate impact on the Company’s future business operations, liquidity, financial condition and results of operations. For example, travel restrictions have adversely affected the Company’s ability to timely achieve certain milestones included in the Company Agreement with Golden Grand and has delayed the recognition of revenues deriving therefrom. These travel restrictions have also impacted the Group sales and marketing efforts and those of the Company’s subsidiaries. In addition, a substantial portion of Eventer’s business relates to leisure event management, the scope of which was greatly reduced as a result of governmental policies and measures tailored to address to spread of COVID-19. To the extent that these measures remain in place, Eventer’s business and result of operations could be harmed.
The extent of the impact of the pandemic on the Company’s business and financial results will depend largely on future developments, including the duration of the spread of the outbreak and any future “waves” of the outbreak, globally and specifically within Israel and the United States. In addition, the extent of the impact on capital and financial markets, foreign currencies exchange and governmental or regulatory orders that impact the Company’s business are highly uncertain and cannot be predicted. If economic conditions generally or in the industries in which the Company operate specifically, worsen from present levels, the Company results of operations could be adversely affected and the Company financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new government actions or restrictions, new information that may emerge concerning the severity, longevity and impact of the COVID-19 pandemic on economic activity.
Additionally, concerns over the economic impact of the pandemic have caused extreme volatility in financial markets, which has adversely impacted and may continue to adversely impact the Company share price and the Company ability to access capital markets. To the extent the pandemic or any worsening of the global business and economic environment as a result adversely affects the Company business and financial results, it may also have the effect of heightening many of the other risks in the company’s reports.
13
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - BASIS FOR PREPARATION OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| A. | The Group’s interim condensed consolidated financial information as of June 30, 2021, and for the six month interim periods ended on that date (hereinafter - “The Interim Financial Information”) has been prepared in accordance with the guidance of IAS 34 ‘Interim Financial Reporting’. |
The Interim Financial Information has been prepared on the basis of the accounting policies adopted in the Group’s audited consolidated financial statements for the year ended December 31, 2020 (“Annual Financial Statements”), which were prepared in accordance with International Financial Reporting Standards which are standards and interpretations thereto issued by the International Accounting Standard Board (hereinafter “IFRS”). This Interim Financial Information should be read in conjunction with the 2020 Annual Financial Statements and notes thereto issued on May 14, 2021.
The Interim Financial Information is unaudited, does not constitute statutory accounts and does not contain all the information and footnotes required by accounting principles generally accepted under International Financial Reporting Standards for annual financial statements.
| B. | Estimates: |
The preparation of the interim condensed consolidated financial statements requires the Group’s management to exercise judgment and also requires use of accounting estimates and assumptions that affect the application of the Group’s accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates.
In the preparation of these interim condensed consolidated financial statements, the significant judgments exercised by management in the application of the Group’s accounting policies and the uncertainty involved in the key sources of those estimates were identical to the ones used in the Group’s 2020 Annual Financial Statements.
NOTE 3 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT
Estimates of fair value:
Financial assets:
Level 1 and level 2 financial instruments:
Fair value measurements based on Quoted prices (unadjusted) in active markets (level 1):
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Level 1 | ||||||||
| USD in thousands | ||||||||
| Investment in SAFO | ||||||||
| Elbit Imaging | ||||||||
| Automax (Matomy) | ||||||||
14
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont.)
The following table presents the Level 1 financial assets roll-forward:
| Investment in SAFO | Elbit Imaging | Automax (Matomy) | Total | |||||||||||||
| USD in thousands | ||||||||||||||||
| Balance as of January 1, 2021 | ||||||||||||||||
| Initial recognition at fair value upon dilution Equity investment | ||||||||||||||||
| Additional investment | ||||||||||||||||
| Currency translation | ( | ) | ( | ) | ||||||||||||
| Revaluation | ( | ) | ||||||||||||||
| Balance as of June 30, 2021 | ||||||||||||||||
Level 3 financial instruments:
The Company has several financial assets measured at fair value through profit or loss, which meet the level 3 criteria.
The following table presents the level 3 fair value financial assets:
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Level 3 | ||||||||
| USD in thousands | ||||||||
| Gix Media’s shares (see note 4.D) | ||||||||
| Gix warrants | ||||||||
| Conversion right (see note 4.D) | ||||||||
| Anti-dilution -Gix | ||||||||
| ScoutCam warrants | ||||||||
| Maris investment | ||||||||
| SAFO warrants | ||||||||
Valuation processes of the financial assets:
Gix warrants - the Company used the Black-Scholes
model, using the following principal assumptions: share price: NIS 1.62 expected volatility of
Anti-dilution feature - the Company used the Black-Scholes
model, using the following principal assumptions: share price: NIS 1.62,
ScoutCam warrants- the Company used the Black-Scholes
model, using the following principal assumptions: share price: USD 1, expected volatility of
Maris investment - on April 12, 2021 the Company invested in Maris-Tech Ltd. (hereinafter – “Maris”) , Since Maris is a private company, the assumption is that the cost of the investment in the offering represents the fair value of the investment.
SAFO warrants- the Company used the Black-Scholes
model, using the following principal assumptions: share price: USD
15
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont.)
The following table presents the Level 3 financial assets roll-forward:
| Gix Media’s shares | Gix Warrants | ScoutCam warrants | Maris investment | Conversion Right | Anti-dilution | SAFO Warrants | Total | |||||||||||||||||||||||||
| USD in thousands | ||||||||||||||||||||||||||||||||
| Balance as of January 1, 2021 | ||||||||||||||||||||||||||||||||
| Initial recognition at fair value upon deconsolidation | ||||||||||||||||||||||||||||||||
| Exercise of warrants | ( | ) | ( | ) | ||||||||||||||||||||||||||||
| Changes in fair value recognized through profit or loss | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Exercise of conversion right )see note 4) | ( | ) | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance as of June 30, 2021 | ||||||||||||||||||||||||||||||||
| Gix Media’s shares | Gix Warrants | Reverse earn out | Conversion Right | Anti-dilution | SAFO Warrants | Total | ||||||||||||||||||||||
| USD in thousands | ||||||||||||||||||||||||||||
| Balance as of January 1, 2020 | ||||||||||||||||||||||||||||
| Initial recognition of financial asset | ||||||||||||||||||||||||||||
| Changes in fair value recognized through profit or loss | ( | ) | ( | ) | ||||||||||||||||||||||||
| Balance as of December 31, 2020 | ||||||||||||||||||||||||||||
16
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont.)
Financial liabilities:
Level 1 financial instruments:
As of June 30, 2021, and December 31, 2020, the Group has financial liability measured at level 1 – Warrants C.
The fair value of financial instruments traded in active markets is based on quoted market prices at the balance sheet date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.
Level 3 financial instruments:
The Company has several financial liabilities measured at fair value through profit or loss, which meet the level 3 criteria - warrants issued to investors.
The following table presents the financial liabilities that were measured at fair value:
| June 30 | December 31 | |||||||||||||||||||||||
| 2021 | 2020 | |||||||||||||||||||||||
| Level 1 | Level 3 | Total | Level 1 | Level 3 | Total | |||||||||||||||||||
| USD in thousands | USD in thousands | |||||||||||||||||||||||
| Financial liabilities at fair value through profit or loss - | ||||||||||||||||||||||||
| Fair value of warrants | ||||||||||||||||||||||||
NOTE 4 - INTEREST IN OTHER ENTITIES:
A.1 This table summarize the total investment according to the equity method as of June 30, 2021:
| June 30, 2021 | ||||
| USD in thousands | ||||
| ScoutCam (see also note 4.A) | ||||
| Gix Internet (see also note 4.D) | ||||
| Polyrizon (see also note 4.F) | ||||
| Revoltz (see also note 4.G) | ||||
| Total | ||||
| A. | ScoutCam Inc. |
On January 3, 2019, the Company established a wholly owned subsidiary in Israel under the name ScoutCam Ltd., or ScoutCam. ScoutCam was incorporated as part of a reorganization of the Company intended to distinguish the Company’s miniaturized imaging business, or the micro ScoutCam™ portfolio, from the other operations of the Company and to enable the Company to form a separate business unit with dedicated resources focused on the promotion of such technology.
In addition, ScoutCam used the technological platform it developed for the purpose of additional special systems and products that are suitable for both medical and industrial applications.
On September 16, 2019, the Company
entered into a Securities Exchange Agreement (the “Exchange Agreement”), with ScoutCam Inc, formerly known as Intellisense
Solutions Inc. , pursuant to which the Company assigned, transferred and delivered
17
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| A. | ScoutCam Inc. (Cont.) |
The Closing occurred on December
30, 2019 (the “Closing Date”). Pursuant to the Exchange Agreement, Intellisense issued to Medigus
Also, on the Closing Date, ScoutCam
Inc. issued to its’ investors
Each Warrant A is exercisable into
one share of common stock of ScoutCam Inc. at an exercise price of USD
On
March 3, 2020, ScoutCam issued in a private issuance a total of
Each
unit was comprised of two shares of common stock par value USD
Each
Warrant A is exercisable into one share of common stock of ScoutCam Inc.’s at an exercise price of USD
Each
Warrant B is exercisable into one share of common stock of ScoutCam Inc’s at an exercise price of USD
The
immediate proceeds (gross) from the issuance of all securities offered amounted to approximately USD
On May 18, 2020, ScoutCam issued in
a private issuance a total of
Each unit was comprised of two shares of common stock par value USD 0.001 per share, one Warrant A (defined below) and two Warrants B (defined below).
Each Warrant A is exercisable into
one share of common stock of ScoutCam’s at an exercise price of USD
Each Warrant B is exercisable into
one share of common stock of ScoutCam’s at an exercise price of USD
The immediate gross proceeds from
the issuance of all securities offered amounted to approximately USD
18
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| A. | ScoutCam Inc. (Cont.) |
On
January 20, 2021, ScoutCam Inc.’s board of directors approved an increase of the authorized share capital of ScoutCam Inc., by
an additional
On March 22, 2021, ScoutCam Inc.
undertook to issue to certain investors (the “Investors”)
On June 30, 2021, Medigus exercise
all of its
As of June 30, 2021 the Company owned
approximately
Therefore, the Company diluted the
holding and deconsolidate ScoutCam Inc . since April 2021 and treated the investment in equity method. The profit recorded on books related
to the de-consolidation sum up to USD
ScoutCam purchase price allocation summary:
March 29, thousands | ||||
| Cash consideration | ||||
| Medigus Share in company Equity | ||||
| Excess to Allocation | ||||
| Excess purchase price to allocate to technology | ||||
| Deferred tax | ( | ) | ||
| Goodwill | ||||
Reconciliation to carrying amounts for ScoutCam.:
| USD in thousands | ||||
| Equity attributable to ScoutCam shareholders’ as of June 30, 2021 | ||||
| Groups share in % | % | |||
| Group share | ||||
| Fair value adjustments | ||||
| Carrying amount | ||||
19
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| A. | ScoutCam Inc. (Cont.) |
Investment movement for:
| Three
months ended June 30, 2021 | ||||
| USD
in thousands | ||||
| Investment in Fair value as of March 29, 2021 | ||||
| The Company's share in ScountCam's Loss for the three month ended June 30, 2021 | ( | ) | ||
| Warrants exercise | ||||
| Equity attributable to ScoutCam shareholders’ as of June 30, 2021 | ||||
Summarized balance sheet:
| June 30, 2021 | December 31, 2020 | |||||||
| USD in thousands | ||||||||
| Currents assets | ||||||||
| Cash and cash equivalents | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Total assets | ||||||||
| Total current liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total liabilities | ||||||||
| Net assets | ||||||||
Summarized statement of comprehensive income:
| Three months ended March 31, 2021 |
Six months ended June 30, 2020 |
|||||||
| USD in thousands | ||||||||
| Revenue | ||||||||
| Gross Loss | ( |
) | ( |
) | ||||
| Operating Loss | ( |
) | ( |
) | ||||
| Net Loss for the period | ( |
) | ( |
) | ||||
Summarized statement of comprehensive income:
| Three
months ended June 30, 2021 | ||||
| USD
in thousands | ||||
| Revenue | ||||
| Gross Loss | ( | ) | ||
| Operating Loss | ( | ) | ||
| Net Loss for the period | ( | ) | ||
20
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| B. | Eventer Technologies Ltd.: |
On October 14, 2020, the Company signed
a share purchase agreement and a revolving loan agreement with Eventer Technologies Ltd. (hereinafter – “Eventer”),
a technology company engaged in the development of unique tools for automatic creation, management, promotion, and billing of events and
ticketing sales.
In addition, the Company entered into
the Loan Agreement, under which the Company committed to lend up to USD
On October 14, 2020, the Company entered
the Exchange Agreement with Eventer’s shareholders, pursuant to which, during the period commencing on the second anniversary of
the Exchange Agreement and ending
21
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| B. | Eventer Technologies Ltd.: (Cont.) |
On April 8, 2021,
The following table presents the purchase price allocation of Eventer as of October 15, 2020:
| 15
October, 2020 | ||||
| USD
in thousands | ||||
| Cash consideration invested in Eventer | ||||
| Fair value of earn-out | ||||
| Difference between fair value and par value of loan extended to Eventer | ||||
| Total consideration | ||||
| Value acquired: | ||||
| Fair value of net tangible assets acquired | ||||
| Non-controlling interest | ( | ) | ||
| Total acquired | ||||
| Excess purchase price to allocate to technology and goodwill | ||||
Summarized balance sheet:
| June 30, 2021 | December 31, 2020 | |||||||
| USD in thousands (*) | ||||||||
| Current assets | ||||||||
| Current liabilities | ||||||||
| Current net assets | ||||||||
| Non-current assets | ||||||||
| Non-current liabilities | ||||||||
| Non-current net assets | ||||||||
| Net assets | ||||||||
| Accumulated non-controlling interests | ||||||||
22
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| B. | Eventer Technologies Ltd.: (Cont.) |
Summarized statement of comprehensive income:
| Six months ended in 30, June 2021 |
15.10- December 31, 2020 |
|||||||
| USD in thousands (**) | ||||||||
| Revenue | ||||||||
| Net loss for the period | ( |
) | ( |
) | ||||
| Net loss attributable to the NCI | ( |
) | ( |
) | ||||
| (*) |
| (**) |
Summarized statement of cash flows:
| Six months ended in 30, June 2021 | Year ended December 31, 2020 | |||||||
| USD in thousands (**) | ||||||||
| Cash flow used in operating activities | ( | ) | ||||||
| Cash flow used in investing activities | ( | ) | ||||||
| Cash flow from financing activities | ||||||||
| Net increase in cash and cash equivalents | ||||||||
| (*) | translated at the closing rate at the date of that balance sheet. |
| (**) | translated at average exchange rates for the period. |
| C. | Jeff’s Brands Ltd.: |
On October 8, 2020, the Company entered
into a common stock purchase agreement with Smart Repair Pro, Inc. (hereinafter - “Pro”), Purex, Corp. (hereinafter - “Purex”),
and their respective stockholders (the “Purex Purchase Agreement”). Pro and Purex both are in the e-Commerce field and operate
online stores for the sale of various consumer products on the Amazon online marketplace. Pursuant to the Purex Purchase Agreement,
23
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| C. | Jeff’s Brands Ltd.: (Cont.) |
In addition, the companies’
current shareholders are entitled to additional milestone issuances of up to an aggregate USD
Subsequently, according to the terms
of the Purex Purchase Agreement, The Company entered into a loan and pledge agreement, effective January 5, 2021 with its majority owned
subsidiaries Pro and Purex. Pursuant to this loan and pledge agreement, the Company extended a USD
On February
2, 2021, the Company entered into a loan and pledge agreement, effective February 2, 2021, and amended on February 5, 2021, or the Pro
Loan and Pledge Agreement, with the Company majority owned subsidiary Pro and its other stockholder, to finance Pro’s additional
purchases of three new brands on the Amazon online marketplace. Pursuant to the Pro Loan and Pledge Agreement, the Company extended a
USD
Similarly, the Company concluded the stated interest is materially lower than its market price. Accordingly, the difference between the fair value and face value of the loan attributable to the company was recorded as deemed contribution by the non-controlling interests to Jeff Brands.
On May 16, 2021, the Company entered
into a stock exchange and plan of restructuring agreement with Victor Hacmon, the other shareholder of Pro and Purex, and Jeffs’
Brands Ltd. (hereinafter - “Jeffs’ Brands”), a newly incorporated entity. Pursuant to which, among other things, the
Company and Victor Hacmon transferred all holdings in Pro and Purex to Jeffs’ Brands, in return for a consideration of Jeffs’
Brands ordinary shares issued respectively. As a result, Pro and Purex became wholly-owned subsidiaries of Jeffs’ Brands. The share
exchange transaction was accounted in a manner similar to Pooling-of-Interests ("As Pooling"). To date, the Company invested
approximately USD
24
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| C. | Jeff’s Brands Ltd.: (Cont.) |
The table set forth below summarizes the estimates of the fair value of assets acquired and liabilities assumed. In addition, the following table summarizes the allocation of the preliminary purchase price as of the acquisition date:
| January
4, 2021 | ||||
| USD
in thousands | ||||
| Cash consideration invested in Jeff Brands | ||||
| Non- cash consideration invested in Jeff Brands | ||||
| Difference between fair value and par value of loan extended to Jeff Brands | ||||
| Total consideration | ||||
| Less: | ||||
| Fair value of net assets acquired | ||||
| Non-controlling interest | ( | ) | ||
| Total acquired | ||||
| Goodwill | ||||
Summarized balance sheet:
| June 30, 2021 |
||||
| USD in thousands(*) |
||||
| Current assets | ||||
| Current liabilities | ||||
| Current net assets | ||||
| Non-current assets | ||||
| Non-current liabilities | ||||
| Non-current net assets | ||||
| Net assets | ||||
| Accumulated non-controlling interests | ||||
25
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| C. | Jeff’s Brands Ltd.: (Cont.) |
Summarized statement of comprehensive income:
| January
4, 2021- June 30, 2021 | ||||
| USD
in thousands(**) | ||||
| Revenues | ||||
| Loss for the period | ( | ) | ||
| Net loss attributable to the NCI | ( | ) | ||
Summarized statement of cash flows:
| January 4, 2021- June 30, 2021 | ||||
| USD in thousands(**) | ||||
| Cash flow used in operating activities | ( | ) | ||
| Cash flow used in investing activities | ( | ) | ||
| Cash flow from financing activities | ||||
| Net increase in cash and cash equivalents | ( | ) | ||
| (*) | translated at the closing rate at the date of that balance sheet. |
| (**) |
| D. | Gix Internet Ltd: |
On June 19, 2019, the Company signed
an agreement with Gix Internet Ltd(formerly known as Algomizer Ltd., hereinafter - “Gix Internet”) and its then wholly-owned
subsidiary Gix Media Ltd. (formerly known as Linkury Ltd.) ., hereinafter “Gix Media”) (collectively the “Gix Group”),
for an investment of approximately USD
| a. | Medigus received |
| b. | Medigus received |
| c. | Medigus received |
26
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| D. | Gix Internet Ltd: (Cont.) |
| d. |
| e. | Medigus is also entitled, for a period of three years following the closing of the investment, to convert any and all of its Gix Media’s shares into Gix shares with a |
| f. | In the event, during the three year period following the closing of the investment, Gix shall issue, or under take to issue ordinary shares with a price per share or exercise per share lower NIS 4.15 (the Reduced Per Share Purchase Price”), Gix Internet shall be allocated immediately with such amounts of additional ordinary shares (and the Gix Warrant shall be adjusted accordingly) equal to the difference of (x) the amount of ordinary shares actually received by the Company under the Investment Agreement, and (y) the amount which Medigus would have otherwise received should the Reduced Per Share Purchase Price was applied (“Anti-dilution”). |
In consideration of the Investment Agreement as described above Medigus:
| a. | Paid NIS |
| b. | Issued to Gix Internet |
| c. | Issued to Gix Internet |
On
September 3, 2019, the Company acquired
On April 6, 2021, the Company exercised
part of its right to convert Gix Media conversion shares and were issued by Gix Internet with additional
On June 28, 2021, the Company exercised
all of its rights to convert Gix Media’s shares to Gix Internet shares and was issued
As of June 30, 2021, the Company owns
27
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| D. | Gix Internet Ltd: (Cont.) |
| Name of entity | Place of business/country of incorporation | %
of ownership interest as of June 30, 2021 | Nature of relationship | Measurement method | Quoted
fair value as of June 30, 2021 | Carrying
amount as of June 30, 2021 | ||||||||||||||||
| USD in thousands | ||||||||||||||||||||||
Gix purchase price allocation summary:
| USD in thousands | ||||
| Cash consideration | ||||
| Adjusted Company’s Equity | ||||
| Excess to Allocation | ||||
| Excess purchase price to allocate to Customer relationship | ||||
| Deferred tax | ( | ) | ||
| Excess purchase price to allocate to technology | ||||
| Deferred tax | ( | ) | ||
| Goodwill | ||||
Reconciliation to carrying amounts for Gix Internet.:
| Six months ended June 30, 2021 | ||||
| USD in thousands | ||||
| Reconciliation to carrying amounts: | ||||
| Equity attributable to Gix shareholders’ as of June 30, 2021 | ||||
| Groups share in % | % | |||
| Group share | ||||
| Fair value adjustments | ||||
| Exchange rate adjustments | ||||
| Carrying amount | ||||
Reconciliation to carrying amounts for Gix Internet.:
| Six months ended June 30, 2021 | ||||
| USD | ||||
| Investment according to eqity method at the beginning of the period | ||||
| Purchase of Gix ordinary shares (exercise of Conversion Right) | ||||
| Increase in capital reverse | ||||
| Currency translation adjustments | ( | ) | ||
| Other Reserve | ( | ) | ||
| Share of net profit of associate accounted for using the equity method | ( | ) | ||
| Investment according to equity method at the end of the period | ||||
28
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| D. | Gix Internet Ltd: (Cont.) |
Summarized balance sheet:
| June 30, 2021 | December 31, 2020 | |||||||
| USD in thousands (*) | ||||||||
| Currents assets | ||||||||
| Cash and cash equivalents | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Non-current assets | ||||||||
| Total Assets | ||||||||
| Current liabilities | ||||||||
| Financial liabilities (excluding trade payables) | ||||||||
| Other current liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current liabilities | ||||||||
| Financial liabilities (excluding lease liability) | ||||||||
| Lease liability | ||||||||
| Other non-current liabilities | ||||||||
| Total non-current liabilities | ||||||||
| Total Liabilities | ||||||||
| Net assets | ||||||||
| Equity attributable to Gix shareholders | ||||||||
| Non-controlling interests | ||||||||
Summarized statement of comprehensive income:
| Six
months ended June 30, 2021 | Six
months ended June 30, 2020 | |||||||
| USD in thousands (**) | ||||||||
| Revenue | ||||||||
| Gross profit | ||||||||
| Profit (loss for the period) | ( | ) | ||||||
| Other comprehensive loss | ||||||||
| Total comprehensive profit (loss) | ( | ) | ||||||
29
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| D. | Gix Internet Ltd: (Cont.) |
Summarized statement of comprehensive income: (Cont.)
| Six months ended June 30, 2021 | Six months ended June 30, 2020 | |||||||
| USD in thousands (**) | ||||||||
| Cash flow used in operating activities | ||||||||
| Cash flow used in investing activities | ( | ) | ||||||
| Cash flow from financing activities | ( | ) | ( | ) | ||||
| Net increase in cash and cash equivalents | ( | ) | ( | ) | ||||
| (*) | translated at the closing rate at the date of that balance sheet |
| (**) | translated at average exchange rates for the period |
| E. | Automax Ltd. (formerly known as Matomy Ltd.): |
Matomy together with its subsidiaries offered and provided a portfolio of proprietary programmatic data-driven platforms focusing on two core activities of domain monetization and mobile digital advertising to advertisers, advertising agencies, apps developers and domain owners, primarily in the United States and Europe. In the period spanning from mid-2017 through December 2019, Matomy ceased all of its activities.
On February 18, 2020, the Company purchased
Upon
completion of acquisition of the investment in Matomy, the difference between the cost of the investment and the Company’s share
of the net fair value of the assets and liabilities of Matomy amounted to USD
On
September 29, 2020,
30
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| E. | Automax Ltd. (formerly known as Matomy Ltd.): (Cont.) |
Following the Company’s decision
to sell up to
On January 19, 2021 and March 9, 2021,
the Company sold
Reconciliation to carrying amounts for Automax (formerly known as Matomy).
| Six months ended June 30, 2021 | ||||
| USD in thousands | ||||
| Investment as of January 01, 2021 Equity method | ||||
| Held for sale asset | ||||
| Total as of January 01, 2021 | ||||
Sale of held for sale asset | ( | ) | ||
| Share of net profit of associate accounted for using the equity method | ||||
| Total amount as of March 9, 2021 | ||||
| Eliminate investment held for sale and equity as a result of transition to fair value | ( | ) | ||
| Fair value of the investment at the day of the transition | ||||
| Securities revaluation | ||||
| End of the period in Fair value | ||||
31
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| F. | Polyrizon Ltd – Protective Biological Gels: |
Polyrizon Ltd. (hereinafter – “Polyrizon”) is a private company engaged in developing biological gels designed to protect patients against biological threats and reduce the intrusion of allergens and viruses through the upper airways and eye cavities.
In July 2020, the Company entered into
an ordinary share purchase agreement with Polyrizon, pursuant to which the Company purchased
In addition, the Company entered
into an exclusive reseller agreement with Polyrizon. As part of the reseller agreement, the Company received an exclusive global
license to promote, market, and resell the Polyrizon products, focusing on a unique Biogel to protect from the COVID-19 virus. The
term of the license is for
32
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| F. | Polyrizon Ltd – Protective Biological Gels: (Cont.) |
On March 9, 2021,
Following share purchase agreement Polyrizon
signed with its current shareholdersto raise an amount of USD
The following table provides details regarding the Purchase Price Allocation of Polyrizon as of July 15, 2020:
| July
15, 2020 | ||||
| USD
in thousands (*) | ||||
| Current assets | ||||
| Cash and cash equivalents | ||||
| Loan | ||||
| Allocation | ||||
| Consideration for other instruments *** | ||||
| IP | ||||
| Shareholder loan | ( | ) | ||
| Total allocated | ||||
| (*) |
| (***) | Fair value of the Option, to invest an additional amount of up to USD |
The following table presents the Polyrizon equity investment account activity:
| Six months ended on June 30, 2021 | ||||
| USD in thousands | ||||
| Investment as of January 01, 2021 Equity method | ||||
| An addition investment | ||||
| Revaluation of the Option, to invest an additional amount and Shareholder loan | ( | ) | ||
| Profit for the period – through share of other comprehensive income of associates accounted for using the equity method | ( | ) | ||
| Depreciation of technology | ( | ) | ||
| Balance as of the end of the period | ||||
33
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| F. | Polyrizon Ltd – Protective Biological Gels: (Cont.) |
The following table provides details regarding the Purchase Price Allocation of Polyrizon as of March 9, 2021:
| March
9, 2021 | ||||
| USD
in thousands (*) | ||||
| Current assets | ||||
| Cash and cash equivalents | ||||
| Acquired Equity | ||||
| Excess to allocate | ||||
| Allocation | ||||
| IP | ||||
| Goodwill | ||||
| Total allocated | ||||
| (*) | translated at the closing rate at the date of that balance sheet |
| G. | Charging Robotics Ltd.: |
On January 7, 2021,
On February 19, 2021, the Company entered into the Joint Venture Agreement, with Mr. Amir Zaid and Mr. Weijian Zhou (the founders of Emuze Ltd., a privately held company that designs and develops electric mobility micro vehicles), and Charging Robotics (the “Joint Venture Agreement”), under which the Company formed a joint venture, under the name Revoltz, to develop and commercialize three modular electric vehicle (hereinafter – “EV”) micro mobility vehicles for urban individual use and “last mile” cargo delivery.
34
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - INTEREST IN OTHER ENTITIES: (Cont.)
| G. | Charging Robotics Ltd.: (Cont.) |
Under the terms of the Joint Venture Agreement,
In addition, within twelve (12) months
following the completion of the second tranche (but in any event not later than December 31, 2022), the Company shall be entitled to invest
an additional amount of USD
The joint venture’s intended focus is to develop unique EVs that have the ability to last a full working day within a single charge suitable for heavy-duty and rigid operations and provide tailored mission-specific designs as well as Hop on -Hop off modes, off-road versions along with a low cost of operation.
On June 17, 2021, Charging Robotics signed a definitive distribution agreement with Automax, (the “Distribution Agreement”). The Distribution Agreement is for an exclusive distribution of Charging Robotics’ wireless robotic charging pad in Israel and Greece for a period of five years, with an extension option for an additional five years. Automax will market the wireless robotic charging pad for electric vehicles, once fully developed by Charging Robotics, and will be responsible for obtaining all the necessary licenses, permits and approvals for the import, marketing and distribution of such product.
As part of the Distribution Agreement,
35
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - INVENTORY
Composed as follows:
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Unaudited | Audited | |||||||
| USD in thousands | ||||||||
| Current assets: | ||||||||
| Raw materials and supplies | ||||||||
| Finished goods | ||||||||
| Provision for impairment | ( | ) | ||||||
As of June 30, 2021, the inventory is derived from Jeff’s Brands.
As of December 31, 2020, the inventory is derived from ScoutCam.
NOTE 6 - INTANGIBLE ASSETS
| A. | Details of the Company’s Intangible assets: |
Total intangible assets consisted of the following:
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Unaudited | Audited | |||||||
| USD in thousands | ||||||||
| Goodwill -Eventer– see note 4.B | ||||||||
| Goodwill – Jeff’s Brands - see note 4.C | ||||||||
| Technology – Eventer – see note 4. B, Amortization -5 years | ||||||||
| Software License – Eventer– see note 4. B | ||||||||
| Patent – Charging Robotics– see note 4. G | ||||||||
| Brand name – Jeff’s Brands – see note 4.C Amortization -10 years | ||||||||
| Amazon stores- Jeff’s Brands– see note 4.C, Amortization -10 years | ||||||||
NOTE 7 - ACCRUED EXPENSES AND OTHER LIABILITIES
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Unaudited | Audited | |||||||
| USD in thousands | ||||||||
| Employees and related institutions | ||||||||
| Accrued expenses | ||||||||
| Other payables | ||||||||
36
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - EQUITY
Medigus Ltd.:
| (1) | a) | On May 22, 2020, the Company closed a firm commitment public offering, pursuant to which the Company issued a total of |
The
immediate gross and net of issuance expenses proceeds from such securities issuance aggregated to approximately USD
Prefunded warrants may be exercised via a cashless exercise mechanism as defined in the agreement, whereby the number of shares the value of which equals the exercise premium in cash will be deducted from the number of shares to be issued upon exercise of the warrant.
During second quarter of 2020,
During the third quarter of 2020,
Until the end of the third quarter, all the prefunded warrants were exercised.
On
July 9, 2020, the Company’s shareholders approved an increase of the authorized share capital of the Company by an additional NIS
| b) | During second quarter of 2020, |
| c) | On May 18, 2020, board of directors of the Company authorized the issuance of |
| d) | On June 1, 2020, board of directors of the Company authorized the issuance of an aggregated amount of |
37
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - EQUITY
Medigus Ltd.: (Cont.)
| (2) | Share offering to the public and existing shareholders: |
On
January 11, 2021,
On February 12, 2021, following the
approval of an extraordinary general meeting of the Company shareholders held on February 12, 2021, the Company amended its articles of
association to eliminate the par value of its ordinary shares, such that the authorized share capital of the Company following the amendment
consists of
On February 25, 2021,
| (3) | Share-based compensation to employees and to directors: |
In
May and June 2021, the company board of directors approved the grant of
NOTE 9 - REVENUES
| A. | Revenues by product: |
| Six months ended | Year ended | |||||||||||
| June 30, | December 31, | |||||||||||
| 2021 | 2020 | 2020 | ||||||||||
| Unaudited | Audited | |||||||||||
| USD in thousands | ||||||||||||
| Miniature camera and related equipment | ||||||||||||
| Products | ||||||||||||
| Revenues from commissions | ||||||||||||
| Total | ||||||||||||
38
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 - REVENUES (Cont.)
| B. | Major customers: |
Set
forth below is a breakdown of Company’s revenue by major customers (major customer –revenues from these customers constitute
at least
| Six months ended | Year ended | |||||||||||
| June 30, | December 31, | |||||||||||
| 2021 | 2020 | 2020 | ||||||||||
| USD in thousands | ||||||||||||
| Customer A | ||||||||||||
| Customer B | ||||||||||||
| Customer C | ||||||||||||
| Customer D | ||||||||||||
NOTE 10 - TRANSACTIONS WITH RELATED PARTIES:
“Related Parties” – As defined in IAS 24 – ‘Related Party Disclosures” (hereinafter- “IAS 24”)
Key management personnel of the Company - included together with other entities, in the said definition of “Related Parties” mentioned in IAS 24, include some members of senior management.
| A. | Transactions with related parties: |
| Six months ended | Year ended | |||||||||||
| June 30 | December 31 | |||||||||||
| 2021 | 2020 | 2020 | ||||||||||
| Unaudited | Audited | |||||||||||
| USD in thousands | ||||||||||||
| Payroll and related expenses to related parties employed by the Company* | ||||||||||||
| Compensation to directors ** | ||||||||||||
| Consultant services*** | ||||||||||||
| Interest and discounting of loans from Jeff’s Brands related parties **** | ||||||||||||
| Revenues – deduct of commission of Eventer from related parties | ( | ) | ||||||||||
| G&A expenses of Eventer with related parties | ||||||||||||
| * |
| ** |
| *** |
| **** |
39
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - TRANSACTIONS WITH RELATED PARTIES: (Cont.)
| A. | Transactions with related parties: (Cont.) |
Indemnification, exemption and insurance for directors and officers of the Company:
| a. | The Company provides its directors and officers with an obligation for indemnification and exemption. |
| b. | The Group maintains an active Directors and Officers’ insurance
policy. The annual premium of the current policy was USD |
| B. | Balances with related parties: |
(1) Current Assets:
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Unaudited | Audited | |||||||
| USD in thousands | ||||||||
| Related party prepaid expense - media Space from Keshet (a related party of eventer) see note 4. B. | ||||||||
| Other receivables (a related party of eventer and Jeff Brands) | ||||||||
| (2) | Current Liabilities: |
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Unaudited | Audited | |||||||
| USD in thousands | ||||||||
| Compensation to key management personnel | ||||||||
| Related party liability relating to license to use software from Screenz cross media Ltd (a related party of Eventer)- see note 4. B | ||||||||
| Current Liabilities of Jeff’s Brands to related parties | ||||||||
| Other Accrued expenses to related parties of Eventer | ||||||||
| (3) | Loans: |
| June 30, | December 31, | |||||||
| 2021 | 2020 | |||||||
| Unaudited | Audited | |||||||
| USD in thousands | ||||||||
| Current Liabilities of Long Term Loans of Jeff’s Brands from related parties (*) | ||||||||
| Long Term Loans of Jeff’s Brands from related parties (*) | ||||||||
| * |
40
MEDIGUS LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - SUBSEQUENT EVENTS:
On July 19, 2021, the Company announced it has signed a non-binding letter of intent to purchase a controlling interest in a Business-to-Business (B2B) and Business-to-Consumer (B2C) electronics distributor (the “Target Company”) with several outlets in Israel and a growing e-commerce operation.
According
to the LOI, the Company will hold
On July 21, 2021, the Company’s
board of directors authorized the Company to take actions to promote a USD
In accordance with the share purchase
agreement Polyrizon signed with its current shareholders to raise a total amount of USD
On August 17, the Company’s subsidiary,
Jeffs’ Brands Ltd signed a non-binding Letter of Intent to acquire
41