Exhibit 99.1
PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM FINANCIAL STATEMENTS
AS OF JUNE 30, 2024
(UNAUDITED)
INDEX
- - - - - - - - - - - -
U.S. dollars
June 30, | December 31, | |||||||||
Note | 2024 | 2023 | ||||||||
ASSETS | ||||||||||
CURRENT ASSETS: | ||||||||||
Cash and cash equivalents | ||||||||||
Trade receivables | ||||||||||
Other current assets | 4 | |||||||||
Inventories | ||||||||||
TOTAL CURRENT ASSETS | ||||||||||
NON-CURRENT ASSETS: | ||||||||||
Restricted deposit | ||||||||||
Operating lease right-of-use asset | 5 | |||||||||
Property and equipment, net | ||||||||||
TOTAL NON-CURRENT ASSETS | ||||||||||
TOTAL ASSETS |
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM BALANCE SHEETS (Unaudited)
U.S. dollars
June 30, | December 31, | |||||||||
Note | 2024 | 2023 | ||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||
CURRENT LIABILITIES: | ||||||||||
Trade payables | ||||||||||
Operating lease liabilities | ||||||||||
Other current liabilities | 6 | |||||||||
TOTAL CURRENT LIABILITIES | ||||||||||
NON-CURRENT LIABILITIES: | ||||||||||
Operating lease liabilities, net of current portion | 5 | |||||||||
Derivative warrant liabilities | 7 | |||||||||
TOTAL NON-CURRENT LIABILITIES | ||||||||||
COMMITMENTS AND CONTINGENCIES | 9 | |||||||||
SHAREHOLDERS’ DEFICIT | ||||||||||
Ordinary shares, NIS | ||||||||||
Additional paid-in capital | ||||||||||
Accumulated losses | ( | ) | ( | ) | ||||||
TOTAL SHAREHOLDERS’ EQUITY | ||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
U.S. dollars
Six months ended June 30, | Six months ended June 30, | |||||||
2024 | 2023 | |||||||
U.S. dollars | ||||||||
Sales | ||||||||
Cost of Sales | ||||||||
GROSS PROFIT | ||||||||
Research and development expenses | ||||||||
Selling and marketing expenses | ||||||||
General and administrative expenses | ||||||||
Initial public offering expenses | ||||||||
OPERATING LOSS | ||||||||
Change in fair value of derivative warrant liabilities | ( | ) | - | |||||
Other finance expenses (income), net | ( | ) | ||||||
NET LOSS AND COMPREHENSIVE LOSS | ||||||||
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT (Unaudited)
U.S. dollars
Ordinary shares | Additional | |||||||||||||||||||
Number | paid-in | Accumulated | ||||||||||||||||||
of shares | Amount | capital | losses | Total | ||||||||||||||||
U.S. dollars | U.S. dollars | |||||||||||||||||||
BALANCE AS OF DECEMBER 31, 2022 | ( | ) | ( | ) | ||||||||||||||||
CHANGES DURING THE SIX MONTHS ENDED JUNE 30, 2023: | ||||||||||||||||||||
Stock based compensation | - | |||||||||||||||||||
Benefit to the Company by an equity holder with respect to funding transaction | - | |||||||||||||||||||
Comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
BALANCE AS OF JUNE 30, 2023 | ( | ) | ( | ) | ||||||||||||||||
BALANCE AS OF DECEMBER 31, 2023 | ( | ) | ||||||||||||||||||
CHANGES DURING SIX MONTHS ENDED JUNE 30, 2024: | ||||||||||||||||||||
Stock based compensation | - | |||||||||||||||||||
Exercise of pre-funded warrants and consultant warrants (Note 7) | ( | ) | ||||||||||||||||||
Comprehensive loss | - | ( | ) | ( | ) | |||||||||||||||
BALANCE AS OF JUNE 30, 2024 | ( | ) |
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
CONDENSED INTERIM STATEMENTS OF CASH FLOWS (Unaudited)
U.S. dollars
Six months ended June 30, | ||||||||
2024 | 2023 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss | ( | ) | ( | ) | ||||
Adjustments required to reconcile net loss to net cash used in operating activities - | ||||||||
Depreciation | ||||||||
Stock based compensation | ||||||||
Interest expenses with respect to funding from related party | ||||||||
Derivative warrant liabilities | ( | ) | ||||||
Loss from exchange differences on cash and cash equivalents | ||||||||
Finance expenses | ( | ) | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade receivables | ( | ) | ||||||
Other current assets | ( | ) | ||||||
Deferred initial public offering cost | ( | ) | ||||||
Inventories | ( | ) | ( | ) | ||||
Operating lease right-of use asset | ( | ) | ||||||
Trade payables | ||||||||
Operating lease liabilities | ( | ) | ||||||
Other current liabilities | ( | ) | ||||||
Net cash used in operating activities | ( | ) | ( | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Investment in restricted deposit | ( | ) | ||||||
Purchase of property and equipment | ( | ) | ( | ) | ||||
Net cash used in investing activities | ( | ) | ( | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Receipt of loan from related party | ||||||||
Net cash from financing activities | ||||||||
Effect of exchange rate changes on cash, cash equivalents | ( | ) | ||||||
Net decrease in cash and cash equivalents | ( | ) | ( | ) | ||||
Cash and cash equivalents at beginning of period | ||||||||
Cash and cash equivalents at end of period | ||||||||
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||||||||
Benefit to the Company by an equity holder with respect to funding transactions | ||||||||
Right-of-use assets obtained in exchange for operating lease liabilities | ||||||||
Stock based compensation included as issuance costs |
The accompanying notes are an integral part of these condensed interim financial statements.
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PARAZERO TECHNOLOGIES LTD.
Note 1 – General
1. | PARAZERO TECHNOLOGIES LTD. - (the “Company”) was incorporated in Israel on June 30, 2013. The Company’s address is 1 HaTahana, Kfar Saba, 4453001, Israel. The Company is an aerospace company that is focused on drone safety systems and engaged in the business of designing, developing, and providing what it believes are best-in-class autonomous parachute safety systems for commercial drones, also known as unmanned aerial systems, or UAS. The company was founded by a group of aviation professionals, together with veteran drone operators, to address the drone industry’s safety challenges. The Company’s goal is to enable the drone industry to realize its greatest potential through increasing safety and mitigating operational risk. |
2. | The Company is in its commercialization stage and has not generated significant revenues at this stage. The Company has incurred recurring
losses and negative cash flows from operating activities since inception, such that as of June 30, 2024, the Company had accumulated losses
of $ |
On July 31, 2023, the Company raised
gross proceeds of $
Management expects that it will require additional financing in the future to fund its operations until it shall have generated significant revenues. Based on the Company’s current operating plan, the Company’s management currently estimates that its cash position will support its current operations as currently conducted for more than 12 months from the date of issuance of these interim financial statements.
Note 2 – Basis for preparation
The Company’s accompanying unaudited condensed interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnote disclosures required by U.S. GAAP for complete financial statements.
The condensed interim financial statements reflect all adjustments considered necessary for a fair presentation of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal recurring nature.
These unaudited interim financial statements should be read in conjunction with the financial statements of the Company for the year ended December 31, 2023 and notes thereto that are included in the Company’s Form 20-F, filed with the SEC on March 21, 2024. The preparation of financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The results of operations for the six months ended June 30, 2024 are not necessarily indicative of the results to be expected for any other interim period or for the year ending December 31, 2024.
Note 3 – Significant Accounting Policies, Accounting Pronouncements Adopted and Recently Issued Accounting Standards
A. | Significant Accounting Policies |
The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements, except for the following:
Restricted deposits
The restricted deposits consist of funds that are contractually restricted as to usage or withdrawal due to guarantees made with regards to lease payments for the Company’s office space.
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PARAZERO TECHNOLOGIES LTD.
Note 4 – Other Current Assets:
June 30 | December 31 | |||||||
2024 | 2023 | |||||||
Governmental institutions | ||||||||
Prepaid expenses | ||||||||
Deferred contract costs | ||||||||
Other current assets | ||||||||
Note 5 – Leases:
The Company had a two-year lease agreement
for its office in Kiryat Ono, Israel that began in 2020, and was renewed in 2022 for an additional
On February 1, 2024, the Company entered
into a three-year lease agreement commencing on March 15, 2024 (the “Lease Agreement”), to move its corporate headquarters,
including the offices and research and development facility, to 1 HaTahana Street, Menivim Tower, Kfar Saba 4453001 Israel where occupies
approximately
The monthly aggregate rental payment
is NIS
Six months ended | ||||||||
June 30, | ||||||||
2024 | 2023 | |||||||
Lease expense | $ | $ |
Six months ended | ||||||||
June 30, | ||||||||
2024 | 2023 | |||||||
Weighted-average remaining lease term — operating leases (years) | ||||||||
Weighted-average discount rate — operating leases (%) |
June 30, 2024 | ||||
2024 | $ | |||
2025 | $ | |||
2026 | $ | |||
2027 | $ | |||
Total undiscounted cash flows | $ | |||
Less: imputed interest | $ | |||
Operaעting lease liabilities | $ |
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PARAZERO TECHNOLOGIES LTD.
Note 6 – Other Current Liabilities:
June 30 | December 31 | |||||||
2024 | 2023 | |||||||
Employees, salaries and related liabilities | ||||||||
Advances from customers | ||||||||
Warranty provision | ||||||||
Accrued expenses | ||||||||
Other expenses | ||||||||
Note 7 – Derivatives Warrant Liabilities:
Private Placement Warrants
The Company issued pre-funded
warrants, series B warrants and series A warrants as part of the PIPE. During January 2024, certain warrant holders exercised the
remaining
June 30, 2024 | December 31, 2023 | |||||||
Expected volatility (%) | ||||||||
Risk-free interest rate (%) | ||||||||
Expected Life (years) | ||||||||
Value per share | $ | $ | ||||||
Exercise price (U.S. dollars per share) | $ | $ |
Balance as of December 31, 2023 | ||||
Change in fair value | ( | ) | ||
Balance as of June 30, 2024 |
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PARAZERO TECHNOLOGIES LTD.
Note 8 – Shareholders’ Equity:
A. | Equity Warrants |
During April 2024, certain consultants exercised
Issuance date | In connection with | No. of warrants issued | Exercise price per ordinary share | No. of Ordinary shares underlying warrants | ||||||||||
2022 | $ | |||||||||||||
2023 | $ | |||||||||||||
2023 | $ |
* | Warrants issued as part of the Delta Drone transaction with the Former Parent Company and upon the IPO completion. |
B. | Stock-based Compensation |
The Company’s Global Share Incentive Plan (2022) (the “Plan”) was adopted by Company’s Board of Directors on March 28, 2022. The Plan provides for the grant of options to purchase Ordinary Shares, restricted share units representing Ordinary Shares and Ordinary Shares (collectively, the “Awards”) to the Company’s employees, officers, directors, advisors and consultants in order to promote a close identity of interests between those individuals and us.
As
of June 30, 2024, the total number of Ordinary Shares reserved for issuance under the Plan is
Number of Options | Weighted Average Exercise Price | |||||||
Options outstanding as of December 31, 2023 | $ | |||||||
Granted | $ | |||||||
Forfeited | $ | |||||||
Options outstanding as of June 30, 2024 | $ | |||||||
Options exercisable as of June 30, 2024 | $ |
As of June 30, 2024, the weighted-average
remaining contractual life of the outstanding options were
2023 | ||||
Risk-free interest rate | ||||
Expected option term (years) | ||||
Expected share price volatility | ||||
Dividend yield |
As of June 30, 2024, the Company
had
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PARAZERO TECHNOLOGIES LTD.
Note 9 – Commitments and Contingencies
A. | Israel Innovation Authority |
The Company has received royalty-bearing
grants from the Israel Innovation Authority (the “IIA”), for approved research and development projects. The programs include
grants for: wages, materials, subcontractors and miscellaneous. The Company is required to pay royalties at the rate of
As of December 31, 2019, the research
and development projects funded by the IIA were completed. The total amount of the IIA grant received was $
As of June 30, 2024, the maximum
obligation with respect to the grants received from the IIA, including accrued interest, contingent upon entitled future sales, is $
When a company develops know-how, technology or products using IIA grants, the terms of these grants and the Research Law restrict the transfer of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how outside of Israel, without the prior approval of the IIA. Therefore, the discretionary approval of an IIA committee would be required for any transfer to third parties inside or outside of Israel of know-how or manufacturing or manufacturing rights related to those aspects of such technologies. There is no certainty that the Company would obtain such approvals.
B. | Liens |
The Company’s long-term restricted
deposits held in a bank in the amount of NIS
Note 10 – Subsequent Events
A. | On July 24, 2024, the Company’s shareholders meeting
resolved to approve a reverse share split of the Company’s issued and outstanding ordinary shares NIS |
B. | On July 30, 2024, the Company’s Board of Directors
approved the grant of an aggregate of |
The exercise
price of the options is $
All the other terms of the grant of the options shall be as set forth in the Company’s Global Share Incentive Plan (2022) (the “Plan”).
Pursuant to the above grant, the Company
have outstanding options to purchase an aggregate of
C. | On August 9, 2024, pursuant
the approval of the Company’s board of directors, the Company filed a Shelf Registration Statement on Form F-3 (the “Form
F-3”) with the Securities and Exchange Commission (the “SEC”) for the registration under the Securities Act of 1933,
as amended (the “Act”), of such indeterminate number of ordinary shares, warrants to purchase ordinary shares, and units,
in one or more offerings for an aggregate initial offering price of up to $ |
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