Exhibit 99.1
XYLO TECHNOLOGIES LTD
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF JUNE 30, 2024
TABLE OF CONTENTS
XYLO TECHNOLOGIES LTD
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
|
|
|
|
|
June 30,
2024 |
|
|
December 31,
2023 |
|
|
|
Note |
|
|
Unaudited |
|
|
Audited |
|
|
|
|
|
|
USD in thousands |
|
|
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
|
|
|
6,675 |
|
|
|
9,357 |
|
Short term deposits |
|
|
|
|
|
11 |
|
|
|
12 |
|
Restricted cash |
|
|
|
|
|
42 |
|
|
|
166 |
|
Trade accounts receivable |
|
|
|
|
|
6,255 |
|
|
|
12,320 |
|
Other receivables |
|
|
|
|
|
1,721 |
|
|
|
2,144 |
|
Inventory |
|
|
|
|
|
- |
|
|
|
2,386 |
|
Loans to associates |
|
7b2 |
|
|
|
1,595 |
|
|
|
1,684 |
|
Loans to others |
|
|
|
|
|
268 |
|
|
|
376 |
|
Related parties |
|
7b1 |
|
|
|
53 |
|
|
|
59 |
|
Financial assets at fair value through profit or loss |
|
4A |
|
|
|
2,821 |
|
|
|
3,167 |
|
|
|
|
|
|
|
19,441 |
|
|
|
31,671 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
|
|
|
90 |
|
|
|
353 |
|
Right-of-use assets, net |
|
|
|
|
|
8 |
|
|
|
496 |
|
Investments accounted for using the equity method |
|
3B |
|
|
|
974 |
|
|
|
2,995 |
|
Intangible assets, net |
|
5 |
|
|
|
17,523 |
|
|
|
27,336 |
|
Deferred tax asset |
|
|
|
|
|
100 |
|
|
|
273 |
|
Financial assets at fair value through profit or loss |
|
4A |
|
|
|
1,156 |
|
|
|
772 |
|
|
|
|
|
|
|
19,851 |
|
|
|
32,225 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
|
|
|
|
39,292 |
|
|
|
63,896 |
|
The accompanying notes are an integral part
of these interim condensed consolidated financial statements.
XYLO TECHNOLOGIES LTD
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
| |
| | |
June 30, 2024 | | |
December 31, 2023 | |
| |
Note | | |
Unaudited | | |
Audited | |
| |
| | |
USD in thousands | |
| |
| | |
| | |
| |
LIABILITIES AND EQUITY | |
| | |
| | |
| |
| |
| | |
| | |
| |
CURRENT LIABILITIES: | |
| | |
| | |
| |
Trade accounts payable | |
| | |
| 9,073 | | |
| 13,248 | |
Short-term loans | |
3E | | |
| 2,499 | | |
| 8,982 | |
Current maturities of long-term loans | |
3E | | |
| 2,079 | | |
| - | |
Short-term convertible loans | |
3E | | |
| 234 | | |
| - | |
Lease liabilities | |
| | |
| 7 | | |
| 102 | |
Embedded derivatives | |
3E | | |
| 284 | | |
| - | |
Liability to event producers | |
| | |
| 1,530 | | |
| 967 | |
Warrants at fair value issued by subsidiaries | |
3E | | |
| 2,025 | | |
| 1,897 | |
Related parties | |
7b3 | | |
| 604 | | |
| 909 | |
Accrued expenses and other current liabilities | |
| | |
| 2,139 | | |
| 3,163 | |
| |
| | |
| 20,474 | | |
| 29,268 | |
| |
| | |
| | | |
| | |
NON-CURRENT LIABILITIES: | |
| | |
| | | |
| | |
Lease liabilities | |
| | |
| - | | |
| 468 | |
Long-term loans | |
3E | | |
| 1,671 | | |
| 234 | |
Deferred tax liability | |
| | |
| 1,204 | | |
| 1,465 | |
Accrued severance pay, net | |
| | |
| 22 | | |
| 26 | |
| |
| | |
| 2,897 | | |
| 2,193 | |
| |
| | |
| | | |
| | |
TOTAL LIABILITIES | |
| | |
| 23,371 | | |
| 31,461 | |
| |
| | |
| | | |
| | |
EQUITY: | |
6 | | |
| | | |
| | |
Share capital - ordinary shares with no par value: authorized - June 30,2024 - 200,000,000 and December 31, 2023 - 200,000,000 shares; issued and outstanding - June 30, 2024 - 28,851,761 shares December 31, 2023 - 27,989,465 shares | |
| | |
| - | | |
| - | |
Share premium | |
| | |
| 112,913 | | |
| 112,883 | |
Other capital reserves | |
| | |
| 11,861 | | |
| 12,106 | |
Warrants | |
| | |
| 197 | | |
| 197 | |
Accumulated deficit | |
| | |
| (109,777 | ) | |
| (101,610 | ) |
Equity attributable to owners of Xylo Technologies Ltd | |
| | |
| 15,194 | | |
| 23,576 | |
Non-controlling interests | |
3A3 | | |
| 727 | | |
| 8,859 | |
| |
| | |
| 15,921 | | |
| 32,435 | |
| |
| | |
| | | |
| | |
TOTAL LIABILITIES AND EQUITY | |
| | |
| 39,292 | | |
| 63,896 | |
The accompanying notes are an integral part
of these interim condensed consolidated financial statements.
XYLO TECHNOLOGIES LTD
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
LOSS
AND OTHER COMPREHENSIVE INCOME
| |
| |
Six months ended June 30, | |
| |
| |
2024 | | |
2023 | |
| |
Note | |
Unaudited | |
| |
| |
USD in thousands | |
Revenues | |
8 | |
| | | |
| | |
Products | |
| |
| 1,002 | | |
| 3,871 | |
Services | |
| |
| 18,301 | | |
| 49,514 | |
| |
| |
| 19,303 | | |
| 53,385 | |
| |
| |
| | | |
| | |
Cost of revenues: | |
| |
| | | |
| | |
Products | |
| |
| 920 | | |
| 3,497 | |
Services | |
| |
| 14,224 | | |
| 41,688 | |
| |
| |
| 15,144 | | |
| 45,185 | |
| |
| |
| | | |
| | |
Gross profit | |
| |
| 4,159 | | |
| 8,200 | |
Research and development expenses | |
| |
| 2,628 | | |
| 3,542 | |
Sales and marketing expenses | |
| |
| 1,832 | | |
| 2,310 | |
General and administrative expenses | |
| |
| 4,206 | | |
| 6,922 | |
Loss from changes in fair value of financial assets at fair value through profit or loss | |
4 | |
| 1,563 | | |
| 3,978 | |
Equity losses | |
3B2 | |
| 187 | | |
| 1,238 | |
Impairment of goodwill | |
5 | |
| 1,802 | | |
| - | |
Operating loss | |
| |
| (8,059 | ) | |
| (9,790 | ) |
| |
| |
| | | |
| | |
Loss from deconsolidation of Jeffs’ Brands | |
1A | |
| 1,318 | | |
| - | |
Other income | |
| |
| (200 | ) | |
| (154 | ) |
Changes in fair value of warrants issued to investors | |
| |
| - | | |
| (238 | ) |
Changes in fair value of warrants issued to third party investors by subsidiaries | |
| |
| - | | |
| (1,017 | ) |
Loss in connection with issuance of warrants by a subsidiary | |
3E | |
| 1,833 | | |
| - | |
Financial loss, net | |
| |
| 920 | | |
| 978 | |
Loss before taxes on income | |
| |
| (11,930 | ) | |
| (9,359 | ) |
Tax expenses (benefit) | |
| |
| (45 | ) | |
| 177 | |
Net loss for the period | |
| |
| (11,885 | ) | |
| (9,536 | ) |
| |
| |
| | | |
| | |
Other comprehensive income | |
| |
| | | |
| | |
Items that may be reclassified to profit or loss | |
| |
| | | |
| | |
Share of other comprehensive income of consolidated subsidiaries and associates accounted for using the equity method | |
| |
| 189 | | |
| 306 | |
Total comprehensive loss for the period | |
| |
| (11,696 | ) | |
| (9,230 | ) |
| |
| |
| | | |
| | |
Net loss for the period is attributable to: | |
| |
| | | |
| | |
Owners of Xylo Technologies Ltd | |
| |
| (8,167 | ) | |
| (8,200 | ) |
Non-controlling interests | |
| |
| (3,718 | ) | |
| (1,336 | ) |
| |
| |
| (11,885 | ) | |
| (9,536 | ) |
Total comprehensive loss for the period is attributable to: | |
| |
| | | |
| | |
Owners of Xylo Technologies Ltd | |
| |
| (8,095 | ) | |
| (8,061 | ) |
Non-controlling interests | |
| |
| (3,601 | ) | |
| (1,169 | ) |
| |
| |
| (11,696 | ) | |
| (9,230 | ) |
Loss per ordinary share attributed to Xylo Technologies Ltd | |
| |
| | | |
| | |
Basic | |
| |
| (0.28 | ) | |
| (0.33 | ) |
Diluted | |
| |
| (0.28 | ) | |
| (0.33 | ) |
| |
| |
| | | |
| | |
Weighted average ordinary shares outstanding (in thousands) | |
| |
| | | |
| | |
Basic | |
| |
| 28,833 | | |
| 24,490 | |
Diluted | |
| |
| 28,833 | | |
| 24,490 | |
The accompanying notes are an integral part
of these interim condensed consolidated financial statements.
XYLO TECHNOLOGIES LTD
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY
|
|
|
|
|
Equity
attributable to owners of Xylo Technologies Ltd |
|
|
|
|
|
|
|
|
|
Note |
|
|
Ordinary
shares |
|
|
Share
premium |
|
|
Capital
reserves
from options
granted |
|
|
Other
reserves |
|
|
Capital
reserves
from
transactions
with non-
controlling
interests |
|
|
Currency
translation
differences |
|
|
Warrants |
|
|
Accumulated
deficit |
|
|
Total |
|
|
Non-
controlling
interests |
|
|
Total
equity |
|
|
|
|
|
|
Unaudited |
|
|
|
|
|
|
USD
in thousands |
|
BALANCE
AS OF JANUARY 1, 2024 |
|
|
|
|
|
- |
|
|
|
112,883 |
|
|
|
2,787 |
|
|
|
1,239 |
|
|
|
8,955 |
|
|
|
(875 |
) |
|
|
197 |
|
|
|
(101,610 |
) |
|
|
23,576 |
|
|
|
8,859 |
|
|
|
32,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
for the period |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(8,167 |
) |
|
|
(8,167 |
) |
|
|
(3,718 |
) |
|
|
(11,885 |
) |
Other
comprehensive income |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
72 |
|
|
|
- |
|
|
|
- |
|
|
|
72 |
|
|
|
117 |
|
|
|
189 |
|
TOTAL
COMPREHENSIVE LOSS FOR THE PERIOD |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
72 |
|
|
|
- |
|
|
|
(8,167 |
) |
|
|
(8,095 |
) |
|
|
(3,601 |
) |
|
|
(11,696 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TRANSACTIONS
WITH SHAREHOLDERS: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subsidiary’s
share-based compensation to employees and service providers |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
56 |
|
|
|
56 |
|
Share
based compensation to employees and service providers |
|
|
|
|
|
- |
|
|
|
21 |
|
|
|
123 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
144 |
|
|
|
- |
|
|
|
144 |
|
Issuance
of shares by Viewbix Inc. |
|
3E |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
- |
|
|
|
(431 |
) |
|
|
|
|
|
|
- |
|
|
|
- |
|
|
|
(431 |
) |
|
|
658 |
|
|
|
227 |
|
Deconsolidation
of Jeffs’ Brands |
|
|
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(5,245 |
) |
|
|
(5,245 |
) |
Expiration
of options |
|
|
|
|
|
- |
|
|
|
9 |
|
|
|
(9 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
TOTAL
TRANSACTIONS WITH SHAREHOLDERS |
|
|
|
|
|
- |
|
|
|
30 |
|
|
|
114 |
|
|
|
- |
|
|
|
(431 |
) |
|
|
72 |
|
|
|
- |
|
|
|
(8,167 |
) |
|
|
(8,382 |
) |
|
|
(8,132 |
) |
|
|
(16,512 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
AS OF JUNE 30, 2024 |
|
|
|
|
|
- |
|
|
|
112,913 |
|
|
|
2,901 |
|
|
|
1,239 |
|
|
|
8,524 |
|
|
|
(803 |
) |
|
|
197 |
|
|
|
(109,777 |
) |
|
|
15,194 |
|
|
|
727 |
|
|
|
15,921 |
|
The accompanying notes are an integral part
of these interim condensed consolidated financial statements.
XYLO TECHNOLOGIES LTD
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
CHANGES IN EQUITY
| |
| | |
Equity
attributable to owners of Xylo Technologies Ltd | | |
| | |
| |
| |
Note | | |
Ordinary
shares | | |
Share
premium | | |
Capital
reserves from options
granted | | |
Other
reserves | | |
Capital
reserves from transactions with non- controlling interests | | |
Currency
translation differences | | |
Warrants | | |
Accumulated
deficit | | |
Total | | |
Non-
controlling interests | | |
Total
equity | |
| |
| | |
Unaudited | |
| |
| | |
USD
in thousands | |
BALANCE
AS OF JANUARY 1, 2023 | |
| | |
| - | | |
| 111,322 | | |
| 3,260 | | |
| 949 | | |
| 9,689 | | |
| (690 | ) | |
| 197 | | |
| (85,586 | ) | |
| 39,141 | | |
| 15,548 | | |
| 54,689 | |
| |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Loss
for the period | |
| | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (8,200 | ) | |
| (8,200 | ) | |
| (1,336 | ) | |
| (9,536 | ) |
Other
comprehensive income | |
| | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 139 | | |
| - | | |
| | | |
| 139 | | |
| 167 | | |
| 306 | |
TOTAL
COMPREHENSIVE LOSS FOR THE PERIOD | |
| | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 139 | | |
| - | | |
| (8,200 | ) | |
| (8,061 | ) | |
| (1,169 | ) | |
| (9,230 | ) |
| |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
TRANSACTIONS
WITH SHAREHOLDERS: | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Issuance
of shares in consideration for an investment | |
| | |
| - | | |
| 250 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 250 | | |
| - | | |
| 250 | |
Subsidiary’s
share-based compensation to employees and service providers | |
| | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 51 | | |
| 51 | |
Share
based compensation to employees and service providers | |
| | |
| - | | |
| - | | |
| 419 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 419 | | |
| - | | |
| 419 | |
Dividend
declared by subsidiaries | |
| | |
| - | | |
| | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (153 | ) | |
| (153 | ) |
Deemed
issuance of shares by a subsidiary | |
| | |
| - | | |
| - | | |
| - | | |
| | | |
| 146 | | |
| - | | |
| - | | |
| - | | |
| 146 | | |
| 322 | | |
| 468 | |
Deemed
stock exchange listing expenses | |
| | |
| - | | |
| - | | |
| - | | |
| 290 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 290 | | |
| - | | |
| 290 | |
Issuance
of shares by Jeffs’ Brands | |
| | |
| - | | |
| - | | |
| - | | |
| 100 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 100 | | |
| 188 | | |
| 288 | |
Transaction
with non-controlling interest by Gix Internet | |
| | |
| - | | |
| - | | |
| - | | |
| - | | |
| (522 | ) | |
| - | | |
| - | | |
| - | | |
| (522 | ) | |
| (2,103 | ) | |
| (2,625 | ) |
Expiration
of options | |
| | |
| - | | |
| 17 | | |
| (17 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
TOTAL
TRANSACTIONS WITH SHAREHOLDERS | |
| | |
| - | | |
| 267 | | |
| 402 | | |
| 390 | | |
| (376 | ) | |
| - | | |
| - | | |
| - | | |
| 683 | | |
| (1,695 | ) | |
| (1,012 | ) |
| |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
BALANCE
AS OF JUNE 30, 2023 | |
| | |
| - | | |
| 111,589 | | |
| 3,662 | | |
| 1,339 | | |
| 9,313 | | |
| (551 | ) | |
| 197 | | |
| (93,786 | ) | |
| 31,763 | | |
| 12,684 | | |
| 44,447 | |
The accompanying notes are an integral part
of these interim condensed consolidated financial statements.
XYLO TECHNOLOGIES LTD
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
| |
Six months ended June 30, | |
| |
2024 | | |
2023 | |
| |
Unaudited | |
| |
USD in thousands | |
| |
| |
CASH FLOWS USED IN OPERATING ACTIVITIES: | |
| | |
| |
Cash flows from (used in) operations (see Appendix A) | |
| 222 | | |
| (1,839 | ) |
Interest paid | |
| (391 | ) | |
| (28 | ) |
Income tax paid | |
| (71 | ) | |
| (512 | ) |
Net cash flow used in operating activities | |
| (240 | ) | |
| (2,379 | ) |
| |
| | | |
| | |
CASH FLOWS USED IN INVESTING ACTIVITIES: | |
| | | |
| | |
Purchase of property and equipment | |
| (8 | ) | |
| (21 | ) |
Acquisitions of an associate by Jeffs’ Brands | |
| - | | |
| (2,993 | ) |
Acquisitions of investments at fair value through profit or loss | |
| - | | |
| (203 | ) |
Deconsolidation of Jeffs’ Brands (see Appendix B) | |
| (142 | ) | |
| - | |
Purchase of intangible assets by Jeffs’ Brands | |
| (4 | ) | |
| (1,681 | ) |
Loans to associates | |
| - | | |
| (492 | ) |
Proceeds from sale of financial assets at fair value through profit or loss and securities of an associate | |
| - | | |
| 328 | |
Changes in short term deposits | |
| 105 | | |
| 848 | |
Net cash flow used in investing activities | |
| (49 | ) | |
| (4,214 | ) |
| |
| | | |
| | |
CASH FLOWS FROM (USED IN) FINANCING ACTIVITIES: | |
| | | |
| | |
Cash paid to non-controlling interests by Viewbix Inc. | |
| - | | |
| (2,625 | ) |
Proceeds from deemed issuance of shares by Charging Robotics Ltd. | |
| - | | |
| 466 | |
Receipt of short-term loans | |
| 2,301 | | |
| 1,000 | |
Repayment of short-term loans | |
| (4,711 | ) | |
| (111 | ) |
Receipt of long-term loans | |
| - | | |
| 1,500 | |
Repayment of long-term loans | |
| (320 | ) | |
| (874 | ) |
Receipts on account of shares and warrants issued by Viewbix Inc. (see
note 3E) | |
| 236 | | |
| - | |
Dividend paid to non-controlling interests | |
| - | | |
| (728 | ) |
Principal elements of lease liability | |
| (40 | ) | |
| (37 | ) |
Net cash flow used in financing activities | |
| (2,534 | ) | |
| (1,409 | ) |
| |
| | | |
| | |
DECREASE IN CASH AND CASH EQUIVALENTS | |
| (2,823 | ) | |
| (8,002 | ) |
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | |
| 9,357 | | |
| 20,065 | |
GAINS FROM EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS | |
| 141 | | |
| 296 | |
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | |
| 6,675 | | |
| 12,359 | |
The accompanying notes are an integral part
of these interim condensed consolidated financial statements.
XYLO TECHNOLOGIES LTD
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
APPENDIX A TO THE INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS:
| |
Six months ended June 30, | |
| |
2024 | | |
2023 | |
| |
Unaudited | |
| |
USD in thousands | |
CASH FLOWS FROM (USED IN) OPERATIONS: | |
| | |
| |
Loss for the period before taxes on income | |
| (11,930 | ) | |
| (9,359 | ) |
Adjustment in respect of: | |
| | | |
| | |
Depreciation and amortization | |
| 3,496 | | |
| 1,931 | |
Loss from changes in fair value of financial assets at fair value through profit or loss | |
| 1,569 | | |
| 3,978 | |
Changes in fair value of warrants issued by subsidiaries | |
| 2,161 | | |
| (1,255 | ) |
Equity losses | |
| 187 | | |
| 1,238 | |
Finance expenses (income) | |
| 741 | | |
| (543 | ) |
Share based compensation to employees and service providers | |
| 192 | | |
| 470 | |
Deemed stock exchange listing expenses | |
| - | | |
| 290 | |
Loss from deconsolidation of Jeffs’ Brands | |
| 1,318 | | |
| - | |
Interest paid | |
| 391 | | |
| 28 | |
Income tax paid | |
| 71 | | |
| 512 | |
| |
| | | |
| | |
CHANGES IN OPERATING ASSET AND LIABILITY ITEMS: | |
| | | |
| | |
Decrease in trade accounts receivable | |
| 5,889 | | |
| 2,596 | |
Decrease (Increase) in inventory | |
| 161 | | |
| (756 | ) |
Decrease (Increase) in other current assets | |
| (157 | ) | |
| 814 | |
Decrease in trade accounts payable | |
| (3,829 | ) | |
| (1,978 | ) |
Decrease in accrued compensation expenses | |
| (4 | ) | |
| (106 | ) |
Increase (Decrease) in accrued expenses and other current liabilities | |
| (34 | ) | |
| 301 | |
CASH FLOWS FROM (USED IN) OPERATIONS | |
| 222 | | |
| (1,839 | ) |
| |
| | | |
| | |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |
| | | |
| | |
Income receivable from sale of shares (see note 3C) | |
| - | | |
| 5,774 | |
Non-cash investments in securities | |
| 100 | | |
| 776 | |
Non-cash sale and purchase of securities (see note 3I) | |
| - | | |
| (937 | ) |
Consideration payable by Jeffs’ Brands to sellers of intangible
assets | |
| - | | |
| 390 | |
Right of use assets obtained in exchange for lease liabilities | |
| | | |
| 33 | |
Conversion of loan into Polyrizon shares (see note 3G) | |
| - | | |
| 314 | |
Deemed extinguishment and re-issuance of debt by Viewbix Inc. (see
note 3E) | |
| 290 | | |
| - | |
Derecognition of right of use asset and lease liability upon lease
termination (see note 3E) | |
| 389 | | |
| - | |
XYLO TECHNOLOGIES LTD
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
APPENDIX B TO THE CONSOLIDATED STATEMENTS OF CASH FLOWS:
|
|
As
of
January 28,
2024 |
|
|
|
USD
in thousands |
|
Deconsolidation of Jeffs’ Brands: |
|
|
|
|
|
|
|
Net working capital other than cash |
|
|
(1,234 |
) |
Property and equipment, net |
|
|
(58 |
) |
Investments accounted for using the equity method |
|
|
(1,927 |
) |
Intangible assets, net |
|
|
(6,551 |
) |
Financial assets at fair value through profit or loss |
|
|
(50 |
) |
Deferred tax asset |
|
|
(231 |
) |
Lease liabilities |
|
|
45 |
|
Warrants at fair value issued by Jeffs’ Brands
|
|
|
2,033 |
|
Derecognition of non-controlling interests |
|
|
5,245 |
|
Recognition of Jeffs' Brands shares as financial assets at fair value |
|
|
1,393 |
|
Recognition of Jeffs' Brands warrants as financial assets at fair value |
|
|
159 |
|
Loss
arising from deconsolidation |
|
|
1,318 |
|
Net cash deconsolidated upon loss of control |
|
|
142 |
|
The accompanying notes are an integral part
of these interim condensed consolidated financial statements.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
A. |
Xylo Technologies Ltd (the “Company” or “Xylo”) was incorporated under the laws of the State of Israel on December 9, 1999. The Company’s registered office and principal place of business is located in Israel. The address of its registered office is Hanehoshet 10, Tel-Aviv POB 6971072, Israel. |
On April 1, 2024, the Company changed
its name from Medigus Ltd. to Xylo Technologies Ltd.
The Company, together with its subsidiaries and associates, operate in the technology sector, focusing primarily on internet related activities, including ad tech and online events management, as well as on electronics, including the development of safety systems for commercial drones and electric vehicle wireless charging solutions.
Additionally, the Company is engaged
in the licensing of intellectual property relating to its legacy product, the Medigus Ultrasonic Surgical Endostapler (“MUSE”),
to Golden Grand Medical Instruments Ltd., a China based medical services provider, and in the investment of its excess cash resources,
primarily in equity securities.
“Group” – the Company together with Charging Robotics Inc., GERD IP Inc., Eventer Technologies Ltd. and Gix Internet Ltd.
“Subsidiaries” – entities under the control of the Company.
These interim condensed consolidated
financial statements were approved on September 17, 2024.
GERD IP, Inc.
As of June 30, 2024, the Company held
90% of the issued and outstanding share capital of GERD IP, Inc. (“GERD IP”).
Eventer Technologies Ltd.
As of June 30, 2024, the Company held
46.21% of the issued and outstanding share capital of Eventer Technologies Ltd. (“Eventer”).
For additional information, see note
3D.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL (continued)
Gix Internet Ltd.
As of June 30, 2024, the Company held
45.75% of the issued and outstanding share capital of Gix Internet Ltd. (“Gix Internet”).
For additional information, see note
3E.
Charging Robotics Inc.
As of June 30, 2024, the Company held
67% of the issued and outstanding common stock of Charging Robotics Inc. (“Charging”).
For additional information, see notes
3H and 3J.
Jeffs’ Brands Ltd.
As of December 31, 2023, the Company
held 34.11% of the issued and outstanding share capital of Jeffs’ Brands Ltd. (“Jeffs’ Brands”).
On January 25, 2024, Jeffs’
Brands entered into a private placement transaction with certain institutional investors for aggregate gross proceeds of approximately
USD 7,275 thousand.
The Company did not participate in
the private placement and as a result its holdings in Jeffs’ Brands decreased to 13.37% of Jeffs’ Brands issued and outstanding
share capital, which resulted in loss of control in Jeffs’ Brands as of January 28, 2024. Accordingly, Jeffs’ Brands was deconsolidated
as of such date and the remaining holdings were accounted for as financial assets at fair value through profit or loss (FVTPL). As a result,
the Company recorded a loss of USD 1,318 thousand in the interim condensed consolidated statements of loss and other comprehensive income.
Throughout the period between March
2024 and June 2024, warrants were exercised by certain institutional investors. As a result, as of June 30, 2024, the Company held 4.52%
of the issued and outstanding share capital of Jeffs’ Brands.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL (continued)
Interests in other entities
As of June 30, 2024, the Company also held 18.09% in Parazero Technologies
Ltd. (“Parazero”), 38.31% in Polyrizon Ltd. (“Polyrizon”) (see note 3G), 19.7% in Laminera Flow Optimization Ltd.
(“Laminera”) (see note 3K), 36.08% in A.I. Conversation Systems Ltd.(“A.I. Conversations Systems”) (see note 3M),19.99%
in Metagramm Software Ltd (“Metagramm”) (see note 3L) and 60% in Zig Miami 54 LLC (“Zig Miami 54”) (see note 3F).
B. | As of the approval date of these interim condensed consolidated financial
statements, the Company has cash and cash equivalents in the amount of USD 3.7 million. The Company anticipates such cash and cash equivalents
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 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, 2024.
As such, the Company’s ability
to continue operating may be dependent on several factors, mainly its ability to raise sufficient additional funding, which may not necessarily
be available to the Company or provide the Company with sufficient funds to meet its objectives.
During the second half of 2023 and
the six months ended June 30, 2024, Viewbix Inc., Gix Internet’s subsidiary, experienced a decrease in its revenues from the digital
content and search segments, as a result of a decrease in user traffic acquired from third party advertising platforms, an industry-wide
decrease in advertising budget, changes and updates to internet browsers’ technology, which adversely impacted Viewbix’s Inc.
ability to acquire traffic in the search segment and a decrease in revenues from routing of traffic acquired from third-party strategic
partners in the search segment, as a result of lack of availability of suppliers credit from such third party strategic partners.
The decline in revenues and other circumstances
described above raise substantial doubts about Viewbix Inc.’s ability to continue as a going concern during the 12-month period
following the issuance date of these financial statements. The Company has no contractual obligations to support Viewbix Inc.
On October 7, 2023, following the brutal
attacks on Israel by Hamas, a terrorist organization located in the Gaza Strip that infiltrated Israel’s southern border and conducted
a series of attacks on civilian and military targets, Israel’s security cabinet declared war (the “War”). Following
the commencement of the War, hostilities also intensified between Israel and Hezbollah, a terrorist organization located in Lebanon. In
the future, the War may escalate in the future into a greater regional conflict. The War led to a reduction of business activities in
Israel, evacuation of residences located in the northern and southern borders of Israel and a significant call up of military reserves
leading to lower participation in the work force. The activities of the Company’s subsidiary Eventer, which operates in the
Israeli market, were directly affected by the War due to the decrease in physical events in Israel which directly affected Eventer’s
revenues in this field.
The activities of the Company’s
subsidiary Gix Internet were not directly affected by the War, as its customers are predominantly from the U.S., Europe and U.K. markets
that were not influenced by the War. However, there is no assurance that future developments of the War will not have any impact for reasons
beyond the Group’s control such as expansion of the War to additional regions and the recruitment of senior employees.
The Group has business continuity procedures in place, and will continue to follow developments, assessing potential impact, if any, on the Group’s business, financials and operations.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED 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, 2024, and for the six-month period ended on that date (hereinafter
- “The Interim Financial Information”) have 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, 2023 (“2023 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 2023 Annual Financial Statements and notes
thereto issued on April 22, 2024.
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 IFRS for annual financial statements.
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
2023 Annual Financial Statements.
C. | Implementation of amendments to existing accounting standards: |
Amendments to IAS 1 Presentation
of Financial Statements – Classification of Liabilities as Current or Non-current
The amendments to IAS 1 published
in January 2020 (“2020 Amendments”) affect only the presentation of liabilities as current or non-current in the statement
of financial position and not the amount or timing of recognition of any asset, liability, income or expenses, or the information disclosed
about those items.
The 2020 Amendments clarify that the
classification of liabilities as current or non-current is based on rights that are in existence at the end of the reporting period,
specify that classification is unaffected by expectations about whether an entity will exercise its right to defer settlement of a liability,
explain that rights are in existence if covenants are complied with at the end of the reporting period, and introduce a definition of
’settlement’ to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other
assets or services.
In October 2022, additional
amendments to IAS 1 were published (“2022 Amendments”). The 2022 Amendments specify that only covenants that an entity
is required to comply with on or before the end of the reporting period affect the entity’s right to defer settlement of a
liability for at least twelve months after the reporting date (and therefore must be considered in assessing the classification of
the liability as current or non-current). Such covenants affect whether the right exists at the end of the reporting period, even if
compliance with the covenant. is assessed only after the reporting date (e.g. a covenant based on the entity’s financial
position at the reporting date that is assessed for compliance only after the reporting date).
The IASB also specifies that the right
to defer settlement of a liability for at least twelve months after the reporting date is not affected if an entity only has to comply
with a covenant after the reporting period. However, if the entity’s right to defer settlement of a liability is subject to the
entity complying with covenants within twelve months after the reporting period, an entity discloses information that enables users of
financial statements to understand the risk of the liabilities becoming repayable within twelve months after the reporting period. This
would include information about the covenants (including the nature of the covenants and when the entity is required to comply with them),
the carrying amount of related liabilities and facts and circumstances, if any, that indicate that the entity may have difficulties complying
with the covenants.
The 2020 Amendments and the 2022
Amendments are applied retrospectively for annual reporting periods beginning on or after January 1, 2024. The application of these
amendments had no impact on the Group’s consolidated financial statements.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - BASIS FOR PREPARATION
OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
D. | New and revised IFRS Accounting Standards and interpretations issued but not yet effective and not early adopted by the Group, which are expected to impact the Group’s consolidated financial statements |
IFRS 18 “Presentation
and Disclosure in Financial Statements” (IFRS 18)
On April 9, 2024, the IASB published
IFRS 18, which replaces IAS 1 “Presentation of Financial Statements” (IAS 1). IFRS 18 aims to improve how information is
communicated by entities in their financial statements.
IFRS 18 focuses on the following topics:
| 1. | Statement of Profit or Loss structure - presentation of new
defined subtotals and classification of income and expenses into specified categories. |
| 2. | Improvements to the aggregation and disaggregation of information
in both the primary financial statements and the accompanying notes. |
| 3. | Disclosing information on management-defined performance
measures (MPMs) which are non-GAAP measures in the notes to the financial statements. |
Furthermore, amendments to other IFRS
standards become effective when an applying IFRS 18, including changes to IAS 7 “Statement of Cash Flows”, which will enhance
comparability between entities. The amendments mainly include: using the operating profit subtotal as the starting point for the indirect
method of reporting cash flows from operating activities, and removing the presentation alternatives for cash flows related to interest
and dividends paid and received. Consequently, except in specific cases, interest and dividends received will be classified as cash flows
from investing activities, while interest and dividends paid will be classified as cash flows from financing activities.
The standard will be applied for annual
reporting periods beginning on or after January 1, 2027 and will be applied retrospectively with specific transition requirements. Earlier
application is permitted.
The Company is currently assessing
the impact of adopting IFRS 18, including the impact of amendments to additional IFRS standards impacted by the adoption of IFRS 18,
on the financial statements.
Amendments to IFRS 9 “Financial
Instruments”
The main amendments to IFRS 9:
| ● | Introducing
a derecognition option for derecognizing a financial liability that is settled via an electronic
payment system before the settlement date, provided that: |
| a. | the
entity has no practical ability to withdraw, stop or cancel the payment instruction; |
| b. | the
entity has no practical ability to access the cash to be used for settlement as a result of the payment instruction; and |
| c. | the
settlement risk associated with the electronic payment system is insignificant. |
An
entity that elects to apply this derecognition option must apply it to all settlements made through the same electronic payment system.
| ● | Providing
application guidance and illustrative examples on how an entity can assess whether the expected
contractual cash flows of a financial asset reflect solely payments of principal and interest
for the outstanding principal amount, for classifying the financial asset. |
| ● | Clarifying
that a financial asset has non-recourse features if an entity’s ultimate right to receive
cash flows is contractually limited to the cash flows generated by specified assets. |
| ● | Clarifying
the characteristics of contractually linked instruments that distinguish them from other
transactions. |
The amendments are effective for annual
reporting periods beginning on or after January 1, 2026, and will be applied retrospectively. Early application is permitted if all the
amendments are applied simultaneously or if the amendments applied are related only to the classification of financial assets. An entity
is not required to restate prior periods to reflect the application of the amendments, but it may restate prior periods if, and only
if, it is possible to do so without the use of hindsight.
The Company is currently assessing
the impact of amendments to IFRS 9 on the financial statements.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 -
INTEREST IN OTHER ENTITIES
A. |
Investments in subsidiaries |
1. |
Additional information about
subsidiaries held by the Company |
General information
| | Main place of the business | | | Ownership rights held by the Company % | | | Ownership rights held by non- controlling interests % | |
June 30, 2024 | | | | | | | | | |
Eventer | | Israel | | | | 46.21 | % | | | 53.79 | % |
Fuel Doctor | | USA | | | | 67 | % | | | 33 | % |
GERD IP | | USA | | | | 90 | % | | | 10 | % |
Gix Internet | | Israel | | | | 45.75 | % | | | 54.25 | % |
| | Main place of the business | | | Ownership rights
held by the Company % | | | Ownership rights held by non- controlling interests % | |
December 31, 2023 | | | | | | | | | |
Jeffs’ Brands | | Israel | | | | 34.11 | % | | | 65.89 | % |
Eventer | | Israel | | | | 46.21 | % | | | 53.79 | % |
Fuel Doctor | | USA | | | | 67 | % | | | 33 | % |
GERD IP | | USA | | | | 90 | % | | | 10 | % |
Gix Internet | | Israel | | | | 45.75 | % | | | 54.25 | % |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - INTEREST IN OTHER ENTITIES (continued)
A. | Investments in subsidiaries (continued) |
2. |
Information related
to non-controlling interests |
Balance of non-controlling interests:
| |
June 30, 2024 | | |
December 31, 2023 | |
| |
USD in thousands | |
| |
| | |
| |
Eventer | |
| 253 | | |
| 371 | |
Jeffs’ Brands | |
| - | | |
| 5,628 | |
Gix Internet | |
| 363 | | |
| 2,642 | |
GERD IP | |
| 57 | | |
| 57 | |
Fuel Doctor | |
| 54 | | |
| 161 | |
| |
| 727 | | |
| 8,859 | |
Net income (loss) attributed to
non-controlling interests:
| |
Six months ended June 30, | |
| |
2024 | | |
2023 | |
| |
USD in thousands | |
| |
| | |
| |
Eventer | |
| (128 | ) | |
| 88 | |
Jeffs’ Brands | |
| (383 | ) | |
| (661 | ) |
Gix Internet | |
| (3,079 | ) | |
| (668 | ) |
Fuel Doctor | |
| (128 | ) | |
| (95 | ) |
| |
| (3,718 | ) | |
| (1,336 | ) |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST IN OTHER ENTITIES (continued)
B. |
Investments accounted
for using the equity method |
1. | This table summarizes the total investments accounted for using the equity method: |
| |
June 30, 2024 | | |
December 31, 2023 | |
| |
USD in thousands | |
| |
| | |
| |
Polyrizon | |
| 521 | | |
| 499 | |
SciSparc Nutraceuticals Inc | |
| - | | |
| 1,940 | |
A.I Conversation Systems | |
| - | | |
| 76 | |
Revoltz | |
| 83 | | |
| 110 | |
Zig Miami 54 | |
| 370 | | |
| 370 | |
| |
| 974 | | |
| 2,995 | |
2. | This table summarizes the total share of loss (profit) of investments accounted for using the equity method: |
| |
Six months ended June 30, | |
| |
2024 | | |
2023 | |
| |
USD in thousands | |
| |
| | |
| |
Odysight.ai | |
| - | | |
| 655 | |
Parazero | |
| - | | |
| 384 | |
Laminera | |
| - | | |
| 34 | |
Polyrizon | |
| 77 | | |
| 65 | |
SciSparc Nutraceuticals Inc. | |
| 13 | | |
| 89 | |
A.I Conversation Systems | |
| 74 | | |
| - | |
Revoltz | |
| 23 | | |
| 11 | |
| |
| 187 | | |
| 1,238 | |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - INTEREST IN OTHER ENTITIES (continued)
B. |
Investments accounted
for using the equity method (continued) |
3. | This table summarize the Company’s rights in share capital and voting rights: |
| | Main place of business | | | Company rights in share capital and voting rights | |
June 30, 2024 | | | | | | |
Laminera | | Israel | | | | 19.70 | % |
Polyrizon | | Israel | | | | 38.31 | % |
A.I Conversation Systems | | Israel | | | | 36.08 | % |
Revoltz | | Israel | | | | 19.90 | % |
Zig Miami 54 | | USA | | | | 60 | % |
December 31, 2023 | | | | | | |
Laminera | | Israel | | | | 19.70 | % |
Polyrizon | | Israel | | | | 38.76 | % |
SciSparc Nutraceuticals | | USA | | | | 49 | % |
A.I Conversation Systems | | Israel | | | | 36.08 | % |
Revoltz | | Israel | | | | 19.90 | % |
Zig Miami 54 | | USA | | | | 60 | % |
4. | Fair value of investments accounted for using the equity method for which there is a market price on the stock exchange: |
| |
June 30, 2024 | | |
December 31, 2023 | |
| |
Carrying
amount | | |
Quoted fair value | | |
Carrying
amount | | |
Quoted fair value | |
| |
USD in thousands | |
A.I Conversation System | |
| - | | |
| 331 | | |
| 76 | | |
| 882 | |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST IN OTHER ENTITIES (continued)
As of December 31, 2022, the Company
held 27.02% of the outstanding common stock of Odysight.ai.
On March 21, 2023, Odysight.ai completed
a private placement to existing stockholders, of 3,294,117 units, at a purchase price of USD 4.25 per unit, with each unit consisting
of one share of Odysight.ai’s common stock and one warrant to purchase one share of Odysight.ai’s common stock at an exercise
price of USD 5.50 per share. The Company did not participate in the private placement. Following the private placement, the Company’s
holdings in Odysight.ai were diluted to 18.45% and the remaining holding was accounted for as investment at fair value through profit
or loss (FVTPL). As a result of the transition, the Company recognized a loss of USD 2,946 thousand.
On May 17, 2023, the Company signed
a stock transfer agreement to sell its entire holdings in Odysight.ai for total proceeds of approximately USD 5.7 million.
General
As of June 30, 2024, and December 31,
2023, the Company held 46.21% of Eventer’s issued and outstanding common stock.
On August 27, 2024, Julian Azoulay,
Eventer’s CEO exercised options to acquire ordinary shares, and as a result the Company’s holdings in Eventer decreased to
44.52%.
On December 6, 2023, the Company
signed a share purchase agreement with Keshet Holdings LP (“Keshet”) to purchase its entire stake in Eventer for
consideration of USD 250 thousand which will be paid in the Company’s shares. The closing of the transaction is expected to
occur in the near future, and as a result, the Company’s holdings in Eventer are expected to increase to
58.44%.
Exchange agreement
On October 14, 2020, the Company entered
into an exchange agreement with Eventer’s shareholders, pursuant to which, during the period commencing on the second anniversary
of the exchange agreement and ending fifty-four (54) months following the date of the exchange agreement, Eventer’s shareholders
may elect to exchange all of their Eventer shares for ordinary shares of the Company. The Company treated the exchange agreement at the
date of the business combination from accounting perspective as recognition of noncontrolling interests, in addition to the recognition
of a liability in respect of a derivative (exchange options) which will be measured at fair value at each cut-off date. The changes in
the fair value at each cut-off date will be recorded as a financial income/expense.
As of June 30, 2024, and December 31,
2023, the Company concluded that the fair value of this derivative is immaterial.
For more information, see contingent
liabilities section below.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST IN OTHER ENTITIES (continued)
Loan agreements between Eventer
and the Company
On October 30, 2022, the Company and
Eventer signed an amendment pursuant to which the maturity date of the loans between Eventer and the Company was extended to May 30, 2024.
In the event Eventer issues securities in consideration of at least USD 2 million or in the event of an IPO or rights offering (the “Investment”),
then the outstanding loans will automatically be converted into shares. The number of shares will be calculated by dividing the outstanding
balance as of the closing date of the Investment by a price per share which shall reflect a 20% discount off the lowest price per share
paid in the Investment.
As of the issuance date of these financial
statements, the Company and Eventer are renegotiating the terms of the loan agreement.
Contingent liabilities
| a. | On December 14, 2022, a motion to certify a class action
suit was filed against Eventer and two of its directors, alleging the violation of the provisions of the Prohibition of Discrimination
in Products, Services, and Entry into Places of Entertainment and Public Places Law. The plaintiff claims that Eventer enables the allocation
of different kinds of tickets to different groups (such as women, children etc.), thereby allowing structured discrimination. According
to the opinion of Eventer’s legal counsel, the chances of the class action to be rejected are more likely than not both against
Eventer and its directors. A hearing is scheduled for November27, 2024. |
| b. | On April 1, 2024, a lawsuit seeking declaratory judgement
was filed in the District Court of Tel Aviv-Jaffa in Israel by minority shareholders of Eventer against Eventer and the Company (together,
the “Defendants”). The minority shareholders of Eventer (the “Plaintiffs”), hold in aggregate 31.86% of the outstanding
ordinary shares of Eventer. |
The Plaintiffs allege, among others,
that the Defendants violated the agreement whereby the Company acquired control of Eventer (the “Purchase Agreement”), which
established a “separation” mechanism, pursuant to which certain Plaintiffs were granted an option to convert their shares
in Eventer into shares of the Company. The claim alleges that the Company has violated the terms of the Purchase Agreement by refusing
to negotiate Eventer’s valuation to enable certain of the Plaintiffs to exercise their option to convert their shares of Eventer
into shares of the Company. The Plaintiffs seek an aggregate of NIS 1,229 thousand from Eventer due to claims of breach of agreements
(approximately USD 335 thousand) and seek an aggregate of NIS 8,602 thousand from the Company as consideration for the Plaintiffs’ shares
in Eventer or as an alternative remedy, to convert Eventer’s shares into the Company shares for an aggregate value of NIS 8,602
thousand (approximately USD 2,348 thousand) following which all the Plaintiffs shares in Eventer would be transferred to the Company.
The Company submitted its response to the District Court of Tel Aviv
– Jaffa and it intends to defend its position vigorously. As of the date of issuance of these financial statements, the Company
is unable to estimate a loss or range of loss of this claim.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST IN OTHER ENTITIES (continued)
Agreement with Screenz Cross
Media Ltd.
Following the last amendment of the
agreement with Screenz Cross Media Ltd., a company indirectly controlled and managed by Eli Uzan who served as Eventer’s Director
(hereafter “Screenz”), in December 2022, it was determined that Screenz will have the first right to receive any money received
from Eventer and resulting from a digital ticketing platform for interactive virtual events up to a total amount of USD 480 thousand.
As of June 30, 2024, the Company concluded that the fair value of this commitment is immaterial given the uncertainty of generating revenues
by Eventer from interactive virtual events.
Share based compensation grants
| 1. | On March 30, 2021, Eventer granted its CEO 29,944 options to purchase 29,944
shares at an exercise price of 0.001 NIS per share. The options vested on April 1, 2024, and on August 24, 2024 the options were converted
into common stock. |
The fair value of this grant was approximately
NIS 1,668 thousand (USD 473 thousand). For the six months ended June 30, 2024, and 2023, NIS 0 thousand (USD 0 thousand) and NIS 91 thousand
(approximately USD 25 thousand), respectively, were recognized and recorded as expenses.
| 2. | On March 30, 2021, Eventer granted Round Robin Ltd., which is one of the founding partners of Eventer, 29,944 options to purchase 29,944 shares at exercise price of 1.0 NIS per share. The options vested and can be converted to Eventer’s ordinary shares until August 31, 2025. |
The fair value of this grant was approximately
NIS 1,668 thousand (USD 473 thousand). For the six months ended June 30, 2024, and 2023, NIS 0 thousand (USD 0 thousand) and NIS 91 thousand
(approximately USD 25 thousand), respectively, were recognized and recorded as expenses.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 -
INTEREST IN OTHER ENTITIES (continued)
General
As of June 30, 2024, and December 31,
2023, the Company held 45.75% of the issued and outstanding share capital of Gix Internet.
Gix Internet is the parent of Viewbix
Inc. a publicly traded company which is the majority shareholder of Gix Media Ltd. (“Gix Media”). Gix Media is the majority
holder of Cortex Media Group Ltd. (“Cortex”), a digital advertising platform that develops and markets a variety of technological
platforms that automate, optimize and monetize digital online campaigns.
On June 4, 2024, Gix Internet signed
a non-binding memorandum of understanding (“MOU”) with the shareholders of a robotics company specializing in artificial intelligence
(“AI”) autonomous robotics solutions, mainly for logistics distributions in certain medical centers (“Robotics Company”).
Pursuant to the MOU, subject to the
negotiation and execution of a definitive agreement, Gix Internet will execute a share exchange transaction with the Robotics Company.
Subject and upon completion of the contemplated transaction, the Robotics Company is set to become a wholly owned subsidiary of Gix Internet.
Pursuant to the MOU and subject to
the fulfillment of customary closing conditions in the forthcoming definitive agreement, the shareholders of the Robotics Company will
transfer all their shares to Gix Internet in exchange for 30% of the issued and outstanding ordinary shares of Gix Internet. The shareholders
of the Robotics Company will have the option to increase their holdings to 37.5% and 45% of the issued and outstanding shares of Gix
Internet upon completion of two separate commercial milestones.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST
IN OTHER ENTITIES (continued)
E. |
Gix Internet (continued) |
Financing Agreement with Gix Media
On June 13, 2024, Gix Media and Bank
Leumi entered into an addendum to an existing loan agreement in the amount of USD 4,989 thousand between the parties which was effective
as of May 15, 2024, pursuant to which: (i) the addendum will be effective until August 31, 2024; (ii) Viewbix Inc. is obligated to transfer
to Gix Media USD 600 thousand; (iii) a new covenant, measured by reference to positive EBTIDA was implemented; (iv) all payments due to
Bank Leumi long-term bank loan were deferred to August 31, 2024 and from September 1, 2024, payments will be repaid as schedule until
the end of the long-term bank loan; (v) a new USD 350 thousand loan was granted to Gix Media on June 13, 2024, to be repaid until
August 30, 2024, alongside the existing credit facility to Gix Media, which remains equal to 80% of Gix Media’s customer balance;
and (vi) Gix Media is obligated to perform a reduction in expenses, including reduction in force.
On September 11, 2024, Gix Media and Bank Leumi entered into an additional
addendum which was effective from August 30, 2024, pursuant to which, inter alia: (i) the addendum will be effective until February 27,
2025; (ii) Viewbix Inc. is obligated to transfer to Gix Media USD 2 million until December 31, 2024; (iii) all payments due to Bank Leumi
long-term bank loan were deferred to December 31, 2024 and from January 1, 2025, payments will be repaid as schedule until the end of
the long-term bank loan.
Cortex Credit Line
On September 21, 2022, Cortex and Bank
Leumi entered into an addendum to an existing loan agreement (“Cortex Loan Agreement”) between the parties, dated August 15,
2021. As part of the addendum to the loan agreement, Bank Leumi provided Cortex with a monthly renewable credit line of USD 1,500 thousand
(the “Cortex Credit Line”). The Cortex Credit Line is determined every month at the level of 70% of Cortex’s customers’
balance. The amounts that are drawn from the Cortex Credit Line bear an annual interest of SOFR + 3.52% (Overnight Financing Rate Secured,
guaranteed daily interest as determined in accordance with the Federal Bank in New York).
On April 27, 2023, Bank Leumi increased the Cortex Credit
Line by USD 1,000.
In September 2023, Cortex and Bank Leumi entered into an
additional addendum to the Cortex Loan Agreement, in which Bank Leumi extended the Cortex Credit Line of USD 2,500 by one year which will
expire on September 20, 2024. The amounts that are drawn from the Cortex Credit Line bear an annual interest of SOFR + 4.08%.
On May 27, 2024, Cortex and Bank Leumi entered into an amendment
to Cortex Loan Agreement, pursuant to which, the credit facility to Cortex will be 80% of Cortex’s customer balance and up
to $2,000.
As of June 30, 2024, Cortex has drawn $800 of the Cortex
Credit Line.
Loan agreement between the Company
and Gix Internet
On February 8, 2024, the Company and
Gix Internet signed an addendum to the loan agreement, effective as of January 1, 2024. Pursuant to the addendum, the loan repayment will
be postponed until July 1, 2024. In addition, the Company will be entitled to request conversion of all or part of the balance loan in
the following events (1) a change in the Gix Internet’s main business or entry into a new field of activity; or (2) completion of
a transaction merger or consolidation with or into another corporation.
On August 22, 2024, the Company and
Gix Internet signed an addendum to the loan agreement, effective as of July 1, 2024. Pursuant to the addendum, the loan repayment will
be postponed until December 31, 2024.
The Company concluded that the modified
loan terms do not represent a substantial modification in accordance with IFRS 9.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST
IN OTHER ENTITIES (continued)
E. |
Gix Internet (continued) |
Loan agreement between the Company
and Viewbix Ltd.
On November 15, 2023, the Company (along
with several lenders) signed a loan agreement with Viewbix Ltd., a wholly owned subsidiary of Viewbix Inc., in an aggregate amount of
USD 480 thousand. The Company’s portion in this loan was USD 200 thousand (the “2023 Loan”).
In connection with the 2023 Loan, Viewbix
Inc. issued to each lender a warrant to purchase shares of common stock (the “2023 Warrants”). The 2023 Warrants are exercisable
to 480,000 shares of common stock, at an exercise price of USD 0.50 per share and will expire and cease to be exercisable
on December 31, 2025.
The terms of the 2023 Loan were substantially
amended on June 18, 2024, by the June 2024 Facility Agreement (see below). These amendments represent a substantial modification in accordance
with IFRS 9. Accordingly, the terms modification was accounted for as an extinguishment of the original financial liability and the initial
recognition of new financial instruments issued at their fair value as of the effective date of the June 2024 Facility Agreement.
As a result of the substantial modification
of terms, the Group recognized a finance expense of USD 300 thousand and USD 1,833 thousand was recognized as a loss in connection with
issuance of warrants in its interim condensed consolidated statement of loss and other comprehensive income for the six months period
ended June 30, 2024
June 2024 Facility Agreement
On June 18, 2024, Viewbix Inc. entered into a credit facility agreement
which was amended and restated on July 22, 2024 (the “June 2024 Facility Agreement”) for a USD 1 million credit facility
(the “June 2024 Facility Loan Amount”) with a group of lenders including L.I.A. Pure Capital Ltd (the “June 2024 Lead
Lender”, and collectively, the “June 2024 Lenders”). In addition to the June 2024 Facility Loan Amount, the June 2024
Facility Agreement includes modification to the terms of the outstanding debt in the amount of USD 531 thousand owed by Viewbix Inc.
to the June 2024 Lenders (the “June 2024 Prior Loan Amount”, and together with the June 2024 Facility Loan Amount, the “June
2024 Loan Amount”).
The term (the “June 2024 Facility
Term”) of the June 2024 Facility Agreement expires 12 months following the date of the June 2024 Facility Agreement (the
“Initial Maturity Date”), provided that, if the effectiveness of an uplisting of the Viewbix Inc. shares of common stock to
a national securities exchange (the “Uplist”) occurs prior to the Initial Maturity Date, the June 2024 Facility Term will
expire 12 months following the effective date of the Uplist. The June 2024 Facility Agreement sets forth a drawdown schedule
as follows: (i) an aggregate amount of USD 350 thousand was drawn down on the date of the Prior June 2024 Facility Agreement, (ii)
an aggregate amount of USD 150 thousand drawn down upon the filing of the Company’s PIPE Registration Statement (as defined below)
and (iii) an amount of USD 500 thousand drawn down upon the effectiveness of the Uplist.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST
IN OTHER ENTITIES (continued)
E. |
Gix Internet (continued) |
The June 2024 Facility Loan Amount
accrues interest at a rate of 12% per annum, and Viewbix Inc. will also pay such interest on the June 2024 Prior Loan Amount, which
is equal to USD 184 thousand (the “June 2024 Facility Interest”). The June 2024 Facility Interest was paid in advance
for the first year of the June 2024 Facility in (i) shares of Viewbix Inc.’s common stock at a conversion rate of USD 0.25 for
each U.S. dollar of June 2024 Facility Interest accrued on the respective June 2024 Loan Amount, equal to an aggregate of 734,716 shares
of common stock (the “June 2024 Facility Shares”) and (b) a warrant to purchase a number of shares of common stock equal to
the June 2024 Facility Shares (the “June 2024 Facility Warrant”).
Immediately following the effectiveness
of the Uplist, (i) USD 663 thousand of the June 2024 Loan Amount will convert into shares of common stock at a conversion rate equal
to USD 0.25 per share of Viewbix Inc.’s common stock (the “June 2024 Convertible Stock”) and (ii) Viewbix Inc.
will issue a warrant in substantially the same form and on substantially the same terms as a June 2024 Facility Warrant to purchase a
number of shares of Viewbix Inc.’s common stock equal to the June 2024 Convertible Stock with an exercise price of USD 0.25 per
share (the “June 2024 Conversion Warrant”, and (i) and (ii), collectively a “June 2024 Conversion Unit”). Such
portion of the June 2024 Loan Amount that is not converted into a June 2024 Conversion Unit will remain outstanding and will not convert
following the Uplist. For the duration of the June 2024 Facility Term of the June 2024 Facility Agreement, the June 2024 Lenders may elect
to convert after the effectiveness of the Uplist such unconverted portion of the June 2024 Loan Amount into additional June 2024 Conversion
Units or, upon the expiration of the June 2024 Facility Term, such unconverted portion of the June 2024 Loan Amount will be repaid in
accordance with the terms of the June 2024 Facility Agreement.
The June 2024 Facility Warrants are
exercisable upon issuance at an exercise price of USD 0.25 per share of common stock and will have a three-year term from
the issuance date.
In addition and in connection with
the June 2024 Facility Agreement, Viewbix Inc. agreed to pay the June 2024 Lead Lender a commission consisting of (i) 200,000 shares
of common stock, (ii) a warrant in substantially the same form and on substantially the same terms as the June 2024 Facility Warrant to
purchase 200,000 shares of common stock with an exercise price of USD 0.25 per share (the “June 2024 Lead Lender
Warrant”) and (iii) a warrant to purchase 2,500,000 shares of common stock with an exercise price of USD 1.00 per
share, representing an aggregate exercise amount of USD 2.5 million, subject to beneficial ownership limitations and adjustments
(the “June 2024 Lead Lender Fee Warrant” and together with the June 2024 Lead Lender Warrant and the June 2024 Facility Warrants,
the “June 2024 Warrants”).
The conversion and conversion related
features of the June 2024 facility loan were bifurcated from their host debt contract and recognized as liabilities measured at fair value
at each cut-off date. The facility loan was initially recorded at its fair value and subsequently measured at cost. The June 2024 Facility
Warrant issued as prepayment of interest and the June 2024 Lead Lender Warrant were initially recognized at fair value and classified
as a liability measured at fair value at each cut-off date (see note 4).
Following the June 2024 Facility Agreement,
Gix Internet’s holdings in Viewbix Inc. decreased from 76% to 71.11%. The transaction was recorded as a transaction with non-controlling
interests in the Group’s consolidated statements of changes in shareholders equity for the period ended June 30, 2024.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST
IN OTHER ENTITIES (continued)
E. |
Gix Internet (continued) |
Private Placement
On July 3, 2024, Viewbix Inc. entered
into a definitive securities purchase agreement (the “Purchase Agreement”) with a certain investor (the “Lead Investor”)
for the purchase and sale in a private placement (the “Private Placement”) of units consisting of (i) 1,027,500 shares
of Viewbix Inc.’s common stock at a purchase price of USD 0.25 per share (the “PIPE Shares”) and (ii) common stock
purchase warrants to purchase up to 1,541,250 shares of Viewbix Inc.’s common stock (the “PIPE Warrants”)
to the Lead Investor and other investors (collectively, the “Investors”) acceptable to the Lead Investor and Viewbix Inc.
The aggregate gross proceeds received by Viewbix from the Private Placement were $257, of which $237 were received in June 2024 and the
$20 remaining were received in July 2024. The effective date of the Purchase Agreement is June 30, 2024.
The PIPE Warrants are exercisable upon
issuance at an exercise price of USD 0.25 per share and will have a three-year term from the issuance date. In addition,
the PIPE Warrants are subject to an automatic exercise provision in the event that Viewbix Inc.’s shares of common stock are approved
for listing on the Nasdaq Capital Market.
Upon the closing of the Private Placement,
Viewbix Inc. agreed to pay the Lead Investor: (1) USD 10 thousand for actual and documented fees and expenses incurred and, (2) a
commission consisting of (i) a cash fee of USD 123 thousand and (ii) 51,375 shares of Viewbix Inc.’s common stock.
In July 2024, Viewbix Inc. issued to
the Investors 1,027,500 shares of common stock and 1,541,250 warrants in connection with the Private Placement.
Following the Private Placement, Gix
Internet’s holdings in Viewbix Inc. decreased from 71.11% to 66.89%. The transaction was recorded as a transaction with non-controlling
interests in the Group’s consolidated statements of changes in shareholders equity for the period ended June 30, 2024.
Stock Incentive Plan
On March 2, 2023, the Board of Directors
of Viewbix Inc. approved the adoption of the 2023 stock incentive plan (the “2023 Plan”). The 2023 Plan permits the issuance
of up to (i) 2,500,000 shares of Common Stock, plus (ii) an annual increase equal to the lesser of (A) 5% of Viewbix Inc.’s outstanding
capital stock on the last day of the immediately preceding calendar year; and (B) such smaller amount as determined by the Board of Directors,
provided that no more than 2,500,000 shares of common stock may be issued upon the exercise of incentive stock options. If any outstanding
awards expire, are canceled or are forfeited, the underlying shares would be available for future grants under the 2023 Plan. As of the
date of approval of the financial statements, Viewbix Inc. had reserved 2,500,000 shares of common stock for issuance under the 2023 Plan.
As of June 30, 2024, 51,020 stock-based
awards were granted by Viewbix Inc. under the 2023 Plan and an expense of USD 12 thousand was recognized in the Group’s consolidated
statements of income/loss and other comprehensive income/loss for the six months ended June 30, 2024.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST IN OTHER ENTITIES (continued)
On September 13, 2023, the Company
signed an operating agreement with Zig Investment Group LLC (“Zig Investment Group”), a Florida limited liability company,
pursuant to which they formed a company, under the name Zig Miami 54 LLC (“Zig Miami 54”), a Florida limited liability company.
The purpose of Zig Miami 54 is to acquire, improve, renovate, develop, manage, sell and otherwise deal with a commercial property located
in Miami, Florida. The rights of Zig Miami 54 are exercised by Zig Investment Group, and the business and affairs of Zig Miami 54 are
managed under the direction of Zig Investment Group (the “Manager”).
Under the terms of the agreement, the
Company invested an amount of USD 2,000 thousand (the “Initial Capital Contribution”) in consideration of 60% of the
issued and outstanding share capital of Zig Miami 54. The remaining 40% were allocated, without consideration, to Zig Investment Group.
In addition, Zig Miami 54 is entitled
to receive a loan from the seller of the property (“Seller Loan”) in the amount of up to USD 1,500 thousand which is secured
by a first lien on the property.
Additionally, under the terms of the agreement, commencing upon completion
of phase I of the renovation work, the Manager shall distribute net cash from operations, with respect to each calendar quarter, during
the next succeeding calendar quarter, or more frequently as determined by the Manager. All distributions of net cash from operations and
net cash from capital transactions, including refinancing the existing Seller Loan, shall be made in the following order: (i) one hundred
percent (100%) to repay all debts, regular operating expenses and obligations of Zig Miami 54, including the current periodic installments
of principal and interest due on the Seller Loan; (ii) one hundred percent (100%) to the Company until the Company has received a return
of one hundred percent (100%) of its Initial Capital Contribution; (iii) one hundred percent (100%) to Zig Investment Group to repay all
cost overruns incurred by Zig Investment Group, if any, up to the maximum amount of USD 180 thousand; and (iv) pro rata to the Company
and Zig Investment Group in accordance with their percentage interests.
Moreover, upon such time that the Company
has received a distribution of one hundred percent (100%) of its Initial Capital Contribution, the Manager shall cause Zig Miami 54 to
redeem from the Company, without any further consent or action of the Company, fifty percent (50%) of the Company’s interests in
Zig Miami 54, equaling a thirty percent (30%) percentage interest in Zig Miami 54 and to, thereafter, issue to Zig Investment Group, additional
interests in Zig Miami 54 equaling a thirty percent (30%) interest in Zig Miami 54. Following such redemption and issuance, Zig Investment
Group will hold a seventy percent (70%) interest in Zig Miami 54 and the Company will hold a thirty percent (30%) interest in Zig Miami
54.
The closing of the agreement was on
December 15, 2023 (the “Closing”). Following the Closing, Zig Miami 54 acquired the commercial property for an aggregate amount
of USD 2,250 thousand and received a Seller Loan in the amount of USD 1,350 thousand.
The Initial Capital Contribution includes
a loan and an investment. The Initial Capital Contribution was first allocated to the loan based on its fair value at the date of the
Closing in an amount of USD 1,545 thousand (the “Loan”) with the residual of the Initial Capital Contribution in an amount
of USD 455 thousand allocated to the investment (“Investment Purchase Price”).
The Loan is subsequently measured at
fair value through profit or loss (FVTPL). As of June 30, 2024, and December 31, 2023, the fair value of the Loan was USD 1,533 thousand
and USD 1,545 thousand, respectively.
The Company did not obtain any substantive
processes, assembled workforce, or employees capable of producing outputs in connection with the acquisition. Therefore, the transaction
was accounted for as an asset acquisition, as the acquired assets did not meet the definition of a business as defined by IFRS 3, Business
Combinations.
The Investment Purchase Price was fully
allocated to the commercial property.
Additionally, the management of the
Company assessed whether it has control over Zig Miami 54 in accordance with IFRS 10 and determined that it has significant influence
over Zig Miami 54. As such, the investment was accounted for using the equity method in accordance with IAS 28.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 -
INTEREST IN OTHER ENTITIES (continued)
Investment in shares
As of December 31, 2023, the Company
held 38.76% of the issued and outstanding share capital of Polyrizon and the investment was accounted for using the equity method.
On May 12, 2024, the Company converted
loans into 88,216 shares of Polyrizon. As of June 30, 2024, the Company held 38.31% of the issued and outstanding share capital of Polyrizon.
On July 2, 2024, the Company signed
a sale agreement to sell a portion of its stake of 662,980 shares in Polyrizon. See note 10.4 for additional information.
Investment in options
In July 2020, the Company was granted
an option (the “Original Option”) to invest an additional amount of up to USD 1 million in consideration for 3,107,223 shares
of Polyrizon. The Original Option was exercisable until the earlier of (i) April 23, 2023, or (ii) the consummation by Polyrizon of equity
financing of at least USD 500 thousand based on a pre-money valuation of at least USD 10 million. The Original Option
was terminated on April 23, 2023.
On December 15, 2021, the Company was
granted a new option (the “Alternative Option”) to invest an amount of USD 2 million in Polyrizon at a price per share equal
to 125% the price per share at Polyrizon’s IPO (as defined below). The Alternative option is exercisable for a period of 3 years
following the closing of Polyrizon’s initial public offering (“Polyrizon’s IPO”). On November 21, 2023, the Company
signed an amendment to the share purchase agreement according to which, the Alternative Option will be exercisable upon a completion of
listing Polyrizon’s ordinary shares for trading on the NASDAQ, whether via an initial public offering, merger, or by any other listing,
provided however, that such listing takes place on or prior to December 31, 2024.
The fair value was determined based
on management’s expectations for the IPO scenario. As of June 30, 2024, and December 31, 2023, the fair value of the Alternative
Option was 289 USD and USD 105 thousand, respectively.
Convertible loan agreement
On February 12, 2023, the Company and
other lenders signed a convertible loan agreement with Polyrizon for an aggregate amount of USD 180 thousand, of which the Company lent
USD 80 thousand. The loan bears an interest of 4% per annum. The loan will be automatically converted into shares in the event of a securities
issuance or a financing round of at least USD 500 thousand at a discount of 20%. The loan was accounted for as financial assets at fair
value through profit or loss (FVTPL). As of December 31, 2023, the fair value of the loan was USD 78 thousand. On May 12, 2024, the loan
was converted into 88,216 shares of Polyrizon.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST
IN OTHER ENTITIES (continued)
Charging Robotics is a company operating
in the electric vehicle and wireless charging sector. Charging Robotics was formed as a wholly owned subsidiary of the Company on February
1, 2021.
On February 19, 2021, the Company entered
into the 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 “Venture Agreement”), under which the Company formed
a venture, under the name Revoltz Ltd. (“Revoltz”), to develop and commercialize three modular electric vehicle (“EV”)
micro mobility vehicles for urban individual use and “last mile” cargo delivery.
Under the terms of the Venture Agreement,
the Company invested an amount of USD 250 thousand in consideration of 19,990 ordinary shares of Revoltz, representing 19.99% of Revoltz’s
issued and outstanding share capital on a fully diluted basis. The Venture Agreement requires the Company to invest an additional USD
400 thousand in a second tranche, subject to Revoltz achieving certain post-closing milestones, for 37.5% of Revoltz’s issued and
outstanding share capital. As of June 30, 2024, the milestones were not achieved, therefore no additional investments occurred. The investment
in Revoltz was accounted for using the equity method. The additional investment requirement was accounted for as a derivative liability
measured at fair value through profit or loss. As of June 30, 2024, the fair value of the derivative liability was concluded to be immaterial.
On July 28, 2022, Charging Robotics entered into a convertible loan
agreement with Revoltz pursuant to which Charging Robotics was required to invest an amount of USD 60 thousand in Revoltz (the “Loan
Principal Amount”). In addition, Charging Robotics is entitled to provide Revoltz an additional loan of up to USD 340 thousand,
at its sole discretion upon Revoltz’ request (the “Additional Amount”, and together with the Loan Principal Amount,
the “Total Loan Amount”). The Total Loan Amount shall carry interest at the minimum rate prescribed by Israeli law. The Loan
Principal Amount was accounted for as a financial asset at fair value through profit or loss (FVTPL). The fair value of the loan as of
June 30, 2024 was USD 62 thousand.
On March 28, 2023, the Company signed
a securities exchange agreement with Fuel Doctor to sell all its shares in Charging Robotics to Fuel Doctor. See note 3J.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST IN OTHER ENTITIES (continued)
SciSparc is a company formed under
the laws of the State of Israel. SciSparc listed its American Depository Shares on the OTCQB until December 7, 2021, after which SciSparc
uplisted to NASDAQ.
Buffalo Investments Ltd. (“Buffalo”),
an Israeli private company, owned 150,000 options to purchase 150,000 shares of SciSparc at an exercise price of USD 5.02 per share. On
December 7, 2021, the Company entered into an option purchase agreement with Buffalo (the “Buffalo Agreement”) for the purchase
of the 150,000 options in consideration for USD 0.72 per option. The Company paid USD 72 thousand in this transaction. Additionally, the
Company was obligated to immediately exercise all such options into shares and the Company paid SciSparc an additional USD 753 thousand
in this transaction. According to the Buffalo Agreement, Buffalo undertook to purchase 85% of the shares back from the Company within
3 months following the Buffalo Agreement (the “Purchase Period”) in consideration for USD 6.05 per share and for a total consideration
of USD 771 thousand.
In April 2022, the Buffalo Agreement
was amended such that the Company extended the Purchase Period until June 7, 2022.
On June 30, 2022, the Buffalo Agreement
was amended such that the Company extended the Purchase Period until December 31, 2022, and Buffalo undertook to purchase 90% of the shares
back from the Company in consideration for USD 6.05 per share and for a total consideration of USD 817 thousand.
On March 16, 2023, the Company signed
an amendment to the Buffalo Agreement (the “Amendment”).
According to the Amendment, instead
of purchasing 90% of the shares back from the Company for a total consideration of USD 817 thousand, which was originally agreed under
the Buffalo Agreement, Buffalo will transfer to the Company, without any consideration, 309,000 shares of Hydreight Technologies Inc.,
77,980 shares of Viewbix Inc., 84,000 shares of SciSparc, 36,000 shares of Clearmind Medicine Inc. and 31,250 shares of Colugo Systems
Ltd. with an aggregate value of USD 937 thousand, reflecting a compensation of USD 120 thousand.
As a result, on March 16, 2023, the
Company recorded an amount of USD 937 thousand within other receivables and derecognized the forward contract asset in the amount of USD
577 thousand. The difference between the value of the shares to be transferred under the Amendment (USD 937 thousand) and the value of
the forward contract asset (USD 577 thousand) was recorded in profit and loss in the consolidated statement of income/loss and other comprehensive
income/loss.
As of June 30, 2024, the Company received
84,000 shares of SciSparc, 309,000 shares of Hydreight Technologies Inc., 36,000 shares of Clearmind Medicine Inc. and 77,980 shares of
Viewbix Inc. The investments were accounted for as investments at fair value through profit or loss (FVTPL).
As of June 30, 2024, Colugo Systems’
Ltd. shares were not received. As such, they were recorded within other receivables in the consolidated statements of financial position
as of June 30, 2024, in an amount of USD 500 thousand representing their fair value.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST
IN OTHER ENTITIES (continued)
J. |
Charging Robotics Inc. (Formally “Fuel Doctor” |
On December 21, 2021, the Company purchased
90,000,000 shares of Fuel Doctor, which represented 35.06% of the issued and outstanding shares of Fuel Doctor for a total consideration
of USD 263 thousand. The Company gained a significant influence over Fuel Doctor and aforementioned the investment was accounted for using
the equity method.
On March 28, 2023, the Company signed
a securities exchange agreement with Fuel Doctor to sell all its shares in Charging Robotics to Fuel Doctor in exchange for 827,543,253
newly issued shares of Fuel Doctor’s common stock equal to 76.25% of the total number of shares of Fuel Doctor’s common stock
issued and outstanding as of April 7, 2023 (the “Closing”) on a fully diluted basis. In the financial statements of Fuel Doctor,
the share exchange was accounted for as a reverse acquisition where Fuel Doctor was identified as the accounting acquirer. The financial
statements of Fuel Doctor are consolidated in these financial statements from the Closing date.
As of June 30, 2024, and December 31,
2023, the Company held 67% of the issued and outstanding share capital of Fuel Doctor.
On August 10, 2022, the Company signed
a bridge loan agreement with Laminera in the amount of USD 100 thousand. The loan will bear an annual interest of 8% and will be repaid
no later than September 1, 2024. The loan repayment will be accelerated earlier in the event of closing of an equity financing round or
rights offering, an IPO or a default event as described in the bridge loan agreement. The loan was accounted for as financial assets measured
at amortized cost.
Management of the Company assessed
whether there is objective evidence that its net investment in Laminera was impaired. As Laminera continues to have zero revenues and
generate operating losses, and as the Company does not plan additional investments in Laminera, the Company considered the value of the
investment as of December 31, 2023. As the Company does not believe this investment will generate any cash flows in the foreseeable future,
the Company decided to write off the entire amount of the investment in Laminera and recorded an impairment loss of USD 1,176 thousand
within equity losses in the consolidated statements of income/loss and other comprehensive income/loss for the year ended December 31,
2023.
In addition, the Company decided to
write off the entire amount of the loan and recognized a loss in the amount of USD 90 thousand withing the consolidated statements of
income/loss and other comprehensive income/loss for the year ended December 31, 2023.
As of June 30, 2024, the Company held 19.7% of the issued and outstanding
shares of Laminera.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 3 - INTEREST
IN OTHER ENTITIES (continued)
On April 13, 2023, the Company entered
into a share purchase agreement to acquire 19.9% of Metagramm, an AI, machine learning (ML) communication and grammar assistant software.
In return, the Company paid Metagramm USD 250 thousand in Company’s shares. The investment was accounted for as investments at fair
value through profit or loss (FVTPL).
As of June 30, 2024, and December 31, 2023, the Company held 19.9%
of the issued and outstanding shares of Metagramm.
In addition, pursuant to the share
purchase agreement, the Company loaned Metagramm USD 250 thousand in order to fund a pilot. The loan bears an interest rate of 6% per
annum. The loan will be repaid upon the completion of the pilot, in eight quarterly installments starting from the first day of the third
year after the grant date. The loan was accounted for as financial assets measured at amortized cost.
In the event that the pilot approval
is not successfully completed within 15 months after the Closing, Metagramm will repay the loan and any interest on a monthly basis. In
such case, the Company will have the option to receive additional shares of Metagramm, at no cost, in such number that immediately after,
the Company’s holdings in Metagramm will increase to 31.25%. The option is measured at fair value through profit or loss. As of
June 30, 2024, the fair value of the option was estimated to be inconsequential.
In addition, in the event of any fundraising
transaction, the Company will have the option to be reimbursed the full loan amount with accrued interest immediately following the fundraising
transaction or to convert the loan into Metagramm’s shares at a 20% discount.
For more information, see note 10.3
M. |
A.I Conversation Systems |
On August 23, 2022, the Company signed
a convertible loan agreement with A.I Artificial Intelligence Research and Development Ltd. (“A.I R&D”) for the assignment
of a loan it has given to A.I Conversation Systems, a public company traded in Tel Aviv. The original loan amount was NIS 6,000 thousand
(USD 1,800 thousand). According to the agreement, the Company purchased from A.I R&D 50% from the original loan in exchange for USD
914 thousand (NIS 3,000 thousand) in the same terms of the original loan given to A.I Conversation Systems.
According to the agreement, the loan
will bear an interest of 1% per month. Additionally, A.I Conversation Systems has the right to choose to repay the loan and interest in
cash or to convert it into shares of A.I Conversation Systems on March 13, 2023. Under the conversion option, the number of shares will
be equal to the loan (NIS 3,000 thousand) plus NIS 1,750 thousand (USD 1,300 thousand) divided by the average quoted price per share of
A.I Conversation Systems during a period of 30 trading days preceding the conversion decision.
On February 16, 2023, the Company purchased
118,400 shares of A.I Conversation Systems for a total of USD 84 thousand (NIS 296 thousand). The investment was accounted for as investment
at fair value through profit or loss.
On June 13, 2023, the board of directors
of A.I Conversation Systems approved the conversion of the loan into shares, subject to the approval of the shareholders of A.I Conversation
Systems at the general meeting of the shareholders (the “General Meeting”). As such, the number of shares to be issued to
the Company determined to be 2,650,423 shares which equals NIS 4,750 thousand divided by the average quoted price per share of A.I Conversation
Systems during a period of 30 trading days preceding June 13, 2023. The decision of the Board of Directors was subject to the approval
of at the General Meeting.
On September 5, 2023, the loan conversation
was approved during the General Meeting. As a result, the loan was converted into 2,650,423 shares of A.I Conversation Systems which represented
36.08% holdings of the issued and outstanding shares of A.I Conversation Systems and as of this date, the investment was accounted for
using the equity method. The fair value of the loan as of September 5, 2023, was USD 721 thousand (NIS 2,748 thousand).
The Company did not obtain any substantive
processes, assembled workforce, or employees capable of producing outputs in connection with the acquisition. Therefore, the transaction
was accounted for as an asset acquisition, as the acquired assets did not meet the definition of a business as defined by IFRS 3, Business
Combinations.
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL
INSTRUMENTS
Below is an analysis of the financial
instruments carried at fair value. The different levels have been defined as follows:
| ● | Quoted
prices (unadjusted) in active markets for identical assets or liabilities (level 1). |
| ● | Inputs
other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices) (level 3). |
Financial assets
| A. | The
following table presents the level 1 and level 3 fair value financial assets - investments in shares and warrants as of June 30, 2024,
and December 31, 2023 |
| |
June 30, 2024 | | |
December 31, 2023 | |
| |
Level 1 | | |
Level 3 | | |
Total | | |
Level 1 | | |
Level 3 | | |
Total | |
| |
USD in thousands | |
Safe Foods Inc. shares | |
| 1 | | |
| - | | |
| 1 | | |
| 4 | | |
| - | | |
| 4 | |
Maris-Tech Ltd. shares | |
| 150 | | |
| - | | |
| 150 | | |
| 107 | | |
| - | | |
| 107 | |
Maris-Tech Ltd. warrants | |
| - | | |
| 9 | | |
| 9 | | |
| - | | |
| 12 | | |
| 12 | |
Tondo Smart Ltd. shares | |
| 91 | | |
| - | | |
| 91 | | |
| 106 | | |
| - | | |
| 106 | |
Safee shares | |
| - | | |
| 400 | | |
| 400 | | |
| - | | |
| 400 | | |
| 400 | |
SciSparc shares | |
| 3 | | |
| - | | |
| 3 | | |
| 83 | | |
| - | | |
| 83 | |
Polyrizon warrants | |
| - | | |
| 289 | | |
| 289 | | |
| - | | |
| 105 | | |
| 105 | |
Jeffs’ Brands warrants | |
| 8 | | |
| 78 | | |
| 86 | | |
| - | | |
| - | | |
| - | |
Jeffs’ Brands shares | |
| 125 | | |
| - | | |
| 125 | | |
| | | |
| | | |
| | |
Elbit Imaging Ltd. shares | |
| 405 | | |
| - | | |
| 405 | | |
| 468 | | |
| - | | |
| 468 | |
Hydreight Technologies Inc. shares | |
| 74 | | |
| - | | |
| 74 | | |
| 104 | | |
| - | | |
| 104 | |
Clearmind Medicine Inc. warrants | |
| - | | |
| 1 | | |
| 1 | | |
| - | | |
| 3 | | |
| 3 | |
Clearmind Medicine Inc. shares | |
| 13 | | |
| - | | |
| 13 | | |
| 21 | | |
| - | | |
| 21 | |
Metagramm shares | |
| - | | |
| 250 | | |
| 250 | | |
| - | | |
| 250 | | |
| 250 | |
Colugo Systems Ltd. shares | |
| - | | |
| 400 | | |
| 400 | | |
| - | | |
| 400 | | |
| 400 | |
Bubbles Intergroup Ltd. shares | |
| 103 | | |
| - | | |
| 103 | | |
| 98 | | |
| - | | |
| 98 | |
Automax Ltd warrants | |
| 6 | | |
| - | | |
| 6 | | |
| 6 | | |
| - | | |
| 6 | |
Automax Ltd. shares | |
| 175 | | |
| - | | |
| 175 | | |
| 324 | | |
| - | | |
| 324 | |
Elbit Medical Technologies Ltd. shares | |
| 7 | | |
| - | | |
| 7 | | |
| 12 | | |
| - | | |
| 12 | |
Parazero shares | |
| 1,389 | | |
| - | | |
| 1,389 | | |
| 1,436 | | |
| - | | |
| 1,436 | |
Total | |
| 2,550 | | |
| 1,427 | | |
| 3,977 | | |
| 2,769 | | |
| 1,170 | | |
| 3,939 | |
|
B. |
The following table presents the level 1 and level 3 fair value financial assets – loans to associates as of June 30, 2024, and December 31, 2023 |
| |
June 30, 2024 | | |
December 31, 2023 | |
| |
Level 1 | | |
Level 3 | | |
Total | | |
Level 1 | | |
Level 3 | | |
Total | |
| |
USD in thousands | |
Loan to Revoltz | |
| - | | |
| 62 | | |
| 62 | | |
| - | | |
| 62 | | |
| 62 | |
Loan to Polyrizon | |
| - | | |
| - | | |
| - | | |
| - | | |
| 78 | | |
| 78 | |
Loan to Zig Miami 54 (note 3F) | |
| - | | |
| 1,533 | | |
| 1,533 | | |
| - | | |
| 1,545 | | |
| 1,545 | |
Total | |
| - | | |
| 1,595 | | |
| 1,595 | | |
| - | | |
| 1,685 | | |
| 1,685 | |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS (continued)
Financial assets (continued)
| C. | The
following table presents the level 1 and level 3 fair value financial assets included in other receivables as of June 30, 2024, and December
31, 2023 |
| |
June 30, 2024 | | |
December 31, 2023 | |
| |
Level 1 | | |
Level 3 | | |
Total | | |
Level 1 | | |
Level 3 | | |
Total | |
| |
USD in thousands | |
Shares receivable from the Amendment of the Buffalo Agreement (note 3I) | |
| - | | |
| 500 | | |
| 500 | | |
| 10 | | |
| 500 | | |
| 510 | |
Total | |
| - | | |
| 500 | | |
| 500 | | |
| 10 | | |
| 500 | | |
| 510 | |
| D. | The
following table presents the Level 1 financial assets – investments in shares and warrants roll-forward during the six months ended
June 30, 2024: |
| |
Safe
Foods Inc
shares | | |
Tondo
Smart Ltd
shares | | |
Bubbles
Intergroup
Ltd. shares | | |
Jeffs’
Brands
shares | | |
Hydreight
Technologies
Inc shares | | |
SciSparc
shares | | |
Maris-Tech
Ltd. shares | | |
Automax Ltd.
warrants | | |
Jeffs’
Brands
warrants | | |
Clearmind
Medicine Inc.
shares | | |
Elbit
Imaging Ltd.
shares | | |
Automax Ltd.
shares | | |
Parazero
shares | | |
Elbit
Medical
Technologies
Ltd. shares | | |
Total | |
| |
USD
in thousands | |
Balance as of January 1, 2024 | |
| 4 | | |
| 106 | | |
| 98 | | |
| - | | |
| 104 | | |
| 83 | | |
| 107 | | |
| 6 | | |
| - | | |
| 21 | | |
| 468 | | |
| 324 | | |
| 1,436 | | |
| 12 | | |
| 2,769 | |
Deconsolidation of Jeffs’ Brands | |
| - | | |
| - | | |
| - | | |
| 1,393 | | |
| - | | |
| (50 | ) | |
| - | | |
| - | | |
| 42 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,385 | |
Net changes at fair value recognized through profit or loss | |
| (3 | ) | |
| (15 | ) | |
| 5 | | |
| (1,268 | ) | |
| (30 | ) | |
| (30 | ) | |
| 43 | | |
| 1 | | |
| (34 | ) | |
| (8 | ) | |
| (63 | ) | |
| (149 | ) | |
| (47 | ) | |
| (5 | ) | |
| (1,603 | ) |
Sale of securities | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1 | ) | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (1 | ) |
Balance as of June 30, 2024 | |
| 1 | | |
| 91 | | |
| 103 | | |
| 125 | | |
| 74 | | |
| 3 | | |
| 150 | | |
| 6 | | |
| 8 | | |
| 13 | | |
| 405 | | |
| 175 | | |
| 1,389 | | |
| 7 | | |
| 2,550 | |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS (continued)
Financial assets (continued)
| E. | The
following table presents the Level 3 financial assets – investments in shares and warrants roll-forward during the six months ended
June 30, 2024: |
| |
Maris- Tech Ltd. shares and warrants | | |
Polyrizon warrants | | |
Clearmind Medicine Inc.
warrants | | |
Jeffs’
Brands
warrants | | |
Safee shares | | |
Colugo Systems Ltd.
shares | | |
Metagramm shares | | |
Total | |
| |
USD in thousands | |
Balance as of January 1, 2024 | |
| 12 | | |
| 105 | | |
| 3 | | |
| - | | |
| 400 | | |
| 400 | | |
| 250 | | |
| 1,170 | |
Net changes at fair value recognized through profit or loss | |
| (3 | ) | |
| 184 | | |
| (2 | ) | |
| (39 | ) | |
| - | | |
| - | | |
| - | | |
| 140 | |
Deconsolidation of Jeffs’ Brands upon loss f control | |
| - | | |
| - | | |
| - | | |
| 117 | | |
| - | | |
| - | | |
| - | | |
| 117 | |
Balance as of June 30, 2024 | |
| 9 | | |
| 289 | | |
| 1 | | |
| 78 | | |
| 400 | | |
| 400 | | |
| 250 | | |
| 1,427 | |
| F. | The
following table presents the Level 3 financial assets – loans to associates and others roll-forward during the six months ended
June 30, 2024: |
| |
Loan to Revoltz | | |
Loan to Polyrizon | | |
Loan to Zig Miami 54 | | |
Total | |
| |
USD in thousands | |
Balance as of January 1, 2024 | |
| 62 | | |
| 78 | | |
| 1,545 | | |
| 1,685 | |
Net changes at fair value recognized through profit or loss | |
| | | |
| 22 | | |
| (12 | ) | |
| 10 | |
Loan conversion | |
| | | |
| (100 | ) | |
| | | |
| (100 | ) |
Balance as of June 30, 2024 | |
| 62 | | |
| - | | |
| 1,533 | | |
| 1,595 | |
| G. | The
following table presents the level 1 and level 3 fair value financial assets included in other receivables roll-forward during the six
months ended June 30, 2024: |
| |
Shares
receivable | | |
Total | |
| |
USD in thousands | |
Balance as of January 1, 2024 | |
| 510 | | |
| 510 | |
Transfer to investments in shares | |
| (8 | ) | |
| (8 | ) |
Net changes at fair value recognized through profit or loss | |
| (2 | ) | |
| - | |
Balance as of June 30, 2024 | |
| 500 | | |
| 502 | |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS (continued)
Financial liabilities
Level 3 financial liabilities:
As of December 31, 2023, the Group
had financial liabilities measured at level 3 – mainly from derivative liabilities of Jeffs’ Brands.
As of June 30, 2024, the Group had
financial liabilities measured at level 3 – mainly from the June 2024 Facility Agreement entered into by Viewbix Inc. (see note
3E).
The fair value of the financial instruments
under the June 2024 Facility Agreement, as of June 18, 2024, was calculated using the following inputs: share price: USD 0.118, expected
volatility: 125%, exercise price: USD 0.25, risk-free interest rate: 4.41%, expected life: 3.0 years.
The fair value of the financial instruments
estimated by the Group’s management as of June 30 and June 18, 2024, was substantially the same.
| H. | The
following table presents the financial liabilities that were measured at fair value through profit or loss at level 3: |
|
|
June 30,
2024 |
|
|
December 31,
2023 |
|
|
|
USD in thousands |
|
Warrants at fair value issued by subsidiaries |
|
|
2,025 |
|
|
|
1,897 |
|
Embedded derivatives |
|
|
284 |
|
|
|
- |
|
|
|
|
2,309 |
|
|
|
1,897 |
|
| I. | The
following table presents the Level 3 financial liabilities roll-forward: |
|
|
Warrants |
|
|
|
USD
in thousands |
|
Balance as of January 1, 2024 |
|
|
1,897 |
|
Deconsolidation of Jeffs’ Brands upon loss of control |
|
|
(1,874 |
) |
Viewbix June 2024 Facility Agreement (see note 3E) |
|
|
2,286 |
|
Balance as of June 30, 2024 |
|
|
2,309 |
|
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 5 - GOODWILL AND INATANGIBLE ASSETS
A. | Details of the Company’s Intangible assets: |
| |
June 30, | | |
December 31, | |
| |
2024 | | |
2023 | |
| |
Unaudited | | |
Audited | |
| |
USD in thousands | |
| |
| | |
| |
Technology | |
| 7,067 | | |
| 8,042 | |
Customer relationship | |
| 4,178 | | |
| 4,601 | |
Patent | |
| 104 | | |
| 100 | |
Brand name | |
| - | | |
| 6,043 | |
Goodwill | |
| 6,174 | | |
| 8,550 | |
Intangible assets, net | |
| 17,523 | | |
| 27,336 | |
B. |
Changes during the period: |
| A. | On January 25, 2024, Jeffs’ Brands entered into a private placement transaction with certain institutional
investors for aggregate gross proceeds of approximately USD 7,275 thousand. The Company did not participate in the private placement and
as a result its holdings in Jeffs’ Brands decreased to 13.37% of Jeffs’ Brands issued and outstanding share capital, which
resulted deconsolidation and resulted loss of control in Jeffs’ Brands as of January 28, 2024. As a result, the brand name and the
goodwill related to Jeffs’ Brands were deconsolidated as of such date. |
| B. | As of June 30, 2024, the Group identified indicators of impairment of the online advertising and internet
traffic routing reporting unit. As a result, the Group performed an impairment test which included a quantitative analysis of the fair
value of the reporting unit. The fair value was estimated using the income approach, which is based on the present value of the future
cash flows attributable to the reporting unit. The Group compared the fair value of the reporting unit to its carrying amount. As the
carrying amount exceeded the fair value, the Group recognized an impairment loss of USD 1,802 thousand in the consolidated statements
of income/loss and other comprehensive income/loss, which was driven mainly due to a decrease in the cash flow projections. |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 6 - EQUITY
| |
Number of shares | |
| |
Authorized | | |
Issued and paid | |
| |
June 30, | | |
December 31, | | |
June 30, | | |
December 31, | |
| |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| |
In thousands | |
Ordinary shares of no-par value | |
| 200,000 | | |
| 200,000 | | |
| 28,852 | | |
| 27,989 | |
| 2) | The
ordinary shares confer upon their holders’ voting rights and the right to participate in shareholders’ meetings, the right
to receive dividends and the right to participate in surplus assets in the event of liquidation of the Company. |
| 3) | On
May 8, 2024, the Company issued 862,298 Ordinary Shares in relation to RSUs grants. |
| | In August 2013, the Company board of directors approved and adopted the Company 2013 Share Option and Incentive Plan, or the 2013 Plan, which expires in August 2023. The 2013 Plan provides for the issuance of shares and the granting of options, restricted shares, restricted share units and other share-based awards to employees, directors, officers, consultants, advisors, and service providers of us and the Company U.S. Subsidiary. The Plan provides for awards to be issued at the determination of the Company’s board of directors in accordance with applicable law. In June 2021, the Company’s board of directors approved the grant of 1,280,000 options pursuant to the Company’s option plan, to certain employees, consultants and directors. In October 2021, the Company’s board of directors approved the grant of 90,000 options to consultants. The amounts of expenses that were recorded for options to employees and other service providers are USD 14 thousand and USD 143 thousand for the six months ended June 30, 2024 and 2023, respectively. |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 6 - EQUITY (continued)
| c. | Restricted Share Units On June 15, 2023, the Board approved a grant of restricted share units (RSUs) to the Company’s Directors, Chief Executive Officer (“CEO”), Chief Financial Officer (“CFO”), employees and to an advisor of the Company, subject to the approval of shareholders at the general meeting of the shareholders. On August 8, 2023, the Company’s shareholders approved the RSUs grants at the Company’s annual general meeting. The RSUs shall vest over a period of three years commencing on January 1, 2023, with 1/12 of such options vesting at the end of each subsequent three-month period following the grant. The RSUs grant will be in accordance and pursuant to Section 102 of the Income Tax Ordinance [New Version] (“Tax Ordinance”), if applicable, and the RSUs will be accelerated upon the closing of a material transaction, resulting in change of control of the Company. During the six months ended June 30, 2024, the Company recognized an expense in the aggregated amount of USD 130 thousand in relation to these RSUs.
|
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 7 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES
| a. | Transactions
with related parties: |
| |
Six months ended June 30, | |
| |
2024 | | |
2023 | |
| |
USD in thousands | |
| |
| | |
| |
Compensations to key officers (1) | |
| 784 | | |
| 1,032 | |
Compensation to directors (2) | |
| 457 | | |
| 578 | |
Directors’ and Officers’ insurance | |
| 191 | | |
| 468 | |
Consultant services (3) | |
| 16 | | |
| 95 | |
Compensation to member of senior management of Gix Internet (4) | |
| 93 | | |
| 102 | |
Eventer revenues from related parties | |
| - | | |
| 15 | |
Jeffs’ Brands cost of revenues from related parties (5) | |
| 36 | | |
| 313 | |
Jeffs’ Brands income from related parties (6) | |
| (10 | ) | |
| (158 | ) |
Jeffs’ Brands royalties paid to related parties (7) | |
| 2 | | |
| 8 | |
Management fees from Jeffs’ Brands included in revenues (8) | |
| (100 | ) | |
| - | |
Royalties from Jeffs’ Brands
included in revenues (9) | |
| (10 | ) | |
| - | |
Management fees from Parazero included in revenues (10) | |
| (60 | ) | |
| - | |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 7 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES (continued)
|
a. |
Transactions with related parties: (continued) |
| 2) | 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 Company has a D&O liability insurance policy covering all the Company’s directors and officers. The current policy provides limits of USD 4,000,000 in the total aggregate for all loss. The policy was placed for a period of 17 months at a premium of USD 191 thousand (for the period). It includes a deductible of USD 300,000 for each claim, other than securities related claims filed in the United States or Canada, for which the deductible is USD 1,000,000. |
| b. |
Balances with related parties: |
| (1) | Current
assets under related parties section: |
| |
June 30, | | |
December 31, | |
| |
2024 | | |
2023 | |
| |
USD in thousands | |
| |
| | |
| |
Other receivables (a related party of Gix Internet) | |
| 53 | | |
| 53 | |
Other receivables (a related party of Eventer) | |
| - | | |
| 6 | |
| |
| 53 | | |
| 59 | |
| (2) | Current
assets under loans to associates section: |
|
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
USD in thousands |
|
|
|
|
|
|
|
|
Loan to Zig Miami 54 (note 3F) |
|
|
1,533 |
|
|
|
1,545 |
|
Loan to Polyrizon |
|
|
- |
|
|
|
77 |
|
Loan to Revoltz |
|
|
62 |
|
|
|
62 |
|
|
|
|
1,595 |
|
|
|
1,684 |
|
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 7 - TRANSACTIONS AND BALANCES WITH RELATED PARTIES (continued)
|
b. |
Balances with related
parties: (continued) |
| (3) | Current
assets under loans to others section: |
|
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
USD in thousands |
|
|
|
|
|
|
|
|
Loan to Metagramm |
|
|
268 |
|
|
|
250 |
|
Loan to Safee |
|
|
- |
|
|
|
126 |
|
|
|
|
268 |
|
|
|
376 |
|
|
|
June 30, |
|
|
December 31, |
|
|
|
2024 |
|
|
2023 |
|
|
|
USD
in thousands |
|
|
|
|
|
|
|
|
Compensation
to key management personnel (*) |
|
|
600 |
|
|
|
681 |
|
Current
liabilities to related parties of Jeffs’ Brands |
|
|
- |
|
|
|
216 |
|
Other
accrued expenses to related parties of Gix Internet |
|
|
4 |
|
|
|
6 |
|
Other
accrued expenses to related parties of Eventer |
|
|
- |
|
|
|
6 |
|
|
|
|
604 |
|
|
|
909 |
|
|
|
|
|
|
|
|
|
|
Loans
from related parties of Viewbix Ltd. (note 3E) |
|
|
121 |
|
|
|
187 |
|
Derivative
warrant liability to related parties of Viewbix Inc. (note 3E) |
|
|
7 |
|
|
|
- |
|
Short-term
convertible loans from related parties of Viewbix Inc. (note 3E) |
|
|
44 |
|
|
|
- |
|
Embedded
derivative to related parties of Viewbix Inc. (note 3E) |
|
|
134 |
|
|
|
- |
|
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 8 - REVENUES
|
a. |
Disaggregation of Revenues: |
The following table present the Group’s
revenues disaggregated by revenue type:
| |
Six months ended June 30, | |
| |
2024 | | |
2023 | |
| |
USD in thousands | |
| |
| | |
| |
Revenues from commissions (from Eventer) | |
| 796 | | |
| 1,498 | |
Products (from Jeffs’ Brands) * | |
| 1,002 | | |
| 3,871 | |
Management fees (from Xylo Technologies) ** | |
| 170 | | |
| - | |
Revenues from internet services (from Gix Internet) | |
| 17,335 | | |
| 48,016 | |
| |
| 19,303 | | |
| 53,385 | |
Set forth below is a breakdown of Company’s
revenue by major customers (major customer - revenues from these customers constitute at least 10% of total revenues):
|
|
Six months ended
June 30 |
|
|
|
2024 |
|
|
2023 |
|
|
|
USD in thousands |
|
Customer A |
|
|
3,399 |
|
|
|
7,753 |
|
|
|
|
|
|
|
|
|
|
Customer B |
|
|
2,312 |
|
|
|
8,109 |
|
|
|
|
|
|
|
|
|
|
Customer C |
|
|
2,429 |
|
|
|
- |
|
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 9 - SEGMENTS
As of June 30, 2024, the Group identified
seven operating segments as follows: corporate, e-commerce, online advertising & internet
traffic routing, online event management, medical, real-estate and electronics.
The Company concluded that the medical,
real-estate and electronics segments are not “reportable segments” as defined in IFRS 8, Operating Segments. As such, these
segments were combined and disclosed under “Others”.
The CODM measures and evaluates the
operating performance of the Group’s segments based on operating loss (income), assets and liabilities.
The table set forth other information of the Group:
|
|
June 30, 2024 |
|
|
|
Corporate |
|
|
E-commerce |
|
|
Online
Advertising &
Internet
Traffic
Routing |
|
|
Online Event Management |
|
|
Others |
|
|
Adjustments
and
eliminations |
|
|
Total |
|
|
|
USD in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segments’ assets |
|
|
7,469 |
|
|
|
- |
|
|
|
24,628 |
|
|
|
2,159 |
|
|
|
3,642 |
|
|
|
1,394 |
(*) |
|
|
39,292 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segments’ liabilities |
|
|
(744 |
) |
|
|
- |
|
|
|
(19,972 |
) |
|
|
(1,979 |
) |
|
|
(678 |
) |
|
|
- |
|
|
|
(23,371 |
) |
| |
December 31, 2023 | |
| |
Corporate | | |
E-commerce | | |
Online
Advertising &
Internet
Traffic
Routing | | |
Online Event
Management | | |
Others | | |
Adjustments
and
eliminations | | |
Total | |
| |
USD in thousands | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Total segments’ assets | |
| 10,708 | | |
| 13,122 | | |
| 35,178 | | |
| 1,874 | | |
| 3,444 | (*) | |
| (430 | ) | |
| 63,896 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Total segments’ liabilities | |
| (867 | ) | |
| (4,483 | ) | |
| (25,723 | ) | |
| (2,015 | ) | |
| (605 | ) | |
| 2,232 | | |
| (31,461 | ) |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 9 - SEGMENTS (continued)
The table set forth the operating results of the Group:
|
|
Six
months ended June 30, 2024 |
|
|
|
|
|
|
Corporate |
|
|
E-commerce** |
|
|
Online
Advertising & Internet Traffic Routing |
|
|
Online
Event
Management |
|
|
Others |
|
|
Adjustments
and
eliminations |
|
|
Total |
|
|
|
USD
in thousands |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
External
revenues |
|
|
170 |
|
|
|
1,002 |
|
|
|
17,335 |
|
|
|
796 |
|
|
|
- |
|
|
|
- |
|
|
|
19,303 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
results - operating loss |
|
|
(1,409 |
) |
|
|
(567 |
) |
|
|
(3,887 |
) |
|
|
(249 |
) |
|
|
(468 |
)* |
|
|
(1,479 |
) |
|
|
(8,059 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-operating
income (loss) |
|
|
- |
|
|
|
10 |
|
|
|
(1,642 |
) |
|
|
- |
|
|
|
- |
|
|
|
(1,319 |
) |
|
|
(2,951 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income (loss) |
|
|
115 |
|
|
|
(26 |
) |
|
|
(855 |
) |
|
|
(60 |
) |
|
|
- |
|
|
|
(94 |
) |
|
|
(920 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
before taxes on income |
|
|
(1,294 |
) |
|
|
(583 |
) |
|
|
(6,384 |
) |
|
|
(309 |
) |
|
|
(468 |
) |
|
|
(2,892 |
) |
|
|
(11,930 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax
benefit (expense) on income |
|
|
- |
|
|
|
25 |
|
|
|
20 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
results - net loss |
|
|
(1,294 |
) |
|
|
(558 |
) |
|
|
(6,364 |
) |
|
|
(309 |
) |
|
|
(468 |
) |
|
|
(2,892 |
) |
|
|
(11,885 |
) |
| |
Six months ended June 30, 2023 | | |
| |
| |
Corporate | | |
E-commerce | | |
Online Advertising & Internet Traffic Routing | | |
Online Event Management | | |
Others | | |
Adjustments | | |
Total | |
| |
USD in thousands | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| |
External revenues | |
| - | | |
| 3,871 | | |
| 48,016 | | |
| 1,498 | | |
| - | | |
| - | | |
| 53,385 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Segment results - operating income (loss) | |
| (6,301 | ) | |
| (2,131 | ) | |
| (46 | ) | |
| 140 | | |
| (1,452 | )* | |
| - | | |
| (9,790 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Non-operating income | |
| 157 | | |
| 1,252 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 1,409 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Finance income (loss) | |
| (219 | ) | |
| (193 | ) | |
| (765 | ) | |
| (55 | ) | |
| (7 | ) | |
| 261 | | |
| (978 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Profit (Loss) before taxes on income | |
| (6,363 | ) | |
| (1,072 | ) | |
| (811 | ) | |
| 85 | | |
| (1,459 | ) | |
| 261 | | |
| (9,359 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Tax benefit (expense) on income | |
| 3 | | |
| (9 | ) | |
| (340 | ) | |
| - | | |
| - | | |
| 169 | | |
| (177 | ) |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Segment results - net profit (loss) | |
| (6,360 | ) | |
| (1,081 | ) | |
| (1,151 | ) | |
| 85 | | |
| (1,459 | ) | |
| 430 | | |
| (9,536 | ) |
XYLO TECHNOLOGIES LTD
NOTES TO THE INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
NOTE 10 - SUBSEQUENT EVENTS
| 1. | On July 3, 2024, Viewbix Inc. entered into a definitive securities purchase agreement (the “Purchase Agreement”) with
a certain investor (the “Lead Investor”) for the purchase and sale in a private placement (the “Private Placement”).
For more information, see note 3E. |
| 2. | On July 4, 2024, Viewbix Inc. entered into a credit facility agreement, as restated on July 22, 2024, and amended on July 25, 2024, for USD 2.5 million. The amount will accrue interest at a rate of 12% per annum and will be paid in shares and warrants. |
| 3. | On July 21, 2024, the Company and Metagramm signed an amendment to the agreement according to which after 3 months from the amendment
date, Metagramm will pay the Company USD 15 thousand per month. In the event the pilot will not be approved commencing 6 months of the
amendment date, Metagramm will repay the loan including all recruiting interest, in monthly repayments, at the monthly amount of the highest
of: (i) USD 10 thousand or (ii) 60%of Metagramm’s monthly profit. Metagramm will commence the monthly payments at the earlier of 6 months
commencing the amendment date or commencing the dated of the pilot approval. |
| 4. | On July 2, 2024, the Company signed a sales agreement to sell a portion
of its stake of 662,980 shares in Polyrizon for total proceeds of approximately USD 340 thousand. As a result, the Company’s holdings
in Polyrizon were diluted from 38.31% to 9.75% of the issued and outstanding share capital of Polyrizon. |
| 5. | On July 28, 2024, Viewbix Inc. entered into a second credit facility agreement for USD 3 million with certain lenders. The loan amount will accrue interest at a rate of 12% per annum and will be paid in shares and warrants. |
| 6. | On July 31, 2024, Viewbix Inc. entered into a Securities Exchange Agreement, with Metagramm pursuant to which Viewbix Inc. agreed
to issue to Metagramm 9.99% of its issued and outstanding share capital in exchange for 19.99% of Metagramm’s issued and
outstanding share capital. The transactions are expected to close following the Uplist (as defined in note 3E). |
| 7. | On August 5, 2024, the Company effected a ratio change which resulted in a reverse split of the Company’s American Depositary Receipt, or ADR, program on the basis of one (1) new ADS for every 2.666666 old ADSs held. As a result, the number of ordinary shares of the Company represented by each American Depositary Share, or ADS, was changed from fifteen (15) ordinary shares to forty (40) ordinary shares effective as of August 5, 2024. |
| 8. | On August 13, 2024, Polyrizon entered into an agreement with SciSparc for the purchase of an exclusive, worldwide, royalty-bearing license with respect to intellectual property rights associated with SciSparc’s SCI-160 platform (the “Licensed Patent Rights”), in order to research, develop and commercialize the Licensed Patent Rights in connection with the diagnosis, prevention, and treatment of pain in humans. Pursuant to the terms of the agreement, SciSparc is entitled to up to USD 3.32 million based on the achievement of certain milestones, including (i) USD 50 thousand upon a successful preclinical safety test, (ii) USD 100 thousand upon first patient enrolled in phase I clinical trial, (iii) USD 120 thousand upon first patient enrolled in Phase 2a clinical trial, (iv) USD 150 thousand upon first patient enrolled in Phase 2b clinical trial, (v) USD 500 thousand upon first patient enrolled in Phase 3 clinical trials, (vi) USD 800 thousand upon approval by the FDA, (vii) USD 800 thousand upon approval by an EU regulatory body, and (viii) USD 800 thousand upon regulatory approval in any additional jurisdiction. Additionally, SciSparc is eligible to receive royalties, on a country-by-country and product-by-product basis, at a rate of 5%, on aggregate net sales of a product that is based on the Licensed Patent Rights for a period of fifteen years from the date of the first sale of a Licensed Product, on a country-by-country basis, or through the date of expiration of valid claims of any licensed patents with respect to a Licensed Product in such country, if longer. In consideration for purchase of the license, Polyrizon issued to SciSparc 320,000 ordinary shares and additionally committed to issue to Sciparc additional securities in the occurrence of certain events, including the listing of Polyrizon’s shares on a public exchange pursuant to an initial public offering, for a period of two years, such that the value of the aggregate amount of shares and other securities, as applicable, to be issued to Scisparc will equal USD 3 million based on the price at which such securities are to be offered at such initial public offering. |
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