TIDMMTMY
RNS Number : 6365W
Matomy Media Group Ltd
19 August 2020
Matomy Media Group Ltd 2020 interim Results
19 August 2020
Matomy Media Group | 2020 Interim Results
Interim results for the six months period ended 30 June 2020
(Unaudited)
Matomy Media Group Ltd. (the " Company " or " Matomy "),
announces its interim results for the six months ended 30 June
2020.
$ millions, except as otherwise indicated H1 2020 H1 2019
(Unaudited)
Revenue - 33.7
Cost of revenue - 26.5
Gross profit - 7.2
Reseasrch and development - 0.3
Selling and marketing - 1.9
General and administrative 0.9 3.3
Impairment, net of change in fair value of contingent consideration - 16
Other expenses - 1
Total operating expenses 0.9 22.5
Operating Loss (0.9) (15.3)
Financial expenses, net 0.1 2.1
Loss before tax benefit (1.0) (17.4)
Tax benefit (0.1) (0.8)
Net loss (0.9) (16.6)
Business and operating highlights
-- In the six-months period ended 30 June 2020, the Company
incurred a net loss of $ 0.9 million.
-- The full and immediate repayment of the Company's outstanding
convertible bonds (Series A) (the "Bonds") was transferred to the
trustee of the Bonds, and the full redemption of the outstanding
Bonds was executed on 8 January 2020.
-- During the first quarter of 2020 Mr. Sami Totah (Chairman of
the board of directors), Mr. Amir Efrati (Director), Mr. Nir
Tarlovsky (Director), Mr. Stephane Estryn (Director) and Mr. Harel
Locker (External Director) announced their resignation as members
of the board of directors. In addition, Ms. Shirith Kasher
(External Director) continued to serve as a member of the Company's board of directors.
-- On 18 February 2020, Medigus Ltd. purchased 2,284,865
ordinary shares of Matomy, representing 2.32% of the issued and
outstanding share capital of Matomy. On 25 March 2020, Medigus has
completed a transaction to purchase additional 22,326,246 ordinary
shares of Matomy, representing 22.67% of the issued and outstanding
share capital of Matomy for a total consideration of approximately
US$ 1.4 million.
-- On 27 February 2020 the board of directors appointed Mr. Ilan
Tamir as a member of the Company's board of directors. Mr. Tamir
served as a director until the Extraordinary General Meeting that
took place on 14 May 2020, at which the directors were appointed as
detailed below.
-- In May 2020, the Company received a demand letter from a
German firm (the "German Firm") under which the German Firm
contends it is entitled to a transaction fee of EUR 1.25 million
under a consultancy agreement between the Company and the German
Firm, in connection with the sale of Team Internet AG (" Team
Internet") which was consummated in December 2019, as further
described in Note 1c of the Company's financial statements.
-- On 13 May 2020, Mr. Amitay Weiss (Chairman of the board of
directors), Mr. Lior Amit (Director), Mr. Liron Carmel (Director),
Mr. Eli Yoresh (Director), Ms. Kineret Tzedef (Director) and Mr.
Udi Kalifi (External Director) were appointed as members of the
board of directors of the Company. On 21 May 2020, Mr. Amitay Weiss
was appointed as the chairman of the board of directors of the
Company by the Company's board of directors. On 21 May 2020, Mr.
Ilan Tamir was appointed by the Company's board of directors to
hold the position of interim Chief Executive Officer in addition to
his position as the Chief Financial Officer of the Company. Mr.
Tamir's employment with the Company will terminate on 30 September
2020.
-- On 23 June 2020, the trading in the Company's shares was suspended both on TASE and LSE.
-- On 23 June 2020, in accordance with the terms of the
transaction between the Company, Rainmaker Investments GmbH and
Centralnic Group PLC (" CNIC ") regarding the sale of the Company
shares (90%) in Team Internet to CNIC, the deferred cash payment of
EUR 1.6 million was paid by CNIC to the Company.
-- On 13 August 2020, the Company submitted to the Tel
Aviv-Jaffa District Court (the "Court") a petition pursuant to
Section 350 of the Israeli Companies Law (the "Petition"),
requesting the Court to approve (i) the convening of separate
meetings of preferential creditors, secured creditors,
non-preferential creditors and a meeting of the shareholders of the
Company, in order to approve an arrangement between the Company and
its creditors and shareholders (the "Arrangement"); and (ii) the
schedule of the proposed Arrangement.
-- The Arrangement provides for the transfer of all the assets,
rights and liabilities known to the Company or contingent (other
than NIS5 million (US$1.47 million), the amount of cash necessary
for the Company's operations for the next 12 months) to an account
under the control of a trustee to be appointed by the Court, with
the purpose of merging in the future a possible new activity into
the Company free from any debt or claims associated with the
Company's former activities. Any debt confirmed under the
Arrangement will be paid out of the funds deposited with the
trustee and any funds remaining following such process will be
distributed as dividend to the Company's shareholders as of the
approval date of the Arrangement by the Court.
Amitay Weiss, Chairman of the Board of Matomy, said:
"Following the sale of the Company shares (90%) in Team
Internet, the Company is now seeking a new operational horizon, in
which it can grow and prosper."
A copy of this announcement will be available on Matomy's
website:
http://investors.matomy.com/rns.aspx .
About Matomy Media Group Ltd.
Matomy Media Group Ltd. (LSE: MTMY, TASE: MTMY.TA), founded in
2006 with headquarters in Tel Aviv, Matomy is dual-listed on the
London and Tel Aviv Stock Exchanges.
For more information:
Press / Investor Relations:
Ilan Tamir
ilan.t@matomy.com +972-52-5156464
Website: http://investors.matomy.com
CHAIRMAN'S STATEMENT
Introduction
The first half of 2020 was a period of change. In this period,
major shareholders, reportedly, sold their holdings in the Company
to new major shareholders, and except for one, all directors
resigned and were replaced by others.
Operating Performance
As Matomy has sold all its operations, the company has no
revenues, and the expenses shown in this period relate to ongoing
shutdown and public company expenses.
Outlook
The Company is now seeking a new operational horizon, in which
it can grow and prosper.
Amitay Weiss
Chairman
FINANCIAL REVIEW
Revenue:
As Matomy exited and sold all its operations, the Company did
not have any revenues in H1 2020.
($ millions) H1 2020 H1 2019
(Unaudited)
Domain monetization - 33.7
Cost of revenues:
$ millions, except as otherwise indicated H1 2020 H1 2019
(Unaudited)
Media costs - 24.8
Other cost of revenues - 1.7
Cost of revenues - 26.5
Gross margin (%) - 21.4%
Adjusted gross margin (non-GAAP) (%) - 26.4%
Operational expenses (income)
The decrease in operating expenses is attributable to the sale
of Team Internet in late 2019 which lowered the operating expenses
to the minimum.
Financial expenses (income)
Net financial expenses decreased by $2 million to $0.1 million
expense for the six months ended 30 June 2020 (H12019: $2.1 million
expense). The decrease is primarily due to the repayment of the
bond on 8 January 2020, which caused minimum bond interest and no
bond revaluation in H1 2020. Financial expenses in H1 2020 were
caused primarily from revaluation of the investment in CNIC offset
by an income due to exchange rate difference.
Tax benefit
Tax benefit decreased to $(0.1) million income for the
six--month period ended 30 June 2020 (6.9% of loss before taxes),
from an income of $0.8 million for the same period last year. Tax
benefit in H1 2020 was due to decrease in operations and full
valuation allowance on the Company's loss.
Amortization of intangible assets
Amortization expenses from continuing operations were $0 million
in H1 2020 and $0.6 million in H1 2019. The decrease is a result of
intangible assets being fully amortised or impaired in prior years
and during 2019.
Net loss
Net loss was $0.9 million in H1 2020 (H1 2019: $16.6 million).
The Net loss of $0.9 million in H1 2020 was mainly due to operating
and finance expenses slightly off-set by tax benefit.
Liquidity and cash flows
The following table sets out selected cash flow information for
the Group for the six months ended 30 June 2020 and 2019.
$ millions H1 2020 H1 2019
(Unaudited)
Net cash provided by (used in) operating activities (1.2) 3.8
Net cash provided by investing activities 1.8 1.5
Net cash used in financing activities (29.2) (3.7)
Increase (decrease) in cash and cash equivalents and restricted cash (28.6) 1.6
Cash and cash equivalents and restricted cash at beginning of period 33.6 10.3
Cash and cash equivalents and restricted cash at end of period 5.0 11.9
Cash and cash equivalents decreased by $6.9 million, or 58%, to
$5.0 million as at 30 June 2020, compared to $11.9 million as at 30
June 2019.
Cash flows used in operating activities were 1.2 million in H1
2020. This negative cash flow in H1 2020 is a result of the net
loss generated from operating expenses with no revenue.
Net cash provided by investing activities of $1.8 million (H1
2019: $1.5 million) was related to $1.8 million cash received in H1
2020 from sale of subsidiary in 2019.
Cash flows used in financing activities of 29.2 million (H1
2019: $3.7 million) was related to full repayment of the
convertible bond.
Principal risks
The directors assess and monitor the key risks of the business
on an ongoing basis. The principal risks and uncertainties that
could have a material effect on the Group's performance include,
among other things, the following:
-- Matomy's cash flow in the coming year depends on the share
price of Centralnic Group PLC. (LON:CNIC), and Matomy's ability to
successfully sell this asset.
-- Matomy may be subject to third-party claims brought against it
-- Matomy is an Israeli-domiciled company and as such the rights
and obligations of shareholders are governed by Israeli law and
differ in some respects from English law
Cautionary statement regarding forward-looking statements
This announcement includes certain forward-looking statements,
and opinions. These forward-looking statements may be identified by
the fact that they do not relate only to historical or current
facts or the use of forward-looking terminology, including the
terms "believes", "estimates", "plans", "projects", "anticipates",
"expects", "intends", "may", "will" or "should" or, in each case,
their negative or other variations or comparable terminology, or by
discussions of strategy, plans, objectives, goals, future events or
intentions.. These statements reflect the Company's current view
concerning future events and are based on assumptions made by the
Company (including, without limitation, assumptions concerning
currency exchange rate fluctuations, requirements of additional
capital, costs of sale or closure of various operations and changes
to regulations) and information currently available to the
Company.
Although the Company considers that these views and assumptions
are reasonable, by their nature, forward-looking statements involve
unknown risks, uncertainties, assumptions and other factors because
they relate to events and depend on circumstances that will occur
in the future whether or not outside the control of the Group.
These factors, risks, uncertainties, and assumptions could cause
actual outcomes and results to be materially different from those
projected. Past performance cannot be relied upon as a guide to
future performance and should not be taken as a representation that
trends or activities underlying past performance will continue in
the future. No representation is made or will be made that any
forward-looking statements will be achieved or will prove to be
correct. These factors, risks, assumptions, and uncertainties
expressly qualify all subsequent oral and written forward-looking
statements attributable to the Company or persons acting on its
behalf.
The forward-looking statements speak only as of the date of this
announcement. Each of the Company and its respective affiliates
expressly disclaim any obligation or undertaking to update, review
or revise any forward-looking statement and disclaims any
obligation to update its view of any risks or uncertainties
described herein, or to publicly announce the result of any
revisions to the forward-looking statements made in this
announcement to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or
circumstances on which any such statement is based or otherwise,
except as required by law.
No statement in this announcement is intended or is to be
construed, as a profit forecast or estimate or to be interpreted to
mean that earnings per Company share or overall earnings for the
current or future financial years will necessarily match or exceed
the historical published earnings per Company share or overall
earnings.
Directors' responsibility
The directors confirm that to the best of their knowledge the
condensed set of reviewed financial statements, which has been
prepared in accordance with US GAAP principles, gives a true and
fair view of the assets, liabilities, financial position and profit
or loss of the undertakings included in the consolidation as a
whole as required by DTR 4.2.4R and the interim management report
includes a fair review of the information required by DTR 4.2.7R
and DTR 4.2.8R
Amitay Weiss Ilan Tamir
Chairman COO
MATOMY MEDIA GROUP LTD. AND ITS SUBSIDIARIES
INTERIM CONSOLIDATED FINANCIAL INFORMATION
AS OF 30 JUNE 2020
U.S. DOLLARS IN THOUSANDS
UNAUDITED
INDEX
Page
--------
Review Report of Independent Auditor s 10
Consolidated Balance Sheets 11
Consolidated Information of Operations 12
Consolidated Information of Changes in Shareholders'
Equity 13 - 14
Consolidated Information of Cash Flows 15 - 16
Notes to Interim Consolidated Financial Information 17 - 23
- - - - - - - - - - - - - - - - - - -
The Board of Directors
Matomy Media Group Ltd.
Review Report of Independent Auditors
We have reviewed the consolidated financial information of
Matomy Media Group Ltd. and its subsidiaries (collectively "the
Company"), which comprise the consolidated balance sheet as of 30
June 2020, and the related consolidated information of operations,
changes in shareholder's equity and cash flows for the six-month
periods ended 30 June 2020 and 2019.
Management's Responsibility for the Financial Information
Management is responsible for the preparation and fair
presentation of the interim financial information in conformity
with U.S. generally accepted accounting principles; this includes
the design, implementation and maintenance of internal control
sufficient to provide a reasonable basis for the preparation and
fair presentation of interim financial information in conformity
with U.S. generally accepted accounting principles.
Auditor's Responsibility
Our responsibility is to conduct our review in accordance with
auditing standards generally accepted in the United States
applicable to reviews of interim financial information. A review of
interim financial information consists principally of applying
analytical procedures and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in
scope than an audit conducted in accordance with auditing standards
generally accepted in the United States, the objective of which is
the expression of an opinion regarding the financial information.
Accordingly, we do not express such an opinion.
Conclusion
Based on our review, we are not aware of any material
modifications that should be made to the consolidated financial
information referred to above for it to be in conformity with U.S.
generally accepted accounting principles.
Sale of all of the Company's activities
As described in Note 1b to the financial statements, in December
2019, the Company completed the sale of all of its activities and
in January 2020 fully repaid all of its obligations to the
bondholders. Our report is not modified with respect to this
matter.
Tel Aviv, Israel KOST FORER GABBAY & KASIERER
19 August, 2020 A Member of Ernst & Young
Global
CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
30 June 31 December
2020 2019
--------- -----------
Unaudited Audited
--------- -----------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,984 $ 4,295
Restricted cash for bond payment - 29,295
Other receivables and prepaid expenses 735 2,192
Investment in financial assets measured at
fair value 2,204 -
Total current assets 7,923 35,782
--------- -----------
LONG-TERM ASSETS:
Investment in financial assets measured at
fair value - 2,450
Other assets - 557
--------- -----------
Total long-term assets - 3,007
--------- -----------
Total assets $ 7,923 $ 38,789
========= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Convertible bond at fair value (principal of
ILS 101,000 thousand) - 29,225
Accrued expenses and other liabilities 3,317 4,004
Total current liabilities 3,317 33,229
-------- --------
LONG-TERM LIABILITIES:
Other liabilities 105 173
-------- --------
Total long-term liabilities 105 173
-------- --------
EQUITY:
Ordinary shares 254 254
Additional paid-in capital 81,007 80,993
Accumulated deficit (75,645) (74,745)
Treasury shares (1,115) (1,115)
-------- --------
Total equity 4,501 5,387
-------- --------
Total liabilities and equity $ 7,923 $ 38,789
======== ========
The accompanying notes are an integral part of the interim
consolidated financial information.
CONSOLIDATED INFORMATION OF OPERATIONS
U.S. dollars in thousands except share and per share data
Six months ended Yeear ended
30 June 31 December
--------------------
2020 2019 2019
-------- ---------- ------------
Unaudited Audited
-------------------- ------------
Revenues $ - $ 33,701 $ 74,035
Cost of revenues - 26,496 57,128
-------- ---------- ------------
Gross profit - 7,205 16,907
-------- ---------- ------------
Operating expenses
Research and development - 289 601
Selling and marketing - 1,879 3,594
General and administrative 849 3,339 6,411
Impairment, net of change in fair value
of contingent consideration - 15,984 15,984
Other expenses - 1,000 -
Gain from sale of subsidiary - - (2,575)
-------- ---------- ------------
Total operating expenses 849 22,491 24,015
-------- ---------- ------------
Operating loss (849) (15,286) (7,108)
Financial expenses, net 118 2,076 12,270
-------- ---------- ------------
Loss before taxes on income (tax benefit) (967) (17,362) (19,378)
Tax on income (tax benefit) (67) (790) 1,579
-------- ------------
Net loss (900) (16,572) (20,957)
-------- ------------
Net loss (income) attributable to other
non-controlling interests in subsidiary - 13 (1)
-------- ---------- ------------
Net loss attributable to Matomy Media
Group Ltd. $ (900) $ (16,559) $ (20,958)
======== ========== ============
Basic and diluted loss per ordinary
share $ (0.01) $ (0.17) $ (0.22)
======== ========== ============
Weighted average number of shares used
in computing basic and diluted net 98,517,
loss per share 443 97,161,102 97,218,972
======== ========== ============
The accompanying notes are an integral part of the interim
consolidated financial information.
CONSOLIDATED INFORMATION OF CHANGES IN SHAREHOLDERS' EQUITY
US dollars in thousands, except share data
Additional
Ordinary shares paid-in Treasury Total
------------------ -----------
Accumulated equity
Number Amount capital deficit shares
---------- ------ ---------- ----------- --------- -------
Balance as of 1 January 2020 98,483,839 $ 254 $ 80,993 $ (74,745) $ (1,115) $ 5,387
Stock-based compensation - - 14 - - 14
Vesting of restricted share
units 278,000 *) *) - - *)
Net loss - - - (900) - (900)
---------- ------ ---------- ----------- --------- -------
Balance as of 30 June 2020
(unaudited) 98,761,839 $ 254 $ 81,007 $ (75,645) $ (1,115) $ 4,501
========== ====== ========== =========== ========= =======
Total Matomy
Accumulated Media Group
Additional other Ltd.
Ordinary shares paid-in comprehensive Treasury shareholders' Non-controlling Total
------------------ -----------
Accumulated interests equity
Number Amount capital Loss deficit shares equity
---------- ------ ---------- ------------- ----------- --------- ------------- --------------- ---------
Balance as of
1 January
2019 98,372,339 $ 254 $ 86,031 $ (3,174) $ (53,788) $ (6,231) $ 23,092 $ 255 $ 23,347
Stock-based
compensation - - 99 - - - 99 - 99
Net loss - - - - (16,559) - (16,559) (13) $(16,572)
---------- ------ ---------- ------------- ----------- --------- ------------- --------------- ---------
Balance as of
30 June 2019
(unaudited) 98,372,339 $ 254 $ 86,130 $ (3,174) $ (70,347) $ (6,231) $ 6,632 $ 242 $ 6,874
========== ====== ========== ============= =========== ========= ============= =============== =========
*) Represents an amount lower than $ 1.
The accompanying notes are an integral part of the interim
consolidated financial information.
CONSOLIDATED INFORMATION OF CHANGES IN SHAREHOLDERS' EQUITY
US dollars in thousands, except share data
Total Matomy
Accumulated Media Group
Additional other Ltd.
Ordinary shares paid-in comprehensive Treasury shareholders' Non-controlling Total
------------------ -----------
Accumulated interests equity
Number Amount capital Loss deficit shares equity
---------- ------ ---------- ------------- ----------- --------- ------------- --------------- --------
Balance as of
1 January
2019 98,372,339 $ 254 $ 86,031 $ (3,174) $ (53,788) $ (6,231) $ 23,092 $ 255 $ 23,347
Stock-based
compensation - - 78 - - - 78 - 78
Vesting of
restricted
share
units 111,500 *) *) - - - - - *)
Sale of
subsidiary - - (5,116) 3,277 - 5,116 3,277 (256) 3,021
Net loss - - - (103) (20,957) - (21,060) 1 (21,059)
---------- ------ ---------- ------------- ----------- --------- ------------- --------------- --------
Balance as of
31 December
2019
(audited) 98,483,839 $ 254 $ 80,993 $ - $ (74,745) $ (1,115) $ 5,387 $ - $ 5,387
========== ====== ========== ============= =========== ========= ============= =============== ========
*) Represents an amount lower than $ 1.
The accompanying notes are an integral part of the interim
consolidated financial information.
CONSOLIDATED INFORMATION OF CASH FLOWS
US dollars in thousands
Six months ended Year ended
30 June 31 December
-----------------------------
2020 2019 2019
------------- -------------- ------------
Unaudited Audited
----------------------------- ------------
Cash flows from operating activities:
Net loss $ (900) $ (16,572) $ (20,957)
Adjustments to reconcile net loss to
net cash (used in) provided by operating
activities:
Depreciation and amortization - 960 1,694
Stock-based compensation 14 99 78
Impairment of intangible assets, goodwill
and capitalized research and development - 15,984 15,984
Change in deferred tax, net - (2,187) (2,269)
Change in accrued interest and effect
of foreign exchange differences on long
term loans and leases liability - (67) (109)
Fair value revaluation - convertible
bond - 691 10,685
Decrease (increase) in trade receivables - 6,473 (1,086)
Decrease in other receivables and prepaid
expenses 14 116 18 7
Decrease (increase) in other assets - 6 (552)
Decrease in trade payables - (4,189) (5,157)
Changes in fair value of payment obligation
recognized in earnings - 1,587 1,833
Decrease in tax receivable 179 3,326 8,728
Decrease in accrued expenses and other
liabilities (754) (2,374) (1,839)
Gain from sale of activities and subsidiary - - (2,575)
Change in fair value of investment in
financial assets 246 - (863)
Other - (44) (68)
------------- -------------- ------------
Net cash provided by (used in) operating
activities (1,201) 3,809 3,714
------------- -------------- ------------
Cash flows from investing activities:
Sale of activities and subsidiary, net 1,820 1,839 26,024
Purchase of property and equipment - (86) (149)
Purchase of domains - - (73)
Capitalization of research and development
costs - (298) (646)
-------------
Net cash provided by investing activities 1,820 1,455 25,156
------------- -------------- ------------
The accompanying notes are an integral part of the interim
consolidated financial information.
CONSOLIDATED INFORMATION OF CASH FLOWS
US dollars in thousands
Six months ended Year ended
30 June 31 December
------------------------
2020 2019 2019
------------- --------- ------------
Unaudited Audited
------------------------ ------------
Cash flows from financing activities:
Short-term bank credit, net $ - $ (2,345) $ (3,807)
Repayment of convertible bond (29,225) - -
Repayment of bank loans - (1,332) (1,774)
Net cash used in financing activities (29,225) (3,677) (5,581)
------------- --------- ------------
Effect of exchange rate differences
on cash - 3 -
------------- --------- ------------
Increase (decrease) in cash, cash equivalents
and restricted cash (28,606) 1,590 23,289
Cash, cash equivalents and restricted
cash at beginning of period 33,590 10,301 10,301
------------- --------- ------------
Cash, cash equivalents and restricted
cash at end of period $ 4,984 $ 11,891 $ 33,590
============= ========= ============
Supplemental disclosure of cash flow
activities
Cash paid during the period for:
Income taxes $ - $ - $ 390
============= =========
Interest paid $ - $ - $ 950
============= =========
Non-cash investing activities:
Receivable in connection with sale of
subsidiary and activities $ - $ - $ 2,288
============= ========= ============
Investments in financial assets measured
at fair value in connection with sale
of subsidiary $ - $ - $ 1,587
============= ========= ============
The accompanying notes are an integral part of the interim
consolidated financial information.
NOTES TO CONSOLIDATED FINANCIAL INFORMATION
US dollars in thousands (except share and per share data)
NOTE 1:- GENERAL
a. Matomy was incorporated in 2006. The Company's shares were
traded on the London Stock Exchange ("LSE") and on the Tel Aviv
Stock Exchange ("TASE"), until 23 June 2020, when the trading in
the Company's shares was suspended both on TASE and LSE.
In the period spanning from mid-2017 through December 2019, the
Company exited all its activities, as further described in Note 1b
below. In addition, on 8 January 2020, the Company fully repaid all
its obligations to the bondholders.
b. S ale of subsidiary:
On 15 November 2019, the Company and Rainmaker Investments GmbH
(" Rainmaker ") , a minority shareholder (10%) in Team Internet AG
("Team Internet") , signed a binding agreement with Centralnic
Group PLC, whose shares are traded on the AIM Market of the London
Stock Exchange, (" Purchaser " or " CNIC ") to sell all the shares
in Team Internet (the " Transaction ") for total consideration of
EUR45,854,332, plus Interest Amount as determined in the agreement.
On 24 December 2019 the Transaction was completed. The Purchase
Price consisted of the following:
(a) A cash payment on closing date in an amount of EUR39,554,332
(the "Cash Payment"), plus Interest Amount (EUR764,286), in
addition to a retained amount of EUR900,000 (the " Retention Amount
"). The Retention Amount will be fully released after 15 months
period, less deductions for settled claims or for outstanding
claims (which are supported by documents as specified in the
agreement). The retention amount (net of deferred cash payment that
Rainmaker are entitled to receive - see below) is presented at fair
value of $551 upon closing and is included within other receivables
and prepaid expenses in the amount of $573 on the balance sheet as
of 30 June 2020 and in the amount of $557 as of 31 December 2019
and is included within other assets.
(b) 3,911,650 Purchaser shares. The number of shares was
determined by dividing EUR2,700,000 by the Purchaser's share price,
as determined in the agreement. Such shares are subject to a
lock-up period of 12 months, plus an additional 6-month period
during which any disposal must be approved by and coordinated with
the Purchaser and its broker. The investment in these shares (net
of shares paid to Rainmaker - see below), is presented at fair
value of $1,587 on the closing date ($2,204 and $2,450 as of 30
June 2020 and 31 December 2019, respectively) and is presented as
investment in financial assets measured at fair value on the
balance sheets.
(c) A deferred cash payment of EUR2,700,000 payable 6 months
following the closing. Such payment (net of deferred cash payment
that Rainmaker are entitled to receive). The full deferred cash
payment in the amount of $1,820 was received on 23 June 2020.
NOTE 1:- GENERAL (Cont.)
As part of the Transaction, immediately prior to closing date,
the Company consummated the purchase of the remaining 10% stake of
Rainmaker in Team Internet in accordance with the share purchase
agreement dated December 2017 between the Company and Rainmaker ,
by assigning to Rainmaker a portion of the Purchase Price.
Rainmaker received a total sum of EUR19,050,000: (i) a sum of EUR
16,508,190 out of the Cash Payment; (ii) EUR1,087,350 paid in
Purchaser shares (1,575,309 shares); (iii) a sum of EUR1,087,350
out of the deferred cash payment; (iv) a sum of EUR 367,110 out of
the Retention Amount.
The remaining amount of the Cash Payment (EUR23,046,142) plus
the Interest Amount of EUR765,286, in total EUR23,810,427 was paid
in December 2019 to the trustee of the Bonds (Series A) (the "
Bonds " and the " Trustee ", respectively) for a full early
redemption of the outstanding Bonds (ILS101,000 thousands)
(principal and interest). The full redemption of the outstanding
Bonds in the amount of $29,225 was executed on 8 January 2020 .
c. From time to time, we may be subject to legal proceedings and
claims in the ordinary course of business. Regardless of the
outcome, litigation can have an adverse impact on us because of
defense and settlement costs, diversion of management resources and
other factors.
In March 2020 the Company received a demand letter from a German
firm (the "German Firm") under which the German Firm contends it is
entitled to a transaction fee of EUR1.25 million under a
consultancy agreement between the Company and the German Firm dated
November 22, 2017, in connection with the sale of Team Internet AG
which was consummated in December 2019 (the "Transaction").
The Company rejects the claims under the demand letter since,
among other reasons, it appears that the German Firm did not
provide any services to the Company after November 2018 and was not
involved in the Transaction. The Company sent a letter to the
German Firm rejecting these claims, and to date, has not heard back
from the German Firm.
d. On 13 August 2020, the Company submitted to the Tel
Aviv-Jaffa District Court (the "Court") a petition pursuant to
Section 350 of the Israeli Companies Law (the "Petition"),
requesting the Court to approve (i) the convening of separate
meetings of preferential creditors, secured creditors,
non-preferential creditors and a meeting of the shareholders of the
Company, in order to approve an arrangement between the Company and
its creditors and shareholders (the "Arrangement"); and (ii) the
schedule of the proposed Arrangement.
The Arrangement provides for the transfer of all the assets,
rights and liabilities known to the Company or contingent (other
than NIS5 million ($1,470), the amount of cash necessary for the
Company's operations for the next 12 months) to an account under
the control of a trustee to be appointed by the Court, with the
purpose of merging in the future a possible new activity into the
Company free from any debt or claims associated with the Company's
former activities. Any debt confirmed under the Arrangement will be
paid out of the funds deposited with the trustee and any funds
remaining following such process will be distributed as dividend to
the Company's shareholders as of the approval date of the
Arrangement by the Court.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES
a. Unaudited interim financial information:
The accompanying unaudited interim consolidated financial
information have been prepared in accordance with accounting
principles generally accepted in the United States ("US GAAP") for
interim financial information. Accordingly, they do not include all
the information and footnotes required by accounting principles
generally accepted in the United States for complete financial
information. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. The results for the
six-month period ended 30 June 2020 are not necessarily indicative
of the results that may be expected for the year ended 31 December
2020.
In the preparation of the interim consolidated financial
information it applied the significant accounting policies, on a
consistent basis to the annual financial statements of the Company
as of 31 December 2019.
The unaudited interim consolidated financial information should
be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's financial
statements ("the Annual Report") for the year ended 31 December
2019.
b. Use of estimates:
The preparation of the consolidated financial information in
conformity with US GAAP requires management to make estimates,
judgments and assumptions. The Company's management believes that
the estimates, judgments and assumptions it uses are reasonable
based upon information available at the time they are made. These
estimates, judgments and assumptions can affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the dates of the financial information,
and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
On an ongoing basis, the Company's management evaluates
estimates, including those related to accounts receivable, fair
values of financial instruments, fair values of stock-based awards,
deferred taxes and income tax uncertainties and contingent
liabilities. Such estimates are based on historical experience and
on various other assumptions that it believes to be reasonable, the
results of which form the basis for making judgments about the
carrying values of assets and liabilities.
c. Fair value of financial instruments:
The carrying amounts of financial instruments carried at cost,
including cash and cash equivalents, short-term deposits, prepaid
expenses and other assets, accounts payable, accrued expenses and
other liabilities approximate their fair value due to the
short-term maturities of such instruments.
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The Company follows the provisions of ASC 820 which defines fair
value as the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market
participants at the measurement date.
In determining a fair value, the Company uses various valuation
approaches. ASC 820 establishes a hierarchy for inputs used in
measuring fair value that maximizes the use of observable inputs
and minimizes the use of unobservable inputs by requiring that the
most observable inputs be used when available. Observable inputs
are inputs that market participants would use in pricing an asset
or liability, based on market data obtained from sources
independent of the Company. Unobservable inputs are inputs that
reflect assumptions that market participants would use in pricing
an asset or liability, based on the best information available
under given circumstances.
The hierarchy is broken down into three levels, based on the
observability of inputs and assumptions, as follows:
-- Level 1 - Observable inputs obtained from independent
sources, such as quoted prices for identical assets and liabilities
in active markets.
-- Level 2 - Other inputs that are directly or indirectly observable in the market place.
-- Level 3 - Unobservable inputs which are supported by little or no market activity.
The following table present liabilities measured at fair value
on a recurring basis as of 30 June 2020 and 31 December 2019:
30 June 2020
-----------------------------------------
Fair value measurements using
input type
-----------------------------------------
Level Level Level
1 2 3 Total
------ ------------ ----- ------
Assets:
Investment in financial
assets measured at fair *) $
value $ - *) $ 2,204 $ - 2,204
Total financial assets *) $
(Unaudited) $ - *) $ 2,204 $ - 2,204
====== ============ ===== ======
*) Investment in financial assets measured at fair value:
Six months ended
30 June
2020
(Unaudited)
----------------
Quoted price $ 2,488
Discount for lock up period (refer to Note
1b) (284)
Total fair value at 30 June 2020 $ 2,204
================
NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
31 December 2019
--------------------------------------------
Fair value measurements using
input type
--------------------------------------------
Level Level Level
1 2 3 Total
--------- ---------- --------- ----------
Assets:
Investment in financial
assets measured at fair
value $ - *) $ 2,450 $ - *) $ 2,450
Total financial assets $ - *) $ 2,450 $ - *) $ 2,450
========= ========== ========= ==========
Liabilities:
Bonds $ 29,225 $ - $ - $ 29,225
Total financial liabilities
(audited) $ 29,225 $ - $ - $ 29,225
========= ========== ===== ==========
*) Investment in financial assets measured at fair value:
Year ended
31 December
2019
------------
Quoted price $ 2,758
Discount for lock up period
(refer to Note 1b) (308)
Total fair value at the end
of year (audited) $ 2,450
============
NOTE 3:- EQUITY
a. Options issued to employees and directors:
No options were granted during the six month period ended 30
June 2020. 278,000 RSUs, which were fully vested, were granted
during the six month period ended 30 June 2020.
b. Treasury shares
As of 30 June 2020 and 31 December 2019 , treasury shares
amounted to 9,758,875 shares .
NOTE 4:- TAXES ON INCOME
a. Loss before taxes on income is comprised as follows:
Six months ended Year ended
30 June 31 December
-------------------
2020 2019 2019
------- ---------- ------------
Unaudited
-------------------
Domestic $ (888) $ (3,934) $ (24,736)
Foreign (79) (13,428) 5,358
------------
$ (967) $ (17,362) $ (19,378)
======= ========== ============
NOTE 4:- TAXES ON INCOME (Cont.)
b. Taxes on income (tax benefit) are comprised as follows:
Six months ended Year ended
30 June 31 December
------------------
2020 2019 2019
-------- -------- ------------
Unaudited
------------------
Current:
Domestic $ - $ 51 $ 175
Foreign (67) 1,346 3,673
------------
(67) 1,397 3,848
-------- -------- ------------
Deferred:
Foreign - (2,187) (2,269)
------------
- (2,187) (2,269)
-------- --------
$ (67) $ (790) $ 1,579
======== ======== ============
NOTE 5:- OTHER INFORMATION
a. Geographical information:
Revenues by geography are classified based on the location where
the consumer completed the action that generated the relevant
revenues.
Revenues from external customers:
Six months ended Year ended
30 June 31 December
--------------------
2020 2019 2019
------- ---------- ------------
Unaudited
--------------------
United States $ - $ 19,871 $ 39,883
Europe - 9,510 24,092
Asia - 1,330 3,476
Other - 2,990 6,584
-------- ------------
$ - $ 33,701 $ 74,035
======== ========== ============
b. In the six months periods ended 30 June 2020 and 2019 and in
the year ended 31 December 2019, one customer contributed 0 %, 90 %
and 87% of the Company's revenues, while no other customer
contributed more than 10%.
NOTE 6:- FINANCIAL EXPENSES, NET
Six months ended Year ended
30 June 31 December
------------------
2020 2019 2019
------- --------- ------------
Unaudited
------------------
Financial income:
Interest income $ 14 $ 100 $ 167
Hedging transactions - - 77
Foreign currency remesurement.net 121 - 156
Revaluation of expected cash
from CNIC 39 - -
Revaluation of investment
in financial assets measured
at fair value (Refer to Note
1b) - 174 863
174 274 1,263
------- --------- ------------
Financial expenses:
Bank fees (4) (92) (179)
Interest expense (42) (952) (1,939)
Foreign currency remeasurement,
net - (22) -
Change in fair value of convertible
Bonds - (691) (10,685)
Revaluation of investment
in financial assets measured
at fair value (Refer to Note
1b) (246) - -
------- --------- ------------
(292) (2,350) (13,533)
------- --------- ------------
$ ( 118
) $ (2,076) $ (12,270)
======= ========= ============
NOTE 7:- RELATED PARTIES
The Company had activity with related parties as part of its
ordinary business. The majority of the related parties'
transactions included domain monetization activity with the
non-controlling interest of Team Internet.
Cost of revenues to related parties amounted to $ 0, $ 1,495 and
$ 2,882 for the six months ended 30 June 2020 and 2019 and for the
year ended 31 December 2019 respectively.
- - - - - - - - - - - - - - - - - - -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GZGMRLLRGGZM
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