EX-99.4 6 ea150270ex99-4_safetgroup.htm CYBERKICK BUSINESS CONDENSED INTERIM FINANCIAL STATEMENTS AS OF JUNE 30, 2021 (UNAUDITED)

Exhibit 99.4

 

CYBERKICK BUSINESS

 

CONDENSED INTERIM FINANCIAL STATEMENTS AS OF JUNE 30, 2021

 

(UNAUDITED)

 

 

 

 

CYBERKICK BUSINESS

 

CONDENSED INTERIM FINANCIAL STATEMENTS AS OF JUNE 30, 2021

 

(UNAUDITED)

 

TABLE OF CONTENTS

 

 

Page

CONDENSED INTERIM FINANCIAL STATEMENTS:  
Condensed Interim Statements of Financial Position 1
Condensed Interim Statements of Profit or Loss 2
Condensed Interim Statements of Changes in Net Parent Investment (Deficit) 3
Condensed Interim Statements of Cash Flows 4
Notes to Condensed Interim Financial Statements 5-7

 

 

 

 

  

 

 

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CYBERKICK BUSINESS

 

CONDENSED INTERIM STATEMENTS OF FINANCIAL POSITION

 

(UNAUDITED)

 

   June 30,
2021
   December 31,
2020
 
   U.S. dollars in thousands 
Assets        
         
CURRENT ASSETS:        
Trade receivables   795    338 
Other receivables   8     
TOTAL CURRENT ASSETS   803    338 
           
NON-CURRENT ASSETS:          
Deferred tax assets   67    54 
Intangible assets, net   23    28 
Property and equipment, net   2    3 
TOTAL NON-CURRENT ASSETS   92    85 
TOTAL ASSETS   895    423 
           
Liabilities and net parent investment          
           
CURRENT LIABILITIES:          
Related parties   12     
Trade payables   362    113 
Other payables   299    345 
TOTAL CURRENT LIABILITIES   673    458 
TOTAL LIABILITIES   673    458 
           
NET PARENT INVESTMENT -          
Parent investment (deficit)   222    (35)
TOTAL NET PARENT INVESTMENT (DEFICIT)   222    (35)
TOTAL LIABILITIES AND NET PARENT INVESTMENT (DEFICIT)   895    423 

 

The accompanying notes are an integral part of these condensed interim financial statements.

 

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CYBERKICK BUSINESS

 

CONDENSED INTERIM STATEMENTS OF PROFIT OR LOSS

 

(UNAUDITED)

 

   Six-month period
ended June 30
 
   2021   2020 
   U.S. dollars in thousands 
     
REVENUES   2,291    2,177 
COST OF REVENUES   1,020    1,139 
GROSS PROFIT   1,271    1,038 
           
OPERATING EXPENSES:          
Research and development expenses   655    83 
Selling and marketing expenses   979    145 
General and administrative expenses   52    46 
TOTAL OPERATING EXPENSES   1,686    274 
           
OPERATING PROFIT (LOSS)   (415)   764 
FINANCIAL EXPENSE, net   14    

*

 
PROFIT (LOSS) BEFORE TAXES ON INCOME   (429)   764 
TAXES ON INCOME   17    (177)
NET PROFIT (LOSS) FOR THE PERIOD    (446)   587 

 

*Less than $1 thousand.

 

The accompanying notes are an integral part of these condensed interim financial statements.

 

2

 

CYBERKICK BUSINESS

 

CONDENSED INTERIM STATEMENTS OF CHANGES IN NET PARENT INVESTMENT (DEFICIT)

 

(UNAUDITED)

 

   Parent investment (deficit)   Total 
   U.S. dollars in thousands 
         
BALANCE AT JANUARY 1, 2021   (35)   (35)
Share-based payments   479    479 
Net transfer from Parent   224    224 
Loss for the period   (446)   (446)
BALANCE AT JUNE 30, 2021   222    222 
           
           
BALANCE AT JANUARY 1, 2020   124    124 
Net transfer to Parent   (718)   (718)
Net profit for the period   587    587 
BALANCE AT JUNE 30, 2020   (7)   (7)

 

The accompanying notes are an integral part of these condensed interim financial statements.

 

3

 

CYBERKICK BUSINESS

 

CONDENSED INTERIM STATEMENTS OF CASH FLOWS

 

(UNAUDITED)

 

   Six-month period
ended June 30
 
   2021   2020 
   U.S. dollars in thousands 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net profit (loss) for the period   (446)   587 
Adjustments to reconcile net profit (loss) to net cash provided by (used in) operating activities:          
Depreciation and Amortization   5    * 
Share-based payments   479    - 
Changes in deferred tax assets   (13)   (6)
    471    (6)
Changes in operating asset and liability items:          
Decrease (increase) in trade receivables   (457)   225 
Increase in other receivables   (8)   (7)
Increase (decrease) in related parties   12    (25)
Increase in trade payables   250    100 
Decrease in other payables   (46)   (155)
    (249)   138 
Net cash flows provided by (used in) operating activities   (224)   719 
           
CASH FLOWS FROM INVESTING ACTIVITIES -          
Purchase of property and equipment   -    (1)
Net cash used in investing activities   -    (1)
           
CASH FLOWS FROM FINANCING ACTIVITIES -          
Net transfer from (to) Parent   224    (718)
Net cash provided by (used in) financing activities   224    (718)
           
INCREASE IN CASH AND CASH EQUIVALENTS   -    - 
BALANCE OF CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD   -    - 
BALANCE OF CASH AND CASH EQUIVALENTS AT END OF PERIOD   -    - 

 

*Less than $1 thousand.

 

The accompanying notes are an integral part of these condensed interim financial statements.

 

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CYBERKICK LTD.

 

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

 

 

NOTE 1 - GENERAL:

 

On July 1, 2021, Takoomi Ltd. (“Takoomi“ or the “Parent”) entered into a share purchase agreement (the “SPA”) with Safe-T Group Ltd. (“Safe-T”) and the shareholders of Takoomi. Pursuant to the SPA, immediately prior to the Closing (as defined in the SPA), Takoomi will transfer and assign certain assets as well as intellectual property rights (the “CyberKick Business” or “Business”) to CyberKick Ltd. (“CyberKick“ or the “Company”), and accordingly, Safe-T will purchase all of the issued and outstanding share capital of CyberKick.

 

CyberKick was incorporated on May 3, 2021 by the shareholders of Takoomi as a special purpose vehicle organized as a company, designated solely to facilitate the transaction, as described herein.

 

The transaction closed on July 4, 2021. Until the said date, the CyberKick Business was a part of Takoomi’s activities as described herein.

 

The CyberKick Business provides solutions for security and privacy tools developers, as well as to security and privacy tools consumers.

 

NOTE 2 - BASIS OF PREPARATION:

 

a.Basis of presentation of financial statements

 

The CyberKick Business’s interim financial statements for the six months period ended June 30, 2021 and 2020, have been prepared in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting”.

 

These interim financial statements, which are unaudited, do not include all the information and disclosures that would otherwise be required in a complete set of annual financial statements and should be read in conjunction with the annual financial statements as of December 31, 2020 and their accompanying notes, which have been prepared in accordance with International Financial Reporting Standards as published by the International Accounting Standards Board.

 

The results of operations for the six months period ended June 30, 2021 and 2020, are not necessarily indicative of the results that may be expected for the entire fiscal year ending December 31, 2021, or for any other interim period.

 

b.Estimates

 

The preparation of interim financial statements requires the CyberKick Business’s management to exercise its judgment and to use significant accounting estimates and assumptions that affect the application of the Business’s accounting policies and the amounts of reported assets, liabilities, income and expenses. Actual results may materially differ from those estimates.

 

In preparation of these interim financial statements, the significant judgments that were exercised by the management in applying the Business’s accounting policies and the key sources of estimation uncertainty were similar to those applied in the Business’s annual financial statements for the year ended December 31, 2020.

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES:

 

The accounting policies applied in the preparation of these interim financial statements are consistent with those applied in the preparation of the annual financial statements as of December 31, 2020, except for as described below.

 

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CYBERKICK LTD.

 

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

 

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES (continued):

 

Share-based payments

 

The Company operates a share-based compensation plans for employees, directors and service providers of the CyberKick Business. As part of the plans, the Company grants employees, directors and service providers of the CyberKick Business, from time to time and at its discretion, options to purchase Company shares. The total amount recognized as an expense over the vesting period of the options (the period during which all vesting conditions are expected to be met) was determined as follows:

 

1)Share based payments to employees and directors by reference to the fair value of the equity instrument granted at date of grant.

 

2)Share based payments to service providers by reference to the fair value of the service provided.

 

The Business uses the Black-Scholes option valuation model to estimate the grant date fair value. In estimating this fair value, there are certain assumptions that the Business uses to determine the amount of share-based payments, consisting of the fair value of the Company's ordinary shares, expected life of the option, risk free interest rate, dividend yield, and volatility. The use of a different estimate for any of these components could have a material impact on the amount of calculated compensation expense. Share-based compensation expenses are included within “Net transfer from (to) Parent”.

 

NOTE 4 - TRADE RECEIVABLES:

 

As of June 30, 2021 and December 31, 2020, the trade receivables balance comprises open accounts.

 

The CyberKick Business did not record a provision for credit losses as of June 30, 2021 and December 31, 2020, and has no customers that exceed their customary credit terms.

 

As of June 30, 2021 and 2020, a single customer represented 62% and 90%, respectively, of trade receivable. For the periods ended June 30, 2021 and 2020, a single customer represented 60% and 86%, respectively, of total revenues.

 

NOTE 5 - OTHER PAYABLE:

 

   June 30,
2021
   June 30,
2020
 
   U.S. dollars in thousands 
         
Employees and related institutions   81    42 
Accrued expenses   218    51 
    299    93 

 

NOTE 6 - REVENUES:

 

   Six-month period
ended June 30
 
   2021   2020 
   U.S. dollars in thousands 
         
Advertising revenues   2,017    2,177 
Subscription revenues   274    - 
    2,291    2,177 

 

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CYBERKICK LTD.

 

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

  

NOTE 7 - SHARE-BASED PAYMENTS:

 

On June 30, 2021, the Company granted to 2 employees of the CyberKick Business fully vested options to purchase 5,296 ordinary shares of the Company at exercise prices between $0 to $0.8 per share. The fair value of the options at date of grant totaled to $479 thousand.

 

Share-based expenses for the six-month period ended June 30, 2021 were $479 thousand, out of which $470 thousand was recorded under “research and development expense” and $9 thousand under “general and administrative expenses”.

 

NOTE 8 - TAXES ON INCOME:

 

The calculation of income taxes during the reporting period is based on the best projection of the weighted average of the projected income tax rate for the full taxable year. The average projected tax rate of the CyberKick Business for the year ended December 31, 2021, is 23%.

 

NOTE 9 - RELATED PARTIES TRANSACTIONS AND BALANCES:

 

"Related Parties" - As defined in IAS 24. Key management personnel - included together with other entities in the said definition of "related parties" in IAS 24, include the members of the Board of Directors and senior executives.

 

Compensation to key management personnel for work services they provide to the CyberKick Business is as follows:

 

   Six-month period
ended June 30
 
   2021   2020 
   U.S. dollars in thousands 
         
Payroll and related expenses   139    62 
    139    62 

 

As of June 30, 2021 there were related parties open balances of $12 thousand, and as of December 31, 2020 there were no related parties open balances.

 

NOTE 10 - SUBSEQUENT EVENTS:

 

a.As described in Note 1, on July 4, 2021, Safe-T purchased all of the issued and outstanding share capital of the Company for a total consideration of $9.3 million, which consisted of cash consideration of $3.7 million and equity consideration of $5.6 million.

 

The consideration may be increased by an additional earn-out payment of up to $3 million to the founders of Takoomi and the CyberKick Business, subject to certain revenue targets of Company during the first and second year following the closing of the transaction, provided that the entitlement shall be only of the founders who are still employed by the Company at such time.

 

b.On July 1, 2021, all options were exercised into 5,296 ordinary shares of the Company. See Note 7 for further information.

 

 

 

 

  

 

 

 

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