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