| SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES The
interim financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America
(“U.S. GAAP”) for interim financial information and with Rule 8-03 of Regulation S-X. The interim financial statements do
not include a full disclosure as required in annual financial statements and should be read with the annual financial statements of the
Company as of December 31, 2021 from which the accompanying condensed consolidated statement of financial position dated was derived.
In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the six and three months ended June 30, 2022 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2022. The accounting policies implemented in the interim financial statements is
consistent with the accounting policies implemented in the annual financial statements as of December 31, 2021, except of the following
accounting pronouncement adopted by the Company. Recently
Issued Accounting Pronouncements, not yet adopted In
August 2020, the FASB issued ASU 2020-06, “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives
and Hedging – Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”), which is intended to
address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics
of liabilities and equity. For convertible instruments, ASU 2020-06 reduces the number of accounting models for convertible debt instruments
and convertible preferred stocks, and enhances information transparency by making targeted improvements to the disclosures for convertible
instruments and earnings-per-share guidance on the basis of feedback from financial statement users. ASU 2020-06 is effective for fiscal
years, and interim periods in those fiscal years, beginning after December 15, 2023 (effective January 1, 2024) for smaller reporting
companies. The Company is determining the adoption of this new accounting guidance and the effect on its consolidated financial statements
throughout the period until implementation. In
June 2016, the FASB issued ASU 2016-13, “Financial Instruments-Credit Losses (Topic 326)” (“ASU 2016-13”), which
significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not
measured at fair value through net income. ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that
requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments. Under ASU 2016-13
credit impairment is recognized as an allowance for credit losses, rather than as a direct write-down of the amortized cost basis of
a financial asset. The impairment allowance is a valuation account deducted from the amortized cost basis of financial assets to present
the net amount expected to be collected on the financial asset. Once the new pronouncement is adopted by the Company, the allowance for
credit losses must be adjusted for management’s current estimate at each reporting date. The new guidance provides no threshold
for recognition of impairment allowance. Therefore, entities must also measure expected credit losses on assets that have a low risk
of loss. For instance, trade receivables that are either current or not yet due may not require an allowance reserve under currently
generally accepted accounting principles, but under the new standard, the Company will have to estimate an allowance for expected credit
losses on trade receivables under ASU 2016-13. ASU 2016-13 is effective for annual periods, including interim periods within those annual
periods, beginning after December 15, 2022 for smaller reporting companies. Early adoption is permitted. The Company is currently assessing
the impact ASU 2016-13 will have on its consolidated financial statements. CREATIONS
INC. AND SUBSIDIARIES NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (U.S.
dollars in thousands)
A. Use
of Estimates in Preparation of Financial Statements The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions.
The Company’s management believes that the estimates, judgments and assumptions used 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 statements, and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates.
B. Principles of consolidation The
consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions
have been eliminated in consolidation.
C. Functional
currency The
functional currency of the Company is the U.S. dollar, which is the currency of the primary economic environment in which it operates.
In accordance with ASC 830, “Foreign Currency Matters” (ASC 830), monetary balances denominated in or linked to foreign currency
are stated on the basis of the exchange rates prevailing at the applicable balance sheet date. For foreign currency transactions included
in the statement of operations, the exchange rates applicable on the relevant transaction dates are used. Gains or losses arising from
changes in the exchange rates used in the translation of such transactions and from the remeasurement of monetary balance sheet items
are carried as financing income or expenses. The
functional currency of Ocean Yetsira, Yetsira and Ocean is the New Israeli Shekel (“NIS”) and their financial statements
are included in the consolidation based on translation into US dollars. Accordingly, assets and liabilities were translated from NIS
to US dollars using year-end exchange rates, and income and expense items were translated at average exchange rates during the year.
Gains or losses resulting from translation adjustments are reflected in stockholders’ equity, under “Accumulated Other Comprehensive
Income”. SCHEDULE
OF TRANSLATION ADJUSTMENTS
June 30, June 30,
2022 2021
Official exchange rate of NIS 1 to US dollar 0.286 0.307
Exchange rate change in the period ( 11.1 )% ( 1.4 )% CREATIONS
INC. AND SUBSIDIARIES NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (U.S.
dollars in thousands)
D. Revenue
recognition The
Company accounts for revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”). Under the guidance, the Company
determines revenue recognition through the following five steps:
● Identification
of the contract, or contracts, with a customer;
● Identification
of the performance obligations in the contract;
● Determination
of the transaction price;
● Allocation
of the transaction price to the performance obligations in the contract; and
● Recognition
of revenue when, or as, the Company satisfies a performance obligation. Asset
Management and Investments Fees (Gross) All
of the Company’s revenues is from contracts with customers. Customers are invoiced at the end of the month.
E. Intangible
assets Intangible
assets consist of existing customer relationships from the acquisition of Ocean in August and September 2020 for the cost amount of
$ 364 5.25 18 35 no
F. Goodwill Goodwill
represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill
amount of $ 577 649 Goodwill
is not amortized, but is tested at least annually for impairment, or if circumstances occur that more likely than not reduce the fair
value of the reporting unit below its carrying amount. The
Company has determined that there has been no
G. Earnings (Loss) per Share Basic earnings (loss) per share (“EPS”) is computed
by dividing the net income (loss) applicable to common stockholders by the weighted-average number of shares of common stock outstanding
for the period. For purposes of calculating diluted
earnings per common share, the denominator includes both the weighted-average number of shares of common stock outstanding during the
period and the number of common stock equivalents if the inclusion of such common stock equivalents is dilutive. There were no dilutive
securities for any periods presented. CREATIONS
INC. AND SUBSIDIARIES NOTES
TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (U.S.
dollars in thousands) |
