SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Rehovot 7638205 Israel
(Address of principal executive offices)
+972-73-332-2853
info@meatech3d.com
5 David Fikes St., Rehovot 7638205 Israel
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
American Depositary Shares, each representing ten ordinary shares, no par value per share | MITC | The Nasdaq Stock Market LLC | ||
Ordinary shares, no par value per share | _____ | The Nasdaq Stock Market LLC* | ||
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☒ |
Emerging growth company ☒ |
Indicate by check mark whether the registrant has filed a report on the attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
U.S. GAAP ☐ | International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ | Other ☐ |
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PART I | ||
2 | ||
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24 | ||
38 | ||
38 | ||
45 | ||
58 | ||
60 | ||
60 | ||
61 | ||
68 | ||
68 | ||
PART II | ||
70 | ||
70 | ||
70 | ||
70 | ||
70 | ||
71 | ||
71 | ||
71 | ||
71 | ||
71 | ||
72 | ||
72 | ||
72 | ||
PART III | ||
73 | ||
73 | ||
74 | ||
75 |
• | references to “MeaTech,” the “Company,” “us,” “we” and “our” refer to MeaTech MT Ltd. (formerly MeaTech Ltd.) from its inception until the consummation of the January 2020 merger described herein, and MeaTech 3D Ltd. (the “Registrant”), an Israeli company, thereafter, unless otherwise required by the context; |
• | references to “ordinary shares,” “our shares” and similar expressions refer to the Registrant’s ordinary shares, no nominal (par) value per share; |
• | references to “ADS” refer to the American Depositary Shares listed on the Nasdaq Capital Market (“Nasdaq”) under the symbol “MITC,” each representing ten ordinary shares of the Registrant; |
• | references to “dollars,” “U.S. dollars” and “$” are to United States Dollars; |
• | references to “NIS” are to New Israeli Shekels, the currency of the State of Israel; |
• | references to the “Companies Law” are to Israel’s Companies Law, 5759-1999, as amended; and |
• | references to the “SEC” are to the United States Securities and Exchange Commission. |
• | our estimates regarding our expenses, future revenue, capital requirements and needs for additional financing; |
• | our expectations regarding the success of our cultured meat manufacturing technologies we are developing, which will require significant additional work before we can potentially launch commercial sales; |
• | our research and development activities associated with technologies for cultured meat manufacturing, including three-dimensional meat production, which involves a lengthy and complex process; |
• | our expectations regarding the timing for the potential commercial launch of our cultured meat technologies; |
• | our ability to successfully manage our planned growth, including with respect to our acquisition of Peace of Meat BV, or Peace of Meat, and any future acquisitions, joint ventures, collaborations or similar transactions; |
• | the potential business or economic disruptions caused by the COVID-19 pandemic; |
• | the competitiveness of the market for our cultured meat technologies; |
• | our ability to enforce our intellectual property rights and to operate our business without infringing, misappropriating, or otherwise violating the intellectual property rights and proprietary technology of third parties; |
• | our ability to predict and timely respond to preferences for alternative proteins and cultured meats and new trends; |
• | our ability to attract, hire and retain qualified employees and key personnel; and |
• | other risks and uncertainties, including those listed in “Item 3. —Key Information—Risk Factors.” |
ITEM 1. | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
ITEM 2. | OFFER STATISTICS AND EXPECTED TIMETABLE |
ITEM 3. | KEY INFORMATION |
• | We have experienced net losses in every period since the inception of MeaTech and we expect to continue incurring significant losses for the foreseeable future and may never become profitable; |
• | We have a limited operating history to date and our prospects will be dependent on our ability to meet a number of challenges; |
• | Our business and market potential are unproven, and we have limited insight into trends that may emerge and affect our business; |
• | We are wholly dependent on the success of our cultured meat manufacturing technologies, including our cultured steak technologies, and we have limited data on the performance of our technologies to date; |
• | The research and development associated with technologies for cultured meat manufacturing, including three-dimensional meat production, is a lengthy and complex process; |
• | Business or economic disruptions or global health concerns, including the COVID-19 pandemic, may have an adverse impact on our business and results of operations; |
• | We may not be able to compete successfully in our highly competitive market; |
• | We may suffer reputational harm due to real or perceived quality or health issues with products manufactured by our licensees using our technology; |
• | Consumer preferences for alternative proteins in general, and more specifically cultured meats, are difficult to predict and may change, and, if we are unable to respond quickly to new trends, our business may be adversely affected; |
• | We have no manufacturing experience or resources and we expect we will incur significant costs to develop this expertise or need to rely on third parties for manufacturing; |
• | We expect that a small number of customers will account for a significant portion of our revenues, and the loss of one or more of these customers could adversely affect our financial condition and results of operations; |
• | We expect that products utilizing our technologies will be subject to regulations that could adversely affect our business and results of operations; |
• | Regulatory authorities may impose new regulations on manufacturers of alternative proteins; |
• | Any changes in, or changes in the interpretation of, applicable laws, regulations or policies of the U.S. Department of Agriculture, state regulators or similar foreign regulatory authorities that relate to the use of the word “meat” or other similar words in connection with cultured meat products could adversely affect our business, prospects, results of operations or financial condition; |
• | If we are unable to obtain and maintain effective intellectual property rights for our technologies, we may not be able to compete effectively in our markets; |
• | If there are significant shifts in the political, economic and military conditions in Israel, it could have an adverse impact on our operations; and |
• | If we encounter delays or challenges, such as operational challenges inherent in managing a foreign business, we may not fully realize the anticipated benefits of the acquisition of Peace of Meat. |
• | our progress with current research and development activities; |
• | the number and characteristics of any products or manufacturing processes we develop or acquire; |
• | the expenses associated with our marketing initiatives; |
• | the timing, receipt and amount of milestone, royalty and other payments from future customers and collaborators, if any; |
• | the scope, progress, results and costs of researching and developing future products or improvements to existing products or manufacturing processes; |
• | any lawsuits related to our products or commenced against us; |
• | the expenses needed to attract, hire and retain skilled personnel; |
• | the costs associated with being a public company in the United States; and |
• | the costs involved in preparing, filing, prosecuting, maintaining, defending and enforcing intellectual property claims, including litigation costs and the outcome of such litigation. |
• | the assumption of additional indebtedness or contingent liabilities; |
• | assimilation of operations, intellectual property and products of an acquired company, including difficulties associated with integrating new personnel; |
• | the diversion of our management’s attention from our existing programs and initiatives in pursuing such a strategic merger or acquisition; |
• | retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships; |
• | risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing technologies; and |
• | our inability to generate revenue from acquired technologies or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs. |
• | collaborators may not perform or prioritize their obligations as expected; |
• | collaborators may not pursue development and commercialization of any of our cultured meat manufacturing technologies or may elect not to continue or renew development or commercialization, changes in the collaborators’ focus or available funding, or external factors, such as an acquisition, that divert resources or create competing priorities; |
• | collaborators may provide insufficient funding for the successful development or commercialization of our cultured meat manufacturing technologies; |
• | collaborators could independently develop, or develop with third parties, products or technologies that compete directly or indirectly with our products or cultured meat manufacturing technologies if the collaborators believe that competitive products are more likely to be successfully developed or can be commercialized under terms that are more economically attractive than ours; |
• | cultured meat manufacturing technologies developed in collaborations with us may be viewed by our collaborators as competitive with their own products or technologies, which may cause collaborators to cease to devote resources to the development or commercialization of our products; |
• | a collaborator with marketing and distribution rights to one or more of our products or technologies that achieve regulatory approval may not commit sufficient resources to the marketing and distribution of any such product; |
• | disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the preferred course of development of cultured meat manufacturing technologies, may cause delays or termination of the research, development or commercialization of such technologies, may lead to additional responsibilities for us with respect to such technologies, or may result in litigation or arbitration, any of which would be time-consuming and expensive; |
• | collaborators may not properly maintain, protect, defend or enforce our intellectual property rights or may use our proprietary information in such a way as to invite litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential litigation; |
• | disputes may arise with respect to the ownership of intellectual property developed pursuant to our collaborations; |
• | collaborators may infringe, misappropriate or otherwise violate the intellectual property rights of third parties, which may expose us to litigation and potential liability; |
• | collaborations may be terminated for the convenience of the collaborator and, if terminated, the development of our cultured meat manufacturing technologies may be delayed, and we could be required to raise additional capital to pursue further development or commercialization of the cultured meat manufacturing technologies; |
• | future relationships may require us to incur non-recurring and other charges, increase our near- and long-term expenditures, issue securities that dilute our existing shareholders, or disrupt our management and business; and |
• | we could face significant competition in seeking appropriate collaborators, and the negotiation process is time-consuming and complex. |
• | the judgment is enforceable in the state in which it was given; |
• | the judgment was rendered by a court of competent jurisdiction under the rules of private international law prevailing in Israel; |
• | the laws of the state in which the judgment was given provide for the enforcement of judgments of Israeli courts; |
• | adequate service of process has been effected and the defendant has had a reasonable opportunity to be heard; |
• | the judgment and the enforcement of the judgment are not contrary to the law, public policy, security or sovereignty of the State of Israel; |
• | the judgment was not obtained by fraudulent means and does not conflict with any other valid judgment in the same matter between the same parties; and |
• | an action between the same parties in the same matter is not pending in any Israeli court at the time the lawsuit is instituted in the foreign court. |
• | changes in the prices of our raw materials or the products manufactured in factories using our technologies; |
• | the trading volume of the ADSs; |
• | the effects of the COVID-19 pandemic; |
• | general economic, market and political conditions, including negative effects on consumer confidence and spending levels that could indirectly affect our results of operations; |
• | actual or anticipated fluctuations in our financial condition and operating results, including fluctuations in our quarterly and annual results; |
• | announcements by us or our competitors of innovations, other significant business developments, changes in distributor relationships, acquisitions or expansion plans; |
• | announcement by competitors or new market entrants of their entry into or exit from the alternative protein market; |
• | overall conditions in our industry and the markets in which we intend to operate; |
• | market conditions or trends in the packaged food sales industry that could indirectly affect our results of operations; |
• | addition or loss of significant customers or other developments with respect to significant customers; |
• | adverse developments concerning our manufacturers and suppliers; |
• | changes in laws or regulations applicable to our products or business; |
• | our ability to effectively manage our growth and market expectations with respect to our growth, including relative to our competitors; |
• | changes in the estimation of the future size and growth rate of our markets; |
• | announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; |
• | additions or departures of key personnel; |
• | competition from existing products or new products that may emerge; |
• | issuance of new or updated research or reports about us or our industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts; |
• | variance in our financial performance from the expectations of market analysts; |
• | our failure to meet or exceed the estimates and projections of the investment community or that we may otherwise provide to the public; |
• | fluctuations in the valuation of companies perceived by investors to be comparable to us; |
• | disputes or other developments related to proprietary rights, including patents, and our ability to obtain intellectual property protection for our products; |
• | litigation or regulatory matters; |
• | announcement or expectation of additional financing efforts; |
• | our cash position; |
• | sales and short-selling of the ADSs; |
• | our issuance of equity or debt; |
• | changes in accounting practices; |
• | ineffectiveness of our internal controls; |
• | negative media or marketing campaigns undertaken by our competitors or lobbyists supporting the conventional meat industry; |
• | the public’s response to publicity relating to the health aspects or nutritional value of products to be manufactured in factories using our technologies; and |
• | other events or factors, many of which are beyond our control. |
ITEM 4. | INFORMATION ON THE COMPANY |
• | Environmental: At least 18% of the greenhouse gases entering the atmosphere today are from the livestock industry. Research shows that the expected environmental footprint of cultivated meat includes approximately 78% to 96% fewer greenhouse gas emissions, 99% less land use, 82% to 96% less water use, and 7% to 45% less energy use than conventionally-produced beef, lamb, pork and poultry. This suggests that the environmental consequences of switching from large-scale, factory farming to lab-grown cultivated meat could have a long-term positive impact on the environment. |
• | Cost: While the precise economic value of harvested cells has yet to be determined, the potential to harvest large numbers of cells from a small number of live donor animals gives rise to the possibility of considerably higher returns than traditional agriculture, with production cycles potentially measured in months, rather than years. By comparison, raising a cow for slaughter generally takes an average of 18 months, over which period 15,400 liters of water and 7 kilograms of feed will be consumed for every kilogram of beef produced. |
• | Animal Suffering: More and more people are grappling with the ethical question of whether humanity should continue to slaughter animals for food. There is a growing trend of opposition to the way animals are raised for slaughter, often in small, confined spaces with unnatural feeding patterns. In many cases, such animals suffer terribly throughout their lives. This consideration is likely a factor in many consumers choosing to incorporate more flexitarian, vegetarian and vegan approaches to their diets in recent years. |
• | Controlled Growing Environment: Another potential benefit of cultivated meat is that its growth environment is designed to be less susceptible to biological risk and disease, through standardized, tailored production methods consistent with good manufacturing practices, or GMP, that are controls to contribute to improved nutrition, health and wellbeing. |
• | Alternate Use of Natural Resources: Eight percent of the world’s freshwater supply and one third of croplands are currently used to provide for livestock. The development of cultivated meat is expected to free up many of these natural resources, especially in developing economies where they are most needed. |
• | Food Waste: The conventional meat industry’s largest waste management problem relates to the disposal of partially-used carcasses, which are usually buried, incinerated, rendered or composted, with attendant problems such as land, water or air pollution. Cultivated meat offers a potential solution for this problem, with only the desired cuts of meat being produced for consumption and only minimal waste product generated, with no leftover carcass. |
• | Replacing expensive, animal-derived components in cell growth media with chemical replacements, including through in-house production; |
• | Cell line optimizations, e.g. through high-throughput analyses of evolved isolates; |
• | Bioprocess optimization and media recycling; |
• | Upscaled growth factor production, e.g. through hollow fiber bioreactors; and |
• | Long-term market optimization as a result of expected increased demand. |
Name | Jurisdiction of Incorporation | Parent | % Ownership | |||||||
MeaTech U.S., Inc. | Delaware, U.S. | MeaTech 3D Ltd. | 100 | % | ||||||
MeaTech MT Ltd. | Israel | MeaTech 3D Ltd. | 100 | % | ||||||
MeaTech Europe BV | Belgium | MeaTech 3D Ltd. | 100 | % | ||||||
Peace of Meat BV | Belgium | MeaTech Europe BV | 100 | % |
ITEM 4A. | UNRESOLVED STAFF COMMENTS |
ITEM 5. | OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
• | employee-related expenses, such as salaries and share-based compensation; |
• | expenses relating to outsourced and contracted services, such as external laboratories and consulting, research and advisory services; |
• | supply and development costs; |
• | expenses, such as materials, incurred in operating our laboratories and equipment; and |
• | costs associated with regulatory compliance. |
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
Operating expenses: | ||||||||
Research and development expenses | $ | 7,594 | $ | 2,491 | ||||
Marketing expenses | 1,628 | 506 | ||||||
General and administrative expenses | 8,010 | 5,380 | ||||||
Public listing expenses | - | 10,164 | ||||||
Loss from operations | $ | 17,232 | $ | 18,541 | ||||
Finance income | 509 | 110 | ||||||
Finance expense | 1,299 | 93 | ||||||
Finance expense (income), net | 790 | (17 | ) | |||||
Net loss | $ | 18,022 | $ | 18,524 |
The increase reflects MeaTech’s growing investment in research and development as it achieves its milestones and expands its cultured meat technology capabilities.
• | to the extent that we no longer qualify as a foreign private issuer, (i) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (ii) exemptions from the requirement to hold a non-binding advisory vote on executive compensation, including golden parachute compensation; |
• | an exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002; and |
• | an exemption from compliance with the Critical Audit Matters requirement that the Public Company Accounting Oversight Board has adopted regarding a supplement to the auditor’s report providing additional information about the audit and the financial statements. |
Year Ended December 31, | ||||||||
2021 | 2020 | |||||||
Net cash used in operating activities | $ | (13,960 | ) | $ | (3,832 | ) | ||
Net cash used in investing activities | (9,340 | ) | (1,875 | ) | ||||
Net cash provided by financing activities | 29,023 | 17,345 | ||||||
Net increase in cash and cash equivalents | $ | 5,723 | $ | 11,638 |
• | the progress and costs of our research and development activities; |
• | the costs of development and expansion of our operational infrastructure; |
• | the costs and timing of developing technologies sufficient to allow food production equipment manufacturers and food manufacturers to product products compliant with applicable regulations; |
• | our ability, or that of our collaborators, to achieve development milestones and other events or developments under potential future licensing agreements; |
• | the amount of revenues and contributions we receive under future licensing, collaboration, development and commercialization arrangements with respect to our technologies; |
• | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; |
• | the costs of contracting with third parties to provide sales and marketing capabilities for us or establishing such capabilities ourselves, once our technologies are developed and ready for commercialization; |
• | the costs of acquiring or undertaking development and commercialization efforts for any future products or technology; |
• | the magnitude of our general and administrative expenses; and |
• | any additional costs that we may incur under future in- and out-licensing arrangements relating to our technologies and futures products. |
Name | Age | Position | ||
Executive Officers: | ||||
Arik Kaufman | 41 | Chief Executive Officer | ||
Omri Schanin | 32 | Deputy Chief Executive Officer | ||
Guy Hefer | 40 | Chief Financial Officer | ||
Dan Kozlovski | 37 | Chief Technologies Officer | ||
Non-Employee Directors: | ||||
Yaron Kaiser | 44 | Chairman of the Board of Directors | ||
David Gerbi(1)(2)(3) | 42 | Director | ||
Eli Arad(1)(2)(3) | 49 | Director | ||
Sari Singer(1)(2)(3) | 42 | Director |
(1) | Member of the Audit Committee |
(2) | Member of the Compensation Committee |
(3) | Independent director as defined under Nasdaq Marketplace Rule 5605(a)(2) and SEC Rule 10A-3(b)(1). |
Name and Principal Position | Salary(1) | Bonus(2) | Equity-Based Compensation(3) | Other Compensation(4) | Total | |||||||||||||||
(USD in thousands) | ||||||||||||||||||||
Mr. Steven H. Lavin | ||||||||||||||||||||
Chairman of the Board of Directors(5) | $ | 180 | $ | - | $ | 281 | - | $ | 461 | |||||||||||
Mr. Sharon Fima | ||||||||||||||||||||
Chief Executive Officer & Chief Technology Officer(6) | 240 | - | 83 | - | 323 | |||||||||||||||
Mr. Omri Schanin | ||||||||||||||||||||
Deputy Chief Executive Officer | 190 | 46 | 121 | - | 357 | |||||||||||||||
Mr. Guy Hefer | ||||||||||||||||||||
Chief Financial Officer | 193 | 39 | 116 | - | 348 | |||||||||||||||
Mr. Dan Kozlovski | ||||||||||||||||||||
Vice-President, Research & Development (later Chief Technologies Officer) | $ | 170 | $ | 48 | $ | 24 | - | $ | 242 |
(1) | Salary includes the officer’s gross salary plus payment by us of social benefits on behalf of the officer. Such benefits may include payments, contributions and/or allocations for savings funds (e.g., Managers’ Life Insurance Policy), pension, severance, risk insurance (e.g., life, or work disability insurance), payments for social security and tax gross-up payments, vacation, medical insurance and benefits, convalescence or recreation pay and other benefits and perquisites consistent with our policies. |
(2) | Represents annual bonuses paid with respect to 2021. |
(3) | Represents the equity-based compensation expenses recorded in our consolidated financial statements for the year ended December 31, 2021, based on the options’ fair value on the grant date, calculated in accordance with applicable accounting guidance for equity-based compensation. For a discussion of the assumptions used in reaching this valuation, see Note 10(B) to our annual consolidated financial statements included in this Annual Report on Form 20-F. |
(4) | Represents benefits and perquisites such as car, phone and social benefits. |
(5) | Mr. Levin resigned his position as Chairman on January 24, 2022. |
(6) | Mr. Fima resigned as Chief Executive Officer & Chief Technology Officer on January 24, 2022. |
• | the office holder’s relatives (spouse, siblings, parents, grandparents, descendants, spouse’s descendants and the spouses of any of these people); or |
• | any company in which the office holder or his or her relatives holds 5% or more of the shares or voting rights, serves as a director or general manager or has the right to appoint at least one director or the general manager. |
• | a transaction other than in the ordinary course of business; |
• | a transaction that is not on market terms; or |
• | a transaction that may have a material impact on the company’s profitability, assets or liabilities. |
• | a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or |
• | the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than 2% of the voting rights in the company. |
• | an amendment to the articles of association; |
• | an increase in the company’s authorized share capital; |
• | a merger; and |
• | the approval of related party transactions and acts of office holders that require shareholder approval. |
• | financial liability that was imposed upon him in favor of another person pursuant to a judgment, including a compromise judgment or an arbitrator’s award approved by a court; |
• | reasonable litigation expenses, including attorneys’ fees paid by an officeholder following an investigation or proceeding conducted against him by an authority authorized to conduct such investigation or proceeding, and which ended without the filing of an indictment against him and without any financial obligation being imposed on him as an alternative to a criminal proceeding, or which ended without the filing of an indictment against him but with the imposition of a financial obligation as an alternative to a criminal proceeding for an offense which does not require proof of mens rea or in connection with a financial sanction; |
• | reasonable litigation expenses, including attorneys’ fees paid by the officeholder or which he was required to pay by a court, in a proceeding filed against him by the Company or on its behalf or by another person, or in criminal charges from which he was acquitted, or in criminal charges in which he was convicted of an offense which does not require proof of mens rea; |
• | a financial obligation imposed on the officeholder for the benefit of all of the parties damaged by the violation of an administrative proceeding; |
• | expenses incurred by an officeholder in connection with an Administrative Proceeding conducted in his regard, including reasonable litigation expenses, and including attorneys’ fees; |
• | expenses incurred by an officeholder in connection with a proceeding under the Antitrust Law, 5748-1988 and/or in connection with it (a “Proceeding Under the Antitrust Law”), conducted regarding him, including reasonable litigation expenses, and attorneys' fees; and |
• | any other liability or expense in respect of which it is permitted or shall be permitted by Law to indemnify an officeholder. |
• | Breach of the duty of care to the Company or to any other person; |
• | Breach of the fiduciary duty to the Company, provided that the officeholder acted in good faith and had reasonable grounds to assume that his act would not adversely affect the Company’s best interests; |
• | financial liability imposed upon him in favor of another person; |
• | financial liability imposed on the officeholder for the benefit of all of the parties damaged by the violation of an administrative proceeding; |
• | expenses incurred or to be incurred by an officer in connection with an Administrative Proceeding, including reasonable litigation expenses, and including attorneys’ fees; |
• | Expenses incurred or to be incurred in connection with a proceeding under the Antitrust Law, including reasonable litigation expenses, and including attorneys’ fees; and |
• | any other event in respect of which it is permitted and/or shall be permitted by Law to insure the liability of an officeholder. |
• | a breach of the duty of loyalty, except for indemnification and insurance for a breach of the duty of loyalty to the company to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach of duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; |
• | an act or omission committed with intent to derive illegal personal benefit; or |
• | a fine, monetary sanction or forfeit levied against the office holder. |
Shares Beneficially Owned | ||||||||
Name of Beneficial Owner | Number | Percentage | ||||||
Directors and executive officers | ||||||||
Arik Kaufman(1) | 129,170 | * | ||||||
Omri Schanin(2) | 3,626,900 | 2.9 | % | |||||
Guy Hefer(3) | 104,170 | * | ||||||
Dan Kozlovski(4) | 83,342 | * | ||||||
Yaron Kaiser(5) | 1,454,230 | 1.2 | % | |||||
David Gerbi(6) | 12,500 | * | ||||||
Eli Arad(7) | 12,500 | * | ||||||
Sari Singer | — | — | ||||||
All directors and executive officers as a group (8 persons) | 5,422,812 | 4.3 | % |
(1) | Consists of 87,510 ordinary shares and options to purchase 41,660 ordinary shares exercisable within 60 days of the date of this annual report, with an exercise price of $0.519. These options expire on March 16, 2026. |
(2) | Consists of 3,522,730 ordinary shares and options to purchase 104,170 ordinary shares exercisable within 60 days of the date of this annual report, with an exercise price of NIS 3.49 ($1.07). These options expire on March 24, 2025. |
(3) | Consists of options to purchase 104,170 ordinary shares exercisable within 60 days of the date of this annual report, with an exercise price of NIS 3.49 ($1.07). These options expire on March 24, 2025. |
(4) | Consists of options to purchase 83,342 ordinary shares exercisable within 60 days of the date of this annual report, with an exercise price of NIS 1.90 ($0.58). These options expire on August 5, 2024. |
(5) | Consists of 1,425,070 ordinary shares and options to purchase 29,160 ordinary shares exercisable within 60 days of the date of this annual report, with an exercise price of $0.519. These options expire on March 16, 2026. |
(6) | Consists of 10,000 ordinary shares and RSUs vesting into 2,500 ordinary shares within 60 days of the date of this annual report. |
(7) | Consists of 10,000 ordinary shares and RSUs vesting into 2,500 ordinary shares within 60 days of the date of this annual report. |
Ordinary Shares Beneficially Owned | ||||||||
Name of Beneficial Owner | Number | Percentage | ||||||
5% or greater shareholders | ||||||||
Shimon Cohen | 9,859,120 | (1) | 7.8 | % |
ITEM 8. | FINANCIAL INFORMATION |
The Company’s Board of Directors appointed Mr. Arik Kaufman to the position of Chief Executive Officer and Mr. Yaron Kaiser to the position of Chairman of the Board of Directors.
ITEM 9. | THE OFFER AND LISTING |
ITEM 10. | ADDITIONAL INFORMATION |
• | an individual who is a citizen or resident of the United States, |
• | a domestic corporation (or other entity taxable as a corporation); |
• | an estate the income of which is subject to United States federal income taxation regardless of its source; or |
• | a trust if (1) a court within the United States is able to exercise primary supervision over the trust’s administration and one or more United States persons have the authority to control all substantial decisions of the trust or (2) a valid election under the Treasury regulations is in effect for the trust to be treated as a United States person. |
• | such gain is effectively connected with your conduct of a trade or business in the United States (or, if required by an applicable income tax treaty, the gain is attributable to a permanent establishment or fixed base that such holder maintains in the United States); or |
• | you are an individual and have been present in the United States for 183 days or more in the taxable year of such sale or exchange and certain other conditions are met. |
ITEM 11. | QUANTITATIVE AND QUALITATIVE DISCLOSURE ON MARKET RISK |
ITEM 12. | DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
Persons depositing or withdrawing ordinary shares or ADS holders must pay | For: | |
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs) | Issuance of ADSs, including issuances resulting from a distribution of ordinary shares or rights or other property Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates | |
$.05 (or less) per ADS | Any cash distribution to ADS holders | |
A fee equivalent to the fee that would be payable if securities distributed to you had been ordinary shares and the ordinary shares had been deposited for issuance of ADSs | Distribution of securities distributed to holders of deposited securities (including rights) that are distributed by the depositary to ADS holders | |
$.05 (or less) per ADS per calendar year | Depositary services | |
Registration or transfer fees | Transfer and registration of ordinary shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw ordinary shares | |
Expenses of the depositary | Cable, telex and facsimile transmissions (when expressly provided in the deposit agreement) Converting foreign currency to U.S. dollars | |
Taxes and other governmental charges the depositary or the custodian have to pay on any ADSs or ordinary shares underlying ADSs, such as stock transfer taxes, stamp duty or withholding taxes | As necessary | |
Any charges incurred by the depositary or its agents for servicing the deposited securities | As necessary |
ITEM 13. | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES |
ITEM 14. | MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |
ITEM 15. | CONTROLS AND PROCEDURES |
ITEM 16. | [RESERVED] |
ITEM 16A. | AUDIT COMMITTEE FINANCIAL EXPERT |
ITEM 16B. | CODE OF ETHICS |
ITEM 16C. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Year ended December 31, | ||||||||
2021 | 2020 | |||||||
USD, in thousands | ||||||||
Audit fees(1) | 176 | 145 | ||||||
Tax fees(2) | 3 | 10 | ||||||
Total | 179 | 155 |
(1) | Audit fees consist of fees billed or expected to be billed for the annual audit services engagement and other audit services, which are those services that only the external auditor can reasonably provide, and include the Company audit; statutory audits; comfort letters and consents; attest services; and assistance with and review of documents filed with the TASE and SEC. |
(2) | Tax fees include fees billed for tax compliance services that were rendered during the most recent fiscal year, including the preparation of original and amended tax returns and claims for refund; tax consultations, such as assistance and representation in connection with tax audits and appeals, tax advice related to mergers and acquisitions, transfer pricing, and requests for rulings or technical advice from taxing authority; tax planning services; and expatriate tax planning and services. |
• | Quorum. As permitted under the Companies Law, pursuant to our articles of association, the quorum required for an ordinary meeting of shareholders consists of at least two shareholders present in person or by proxy who hold or represent between them at least 25% of the voting power of our shares (and, with respect to an adjourned meeting, generally one or more shareholders who hold or represent any number of shares), instead of 33 1/3% of the issued share capital provided under Nasdaq Listing Rule 5260(c). |
• | Shareholder Approval. Although the Nasdaq Listing Rules generally require shareholder approval of equity compensation plans and material amendments thereto, we follow Israeli practice, which is to have such plans and amendments approved only by the board of directors, unless such arrangements are for the compensation of chief executive officer or directors, in which case they also require the approval of the compensation committee and the shareholders. In addition, rather than follow the Nasdaq Listing Rules requiring shareholder approval for the issuance of securities in certain circumstances, we follow Israeli law, under which a private placement of securities requires approval by our board of directors and shareholders if it will cause a person to become a controlling shareholder (generally presumed at 25% ownership) or if: (a) the securities issued amount to 20% or more of our outstanding voting rights before the issuance; (b) some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and (c) transaction will increase the relative holdings of a shareholder that holds 5% or more of our outstanding share capital or voting rights or will cause any person to become, as a result of the issuance, a holder of more than 5% of our outstanding share capital or voting rights. |
• | Executive Sessions. While the Nasdaq Listing Rules require that “independent directors,” as defined in the Nasdaq Listing Rules, must have regularly scheduled meetings at which only “independent directors” are present. Israeli law does not require, nor do our independent directors necessarily conduct, regularly scheduled meetings at which only they are present. |
Financial Information of MeaTech 3D Ltd. | Page |
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 1057) | F-2 |
Consolidated Financial Statements: | |
F-3 | |
F-4 | |
F-5 | |
F-6 | |
F-7 |
To the Shareholders and Board of Directors
MeaTech 3D Ltd.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of MeaTech 3D Ltd. (“the Company”) as of December 31, 2021 and 2020, the related consolidated statements of income and comprehensive loss, changes in equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with International Financial Reporting Standards, as issued by the International Accounting Standards Board.
Going Concern
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1c to the consolidated financial statements, the Company has incurred recurring losses from operations that, together with other matters described in the aforesaid note, raise substantial doubt about its ability to continue as a going concern Management’s plans in regard to these matters are also described in Note 1c. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Somekh Chaikin
Somekh Chaikin
Member Firm of KPMG International
We have served as the Company’s auditor since 2020.
Tel Aviv, Israel
March 24, 2022
F - 2
December 31 | December 31 | ||||||||||
2021 | 2020 | ||||||||||
USD thousands | USD thousands | ||||||||||
Current assets | |||||||||||
Cash and cash equivalents | 4 | 19,176 | 13,556 | ||||||||
Other investment | 6 | 154 | 149 | ||||||||
Receivables and prepaid expenses | 5 | 2,782 | 131 | ||||||||
Total current assets | 22,112 | 13,836 | |||||||||
Non-current assets | |||||||||||
Restricted deposits | 405 | 51 | |||||||||
Other investment | 6 | 1,355 | 2,513 | ||||||||
Right-of-use asset | 19 | 407 | 168 | ||||||||
Intangible assets | 16 | 13,453 | 0 | ||||||||
Fixed assets, net | 7 | 2,922 | 906 | ||||||||
Total non-current assets | 18,542 | 3,638 | |||||||||
Total Assets | 40,654 | 17,474 | |||||||||
Current liabilities | |||||||||||
Trade payables | 382 | 351 | |||||||||
Other payables | 8 | 2,239 | 996 | ||||||||
Current maturities of lease liabilities | 19 | 165 | 180 | ||||||||
Derivative instrument | 0 | 316 | |||||||||
Total current liabilities | 2,786 | 1,843 | |||||||||
Non-current liabilities | |||||||||||
Long-term lease liabilities | 19 | 246 | 0 | ||||||||
Total non-current liabilities | 246 | 0 | |||||||||
Equity | |||||||||||
Share capital and premium on shares | 69,610 | 30,481 | |||||||||
Capital reserves | 3,708 | 3,319 | |||||||||
Currency translation differences reserve | 1,275 | 780 | |||||||||
Accumulated deficit | (36,971 | ) | (18,949 | ) | |||||||
Total Equity | 37,622 | 15,631 | |||||||||
Total liabilities and Equity | 40,654 | 17,474 |
F - 3
MeaTech 3D Ltd.
Year ended December 31, | Year ended December 31, | Year ended December 31, | |||||||||||||
2021 | 2020 | 2019 | |||||||||||||
USD thousands, except share data | USD thousands, except share data | USD thousands, except share data | |||||||||||||
Research and development expenses | 11 | 7,594 | 2,491 | 166 | |||||||||||
Marketing expenses | 12 | 1,628 | 506 | 0 | |||||||||||
General and administrative expenses | 13 | 8,010 | 5,380 | 256 | |||||||||||
Public listing expenses | 0 | 10,164 | 0 | ||||||||||||
Operating loss | 17,232 | 18,541 | 422 | ||||||||||||
Financing income | 14 | 509 | 110 | 0 | |||||||||||
Financing expenses | 14 | 1,299 | 93 | 1 | |||||||||||
Loss for the year | 18,022 | 18,524 | 423 | ||||||||||||
Capital reserve for financial assets at fair value that will not be transferred to profit or loss | 0 | 334 | 0 | ||||||||||||
Currency translation differences loss (income) that will not be transferred to profit or loss over ILS | (1,942 | ) | (758 | ) | (22 | ) | |||||||||
Currency translation differences loss (income) that might be transferred to profit or loss over EUR | 1,447 | 0 | 0 | ||||||||||||
Total comprehensive loss for the year | 17,527 | 18,100 | 401 | ||||||||||||
Loss per ordinary share, no par value (USD) | |||||||||||||||
Basic and diluted loss per share (USD) | 0.155 | 0.308 | 0.022 | ||||||||||||
Weighted-average number of shares outstanding - basic and diluted (shares) | 115,954,501 | 60,112,197 | 19,484,478 |
F - 4
Share capital and capital premium | Fair value of financial assets reserve | Transactions with related parties reserve | Currency translation differences reserve | Share-based payments reserve | Accumulated deficit | Total | ||||||||||||||||||||||
USD thousands | ||||||||||||||||||||||||||||
Balance as at January 1, 2021 | 30,481 | (334 | ) | 14 | 780 | 3,639 | (18,949 | ) | 15,631 | |||||||||||||||||||
Share-based payments | 0 | 0 | 0 | 0 | 3,965 | 0 | 3,965 | |||||||||||||||||||||
Issuance of shares and warrants, net | 32,330 | 0 | 0 | 0 | 0 | 0 | 32,330 | |||||||||||||||||||||
Exercise of options | 6,799 | 0 | 0 | 0 | (3,576 | ) | 0 | 3,223 | ||||||||||||||||||||
Other comprehensive income | 0 | 0 | 0 | 495 | 0 | 0 | 495 | |||||||||||||||||||||
Loss for the year | 0 | 0 | 0 | 0 | 0 | (18,022 | ) | (18,022 | ) | |||||||||||||||||||
Balance as at December 31, 2021 | 69,610 | (334 | ) | 14 | 1,275 | 4,028 | (36,971 | ) | 37,622 | |||||||||||||||||||
Balance as at January 1, 2020 | 1,880 | 0 | 14 | 22 | 0 | (425 | ) | 1,491 | ||||||||||||||||||||
Share-Based Payment | 0 | 0 | 0 | 0 | 3,958 | 0 | 3,958 | |||||||||||||||||||||
Reverse acquisition | 11,439 | 0 | 0 | 0 | 0 | 0 | 11,439 | |||||||||||||||||||||
Issuance of shares and warrants, net | 14,067 | 0 | 0 | 0 | 0 | 0 | 14,067 | |||||||||||||||||||||
Exercise of options – Investors | 2,753 | 0 | 0 | 0 | 0 | 0 | 2,753 | |||||||||||||||||||||
Exercise of options – Share-Based Payment | 342 | 0 | 0 | 0 | (319 | ) | 0 | 23 | ||||||||||||||||||||
Other comprehensive income (loss) | 0 | (334 | ) | 0 | 758 | 0 | 0 | 424 | ||||||||||||||||||||
Loss for the year | 0 | 0 | 0 | 0 | 0 | (18,524 | ) | (18,524 | ) | |||||||||||||||||||
Balance as at December 31, 2020 | 30,481 | (334 | ) | 14 | 780 | 3,639 | (18,949 | ) | 15,631 | |||||||||||||||||||
Balance as at January 1, 2019 | 0 | 0 | 0 | 0 | 0 | (2 | ) | (2 | ) | |||||||||||||||||||
Issuance of shares and warrants, net | 1,880 | 0 | 0 | 0 | 0 | 0 | 1,880 | |||||||||||||||||||||
Other comprehensive income | 0 | 0 | 0 | 22 | 0 | 0 | 22 | |||||||||||||||||||||
Transaction with a related party | 0 | 0 | 14 | 0 | 0 | 0 | 14 | |||||||||||||||||||||
Loss for the year | 0 | 0 | 0 | 0 | 0 | (423 | ) | (423 | ) | |||||||||||||||||||
Balance as at December 31, 2019 | 1,880 | 0 | 14 | 22 | 0 | (425 | ) | 1,491 |
F - 5
Year ended December 31, 2021 | Year ended December 31, 2020 | Year ended December 31, 2019 | |||||||||||
USD thousands | USD thousands | USD thousands | |||||||||||
Cash flows - operating activities | |||||||||||||
Net Loss for the period | (18,022 | ) | (18,524 | ) | (423 | ) | |||||||
Adjustments: | |||||||||||||
Depreciation and amortization | 680 | 213 | 21 | ||||||||||
Change in fair value of derivative | (316 | ) | (36 | ) | 14 | ||||||||
Change in fair value of other investment | 6 | (193 | ) | (74 | ) | 0 | |||||||
Changes in net foreign exchange expenses | 1,279 | 0 | 0 | ||||||||||
Share-based payment expenses | 3,965 | 3,958 | 0 | ||||||||||
Public listing expenses | 0 | 10,164 | 0 | ||||||||||
Changes in asset and liability items: | |||||||||||||
Decrease (increase) in receivables | (2,351 | ) | 5 | (36 | ) | ||||||||
Increase (decrease) in trade payables | (97 | ) | 126 | 66 | |||||||||
Increase in other payables | 1,095 | 336 | 185 | ||||||||||
Net cash used in operating activities | (13,960 | ) | (3,832 | ) | (173 | ) | |||||||
Cash flows - investment activities | |||||||||||||
Acquisition of fixed assets | (1,828 | ) | (681 | ) | (126 | ) | |||||||
Increase in restricted deposit | (337 | ) | (6 | ) | (41 | ) | |||||||
Loan provided | (367 | ) | 0 | (86 | ) | ||||||||
Acquisition of other investments, net of cash acquired | 16 | (6,808 | ) | (1,188 | ) | 0 | |||||||
| |||||||||||||
Net cash used in investing activities | (9,340 | ) | (1,875 | ) | (253 | ) | |||||||
Cash flows - financing activities | |||||||||||||
Proceeds from issuance of shares and warrants | 29,281 | 14,887 | 1,670 | ||||||||||
Issuance costs | (3,283 | ) | (819 | ) | (8 | ) | |||||||
Repayment of liability for lease | (346 | ) | (140 | ) | (14 | ) | |||||||
Proceeds on account of other investment | 149 | 71 | 0 | ||||||||||
Proceeds on account of capital issuance | 0 | 222 | 0 | ||||||||||
Proceeds with regard to derivative | 0 | 348 | 0 | ||||||||||
Proceeds from exercise of share options | 3,222 | 2,776 | 0 | ||||||||||
Net cash from financing activities | 29,023 | 17,345 | 1,648 | ||||||||||
Increase in cash and cash equivalents | 5,723 | 11,638 | 1,222 | ||||||||||
Effect of exchange differences on cash and cash equivalents | (103 | ) | 644 | 21 | |||||||||
Cash and cash equivalents at the beginning of the period | 13,556 | 1,274 | 31 | ||||||||||
Cash balance and cash equivalents at end of period | 19,176 | 13,556 | 1,274 | ||||||||||
Non cash activities | |||||||||||||
Purchase of fixed assets | 57 | 143 | 1 | ||||||||||
Issue of shares and options against intangible asset | 6,332 | 0 | 222 |
A. | Reporting entity |
MeaTech 3D Ltd. (formerly Ophectra Real Estate and Investments Ltd. and Meat-Tech 3D Ltd.) (the “Company”) was incorporated in Israel on July 22, 1992 as a private company limited by shares in accordance with the Companies Ordinance, 1983, and later a publicly-traded company whose ordinary shares were listed for trade on the Tel Aviv Stock Exchange (TASE). The Company’s official address is 5 David Fikes St., Rehovot, Israel.
The Company’s foodtech activities were commenced in July 2019 by a company called MeaTech Ltd., which merged with the Company in January 2020 and became a fully-owned subsidiary, now called MeaTech MT Ltd. As the Company was the surviving entity of the merger, and continued the pre-merger business operations, utilizing the pre-merger management and employees, of MeaTech Ltd., the transaction was treated as a reverse acquisition that does not constitute a business combination.
The Company is developing a suite of advanced high-throughput manufacturing technologies to produce cell-based alternative protein products for cultivated, sustainable meat production, and focused on developing premium, center-of-plate meat products, including development of high-throughput bioprinting systems.
B. | Material events in the reporting period |
(1) | Acquisition of subsidiary |
In February 2021, the Company acquired Belgian cultured fat developer Peace of Meat BV. For further details, see Note 16 below.
(2) | Initial public offering |
On March 12, 2021, the Company completed its Initial Public Offering on the Nasdaq of 2,721,271 ADSs, each representing ten ordinary shares of the Company (in total, 27,212,710 ordinary shares), at an offering price of USD10.30 per ADS, resulting in gross proceeds of USD28 million and net proceeds of USD24.7 million. The ADSs trade on the Nasdaq Capital Market under the symbol “MITC.” On August 5, 2021, the Company completed the voluntary de-listing of its ordinary shares from the TASE. A number of ordinary shares remain traded over the counter (OTC:MTTCF). Additionally, the vesting of 1,374,998 investor share rights was triggered by the IPO, and these shares were issued in return for USD 1.25 million following the IPO.
(3) | Effects of the spread of COVID-19 |
To date, the impact of the COVID-19 pandemic on the Company’s operations has been mainly limited to a temporary facility closure in the context of a government-mandated general lockdown, which temporary delayed certain development activities. The Company estimates that as of the date of approval of the financial statements, the COVID-19 pandemic is not expected to affect the Company's operations. However, the Company is unable to assess with certainty the extent of future impact, in part due to the uncertainty regarding the duration of the COVID-19 pandemic, its force and its effects on the markets in which the Company operates and the effects of possible government measures to prevent the spread of the virus. |
F - 7
Note 1 – General (cont.)
C. | Going Concern |
Since inception, the Company has incurred significant losses and negative cash flows from operations and has an accumulated deficit of USD 37.0 million. The Company has financed its operations mainly through fundraising from various investors.
The Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for the foreseeable future. Based on the projected cash flows and cash balances as of December 31, 2021, management is of the opinion that its existing cash will be sufficient to fund operations until Q4 2022. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans include the continue securing sufficient financing through the sale of additional equity securities or capital inflows from strategic partnerships. Additional funds may not be available when the Company needs them on terms that are acceptable to it, or at all. If the Company is unsuccessful securing sufficient financing, it may need to cease operations.
The financial statements include no adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern.
D. | Definitions: |
(1) The Company - MeaTech 3D Ltd.
(2) The Group – The Company and its subsidiaries, MeaTech MT Ltd., formerly known as MeaTech Ltd, Meatech Europe BV and Peace of Meat B.V. (hereafter “Peace Of Meat” OR “POM”)
(3) Related Party - as defined in IAS 24 (revised).
(4) USD - United States Dollar
(5) NIS – New Israeli Shekel
(6) EUR – Euro
(7) ADS – American Depositary Shares
F - 8
A. | Statement of compliance with IFRS |
The financial statements were authorized for issue by the company’s board of directors on March 24, 2022.
B. | Functional currency and presentation currency |
Currency | USD - ILS | USD - EUR | |||||||||||||
Period | 2021 | 2020 | 2019 | 2021 | |||||||||||
December 31 | 3.110 | 3.215 | 3.446 | 0.883 | |||||||||||
Year Average | 3.230 | 3.479 | 3.442 | 0.845 |
C. | Basis of Measurement |
D. | Operating Cycle |
E. | Use of Estimates and Judgments |
F - 9
E. | Use of Estimates and Judgments (cont.) |
The preparation of accounting estimates used in the preparation of the Company’s financial statements requires that the Company’s management makes assumptions regarding circumstances and events that involve considerable uncertainty. The Company’s management prepares the estimates on the basis of past experience, various facts, external circumstances, and reasonable assumptions according to the pertinent circumstances of each estimate. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Further information about the assumptions that were used to determine fair value is included in the following notes:
• Note 6, on other investments;
• Note 10, on share-based payments;
• Note 16, on intangible assets;
Determination of fair value
F - 10
A. | Financial Instruments: |
(1) | Non-derivative financial assets |
- | It is held within a business model whose objective is to hold assets so as to collect contractual cash flows; and |
- | The contractual terms of the financial asset give rise to cash flows representing solely payments of principal and interest on the principal amount outstanding on specified dates. |
(2) | Non-derivative financial liabilities |
F - 11
(3) | Share capital |
(4) | Issuance of securities |
B. | Impairment |
Non-derivative financial assets
See note 6.
C. | Financing income and expenses |
F - 12
Note 3 – Significant Accounting Policies (cont.)
D. | Loss per share |
E. | Intangible Assets |
Subsequent expenditure
Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.
Other intangible assets
Other intangible assets, that are acquired by the Company, are measured at cost less accumulated amortization and accumulated impairment losses. See Note 16.
F. | Provisions |
G. | Fixed assets |
(1) | Recognition and measurement |
(2) | Depreciation |
F - 13
Note 3 – Significant Accounting Policies (cont.)
G. | Fixed assets (cont.) |
An asset is depreciated from the date it is ready for use, namely, the date on which it reaches the location and condition required for it to operate in the manner intended by Management.
● | Computers | 3 years | |
● | Leasehold improvements | 2 years | |
● | Laboratory equipment | 5-7 years | |
● | Machinery and Equipment | 6-10 years | |
● | Office furniture, equipment and accessories | 14 years |
H. | Leases |
(a) | The right to obtain substantially all the economic benefits from use of the identified asset; and |
(b) | The right to direct the identified asset’s use. |
F - 14
Note 3 – Significant Accounting Policies (cont.)
H. | Leases (cont.) |
I. | Employee benefits |
(1) | Post-employment benefits |
(2) | Short-term benefits |
J. | Share-based compensation |
F - 15
Note 3 – Significant Accounting Policies (cont.)
K. | Basis of Consolidation |
Acquisition of a subsidiary
Upon the acquisition of a subsidiary, the Company exercises discretion when examining whether the transaction constitutes the acquisition of a business or acquisition of an asset, for the purpose of determining the accounting treatment of the transaction. Transactions in which the acquired company is not considered a business are accounted for as the acquisition of a group of assets and liabilities. In such transactions, the cost of acquisition, which includes transaction costs, is allocated proportionately to the acquired identifiable assets and liabilities, based on their proportionate fair value on the acquisition date. Furthermore, no goodwill is recognized and no deferred taxes are recognized in respect of the temporary differences existing on the acquisition date.
Consideration paid partly in the form of equity instruments, based on the quoted share price. Any additional consideration will be capitalized upon the achievement of defined milestones, which constitutes the variable consideration.
When the variable consideration depends on performance conditions, the Company has elected not to recognize the contingent consideration at the time of purchase, but rather if and when the contingent conditions occur and when the consideration is transferred or obliged to be transferred.
IFRS 3 includes a distinction between a transaction to acquire an operation is the acquisition of a "business" and the acquisition of a group of assets that according to the standard is not considered the acquisition of a "business". The aforementioned standard offers the optional concentration test so that if substantially all of the fair value of the acquired assets is attributable to a group of similar identifiable assets or to a single identifiable asset, this will not be the acquisition of a business
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements.
L. | Transactions with controlling shareholder |
Assets and liabilities included in a transaction with a controlling shareholder are measured at fair value on the date of the transaction. As the transaction is on the equity level, the Company includes the difference between the fair value and the consideration from the transaction in its equity.
M. | Government grants |
Government grants are recognized initially at fair value when there is reasonable assurance that they will be received and the Group will comply with the conditions associated with the grant. Unconditional government grants are recognized when the Group is entitled to receive them. Grants that compensate the Group for expenses incurred are presented as a deduction from the corresponding expense. Grants that compensate the Group for the cost of an asset are presented as a deduction from the related assets and are recognized in profit or loss on a systematic basis over the useful life of the asset.
F - 16
December 31 | December 31 | |||||||
2021 | 2020 | |||||||
USD thousands | USD thousands | |||||||
Cash in USD | 15,596 | 1,021 | ||||||
Cash in NIS | 1,688 | 7,627 | ||||||
Cash in Euro | 1,892 | 4,908 | ||||||
Total cash and cash equivalents | 19,176 | 13,556 |
December 31 | December 31 | |||||||
2021 | 2020 | |||||||
USD thousands | USD thousands | |||||||
Institutions | 301 | 102 | ||||||
Prepaid expenses | 743 | 20 | ||||||
Other | 1,738 | 9 | ||||||
2,782 | 131 |
December 31 | December 31 | |||||||
2021 | 2020 | |||||||
USD thousands | USD thousands | |||||||
Separation Agreement from Therapin (A) (1) | 1,509 | 1,414 | ||||||
Investment in Peace of Meat (B) | 0 | 1,248 | ||||||
Total Other Investments | 1,509 | 2,662 |
Developments in Other Investment | USD thousands | |||
| ||||
As at January 1, 2021 | 2,662 | |||
Initial investment in POM transferred to intangible asset | (1,223 | ) | ||
Proceeds from Therapin asset | (149 | ) | ||
Profit from increase in fair value | 193 | |||
Effect of changes in exchange rates | 26 | |||
As at December 31, 2021(1) | 1,509 |
(1) USD 154 thousand are classified as a current asset.
F - 17
A. | Separation Agreement from Therapin |
1. | Therapin committed to pay to the Company an amount of USD 13 thousand (NIS 40 thousand) per month, thereafter as of August 1, 2020 over a period of 119 months (the “Payment Period”), for an aggregate total amount of USD 1.4 million (NIS 4.8 million). During the first two years from the date of the separation agreement, 50% of the payments from Therapin will be transferred to a restricted deposit and form an additional resource of the Merger settlement fund. After two years, the contents of the restricted deposit, will be released to the Company, subject to court approval. |
2. | The rest of the Payment Amount will be paid to the Company if, during the Payment Period, Therapin or a subsidiary completes an exit event, including listing on a stock exchange pursuant to a merger or IPO, and the Company will be given the option to receive shares in such merged company/issue, or payment of the remaining balance in cash. |
3. | During the Payment Period, if Therapin has not completed one of the transactions as set out in Section 2, then in the event that Therapin generates a distributable surplus, Therapin will pay the Company an amount equivalent to 14.74% of the surplus balance as repayment on account of the outstanding balance (but in any case no more than the outstanding balance). |
4. | In the event that, during or subsequent to the end of the Payment Period, Therapin distributes a dividend to its shareholders, and on that date there is a remaining outstanding balance of the Payment Amount, Therapin will pay the Company an amount equivalent to 14.74% of the dividend distributed to shareholders as repayment on account of the outstanding balance (but in any case no more than the outstanding balance). |
5. | As a result of the separation agreement, the Company is no longer a shareholder in Therapin, but rather a debtholder. |
The Company re-measured the asset using a fair value measurement at approximately USD 1.3 million (NIS 4.5 million). The fair value was assessed by capitalization of future cash flows (proceeds) at interest rates that reflect the level of risk (based on the duration of the debt) of these proceeds and were classified as Level 3 in the fair value hierarchy. The estimated capitalization interest was based on Therapin's financial statements, cash balances and liabilities, repayment dates, and analysis of the market in which Therapin operates. The expected additional payment event is 4.2 years, and the interest rate for capitalization of the debt is 10.23%-10.72%.
The revaluation was accounted for in other comprehensive income in the amount of USD 0.3 million (NIS 1.2 million). Any change in the fair value following the separation date, will be recognized through profit or loss.
During 2021, the Company received USD 149 thousand based on the agreement detailed above and recorded USD 193 thousand as re-valuation financing income in profit and loss.
B. | Investment in Peace Of Meat (‘POM’) |
F - 18
| Computers | Leasehold improvements | Laboratory equipment | Machinery and equipment | Office furniture, equipment and accessories | Total | ||||||||||||||||||||||
USD thousands | ||||||||||||||||||||||||||||
Cost |
|
|
|
|
|
| ||||||||||||||||||||||
Balance as at January 1, 2020 | 29 | 11 | 89 | 0 | 1 | 130 | ||||||||||||||||||||||
Additions during the year | 43 | 46 | 466 | 243 | 27 | 825 | ||||||||||||||||||||||
Effect of changes in exchange rates | 2 | 1 | 18 | 0 | 1 | 22 | ||||||||||||||||||||||
Dispositions in the year | 0 | 0 | 0 | 1 | 1 | |||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Cost as at December 31, 2020 | 74 | 58 | 573 | 243 | 28 | 976 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Accumulated depreciation | ||||||||||||||||||||||||||||
Balance as at January 1, 2020 | 2 | 0 | 1 | 0 | 0 | 3 | ||||||||||||||||||||||
Depreciation during the year | 15 | 10 | 37 | 4 | 1 | 67 | ||||||||||||||||||||||
Dispositions in the year | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Accumulated depreciation as at December 31, 2020 | 17 | 10 | 38 | 4 | 1 | 70 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Depreciated balance as at December 31, 2020 | 57 | 48 | 535 | 239 | 27 | 906 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Balance as at January 1, 2021 | 74 | 58 | 573 | 243 | 28 | 976 | ||||||||||||||||||||||
Additions through acquisition of a subsidiary | 14 | 3 | 556 | 0 | 0 | 573 | ||||||||||||||||||||||
Additions during the year | 98 | 75 | 1,608 | 77 | 27 | 1,885 | ||||||||||||||||||||||
Effect of changes in exchange rates | 2 | (1 | ) | (56 | ) | 13 | 2 | (40 | ) | |||||||||||||||||||
| ||||||||||||||||||||||||||||
Cost as at December 31, 2021 | 188 | 135 | 2,681 | 333 | 57 | 3,394 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Accumulated depreciation | ||||||||||||||||||||||||||||
Balance as at January 1, 2021 | 17 | 10 | 38 | 4 | 1 | 70 | ||||||||||||||||||||||
Depreciation during the year | 42 | 22 | 296 | 31 | 3 | 394 | ||||||||||||||||||||||
Effect of changes in exchange rates | 2 | 1 | 4 | 1 | 0 | 8 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Accumulated depreciation as at December 31, 2021 | 61 | 33 | 338 | 36 | 4 | 472 | ||||||||||||||||||||||
| ||||||||||||||||||||||||||||
Depreciated balance as at December 31, 2021 | 127 | 102 | 2,343 | 297 | 53 | 2,922 |
During the year ended December 31, 2021, the Company acquired fixed assets on credit in the amount of USD 57 thousand (2020: USD 143 thousand). The cost of acquisition had not yet been paid at the reporting date.
F - 19
December 31 | December 31 | ||||||||||
2021 | 2020 | ||||||||||
USD thousands | USD thousands | ||||||||||
Accrued expenses | 459 | 263 | |||||||||
Employee benefits | 1,122 | 503 | |||||||||
Contingent liability | 217 | 217 | |||||||||
Subsidiary government grant | 218 | 0 | |||||||||
Others | 223 | 13 | |||||||||
2,239 | 996 |
Number of Ordinary Shares (thousand) | ||||||||||||
2021 | 2020 | 2019 | ||||||||||
Issued and paid-in share capital as at January 1 | 79,866 | 19,870 | 15,447 | |||||||||
Issued in reverse merger | 0 | 30,526 | 0 | |||||||||
Exercise of share options during the period – Investor-related | 3,010 | 11,302 | 2,255 | |||||||||
Exercise of share options during the period – Share-Based Payment-related | 2,218 | 294 | 0 | |||||||||
Issued not for cash during the period (1) | 12,088 | 0 | 0 | |||||||||
Issued for cash during the period (2) | 28,588 | 17,874 | 2,168 | |||||||||
Issued and paid-in share capital as at December 31, 2021 | 125,770 | 79,866 | 19,870 | |||||||||
Authorized share capital | 1,000,000 | 1,000,000 | 1,000,000 |
(1) | In February 2021, the Company completed a purchase of all of the outstanding share capital not yet owned by the Company, of Belgian cultured fat developer Peace of Meat BV. See Note 16 for information regarding the issuance of shares as part of the consideration. As part of the IPO, options and rights previously held by the Company's founders and Series A Investors were issued to 6,359,480 shares. |
(2) | On March 12, 2021, the Company completed its Initial Public Offering (IPO) at the Nasdaq of 2,721,271 ADSs, each representing ten ordinary shares of the Company (in total, 27,212,710 ordinary shares), at an offering price of USD 10.30 per ADS, resulting in gross proceeds of USD 28 million and net proceeds of USD 24.7 million. Additionally, the vesting of 1,374,998 investor share rights was triggered by the IPO, and these shares were issued in return for USD 1.25 million following the IPO. |
F - 20
Date of grant and eligible recipients | Terms of the instrument | No. of ordinary shares (thousands) | Vesting Conditions | Contractual duration of the instrument (years) | ||||
Options awarded to employees of the Company and subsidiaries on March 25, 2021 | Options exercisable for ordinary shares | 2,600 | 1/3 after one year and the balance in 8 quarterly tranches | 4 years | ||||
RSUs awarded to directors on March 25, 2021 | The RSUs vest automatically at no exercise price | 90 | 1/3 after one year and the balance in 8 quarterly tranches | 4 years | ||||
Options awarded to employees of the Company and subsidiaries on April 19, 2021 | Options exercisable for ordinary shares | 800 | 1/3 after one year and the balance in 8 quarterly tranches | 4 years | ||||
Options awarded to employees of the Company and subsidiaries on July 22, 2021 | Options exercisable for ordinary shares | 1,362.5 | 1/3 after one year and the balance in 8 quarterly tranches | 4 years | ||||
RSUs awarded to directors on September 14, 2021 | The RSUs vest automatically at no exercise price | 287.5 | 1/3 after one year and the balance in 8 quarterly tranches | 4 years | ||||
Options awarded to directors on September 14, 2021 | Options exercisable for ordinary shares | 785.6 | 1/3 after one year and the balance in 8 quarterly tranches | 4 years | ||||
Options awarded to the deputy CEO on September 14, 2021 | Options exercisable for ordinary shares | 250 | 1/3 after one year and the balance in 8 quarterly tranches | 4 years | ||||
Options awarded to BlueSoundWaves on October 6, 2021 | Options exercisable for ordinary shares | 6,215.8 | 1/3 after one year and the balance in 8 quarterly tranches, subject to milestone-based acceleration | 10 years | ||||
RSUs awarded to BlueSoundWaves on October 6, 2021 | The RSUs vest automatically at no exercise price | 1,243.1 | 1/3 after one year and the balance in 8 quarterly tranches, subject to milestone-based acceleration | 10 years | ||||
Options awarded to employees of the Company and subsidiaries on November 24, 2021 | Options exercisable for ordinary shares | 925 | 1/3 after one year and the balance in 8 quarterly tranches | 4 years | ||||
Total options/RSUs exercisable/vesting into shares granted in the year ended December 31, 2021 | 14,559.5 |
F - 21
A. | Number and weighted average exercise prices of options and RSUs |
Number of options and RSUs 2021 | Weighted average exercise price 2021 NIS | |||||||
Outstanding at January 1 | 9,505,140 | 2.60 | ||||||
Granted during the year | 14,559,520 | 2.06 | ||||||
Forfeited during the year | 194,673 | 1.63 | ||||||
Exercised during the year(1) | 4,834,730 | 2.55 | ||||||
Outstanding at December 31 | 19,035,257 | 2.20 | ||||||
Exercisable at December 31 | 3,562,192 | 3.07 |
(1) Partly executed through cashless mechanism
Besides incentive options and RSUs, as of the balance sheet date the Company has issued securities exercisable into 22,866,787 ordinary shares to investors, former shareholders of Peace of Meat (see Note 16) and former Ophectra Real Estate and Investments Ltd. employees prior to the reverse merger (see Note 1A), including investor warrants exercisable into 20,224,191 ordinary shares with exercise prices between NIS 3.03 and NIS 6.00, earn-out rights of former shareholders of Peace of Meat, exercisable into 2,412,596 ordinary shares with no exercise price and prior Ophectra Real Estate and Investments Ltd. employees options exercisable into 230,000 ordinary shares with exercise prices between NIS 1.72 and NIS 2.50.
F - 22
B. | Information on measurement of fair value of share-based payment plans |
Options/RSUs | ||
Fair value at date awarded | NIS 23.0 million (USD 7.0 millions) | |
Parameters taken into account in the fair value calculation: | ||
Share price (NIS at date awarded) | 2.05 - 3.53 | |
Exercise price (NIS unlinked) | 0 - 3.68 | |
Expected volatility | 73.84% - 93.10% | |
Expected useful life | 4 - 10 years | |
Risk-free interest rate | 0.23% - 1.97% | |
Expected rate of dividend | 0% |
F - 23
Year ended December 31, | Year ended December 31, | Year ended | ||||||||||
2021 | 2020 | 2019 | ||||||||||
USD thousands | USD thousands | USD thousands | ||||||||||
Salaries, wages and related expenses(1) | 3,425 | 1,369 | 117 | |||||||||
Share-based payment(1) | 911 | 476 | 0 | |||||||||
Materials | 1,875 | 319 | 20 | |||||||||
Professional services | 403 | 89 | 13 | |||||||||
Registration, drafting and filing of patents | 0 | 25 | 10 | |||||||||
Maintenance, office and software fees | 145 | 116 | 0 | |||||||||
Depreciation and amortization | 400 | 59 | 0 | |||||||||
Insurance | 332 | 0 | 0 | |||||||||
Others | 103 | 38 | 6 | |||||||||
Total Research and Development Expenses | 7,594 | 2,491 | 166 |
(1) | Including expenses in respect of related parties - see Note 18. |
Year ended December 31, | Year ended December 31, | Year ended | ||||||||||
2021 | 2020 | 2019 | ||||||||||
USD thousands | USD thousands | USD thousands | ||||||||||
Salaries, wages and related expenses | 494 | 255 | 0 | |||||||||
Share-based payment(1) | 570 | 139 | 0 | |||||||||
PR, advertisement and professional services | 507 | 91 | 0 | |||||||||
Maintenance, office and software fees | 22 | 13 | 0 | |||||||||
Depreciation and amortization | 17 | 3 | 0 | |||||||||
Others | 18 | 5 | 0 | |||||||||
Total Marketing Expenses | 1,628 | 506 | 0 |
F - 24
Note 13 – General and Administrative Expenses
Year ended December 31, | Year ended December 31, | Year ended December 31, | ||||||||||
2021 | 2020 | 2019 | ||||||||||
USD thousands | USD thousands | USD thousands | ||||||||||
Salaries, wages and related expenses(1) | 1,328 | 556 | 107 | |||||||||
Share-based payment(1) | 2,484 | 3,343 | 0 | |||||||||
Legal and professional services(1) | 1,499 | 991 | 112 | |||||||||
Contingent liability expenses | 0 | 217 | 0 | |||||||||
Insurance | 1,837 | 0 | 0 | |||||||||
Corporate costs | 343 | 60 | 0 | |||||||||
Maintenance, office and software fees | 149 | 38 | 10 | |||||||||
Depreciation and amortization | 263 | 151 | 20 | |||||||||
Others | 107 | 24 | 7 | |||||||||
Total General and Administrative Expenses | 8,010 | 5,380 | 256 |
(1) | Including expenses in respect of related parties - see Note 18. |
Year ended December 31, | Year ended December 31, | Year ended December 31, | ||||||||||
2021 | 2020 | 2019 | ||||||||||
USD thousands | USD thousands | USD thousands | ||||||||||
Financing Income | ||||||||||||
Net change in fair value of financial instruments mandatorily measured at fair value through profit or loss | 509 | 110 | 0 | |||||||||
Financing Expenses | ||||||||||||
Net foreign exchange loss | 1,279 | 85 | 0 | |||||||||
Interest expense on lease liabilities | 9 | 5 | 1 | |||||||||
Bank interest and commission expenses | 11 | 3 | 0 | |||||||||
Total Financial expenses | 1,299 | 93 | 1 | |||||||||
Financing expenses (income), net | 790 | (17 | ) | 1 |
F - 25
A. | Details regarding the tax environment of the Company |
(1) | Corporate tax rate |
The tax rates applicable to the companies operating in Belgium for the years 2020-2021 are 25%.
B. | Tax Assessments |
C. | Unrecognized carryforward losses and deferred taxes |
As at December 31, 2021, the Group has estimated business losses carried forward in the amount of USD 18.2 million. Under current tax legislation in Israel and Belgium, tax losses do not expire. Deferred tax assets have not been recognized in respect of these items, nor in respect of timing differences for research and development expenses carried forward in the amount of USD 4.3 million, since the Company has not yet established the probability that future taxable profit will be available against which the Company can utilize the benefits.
In February 2021, the Company completed a purchase of all of the outstanding share capital not yet owned by the Company of Belgian cultured fat developer Peace of Meat BV for total consideration of up to EUR 16.3 million (USD 19.9 million). The total consideration payable by the Company in the acquisition consists of both cash and equity instruments to be paid to Peace of Meat shareholders and in legal and finder’s fees. The total consideration is to be paid part as of the closing of the acquisition and part upon the achievement of the defined milestones and sub-milestones. Substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets (the “intangible asset” or “IPR&D”), thus the subsidiary is not considered a business and the acquisition is accounted as an asset acquisition. Contingent consideration, dependent upon the achievement of technological milestones will be recognized at the time of the achievement of each milestone on the basis of the shares and cash that are payable.
USD thousands | ||||
Cash consideration at closing date | 4,799 | |||
Initial cash investment in acquiree | 1,223 | |||
Equity instruments issued (4,070,766 ordinary shares) (1) | 4,359 | |||
Acquisition-related costs (2) | 254 | |||
Total consideration as of consolidation date | 10,635 | |||
Contingent consideration (3) | 9,308 | |||
Total consideration subject to achievement of all milestones | 19,943 |
F - 26
Note 16 - Subsidiaries (cont.)
(1) | The fair value of the ordinary shares issued was based on the share price of the Company at the closing date (February 10, 2021) of NIS 3.986 per share. |
(2) | Acquisition-related costs include legal expenses and finder’s fees |
(3) | Contingent consideration The Company agreed to pay the selling shareholders and the finder an additional 4,070,766 rights to ordinary shares with a value of USD 4.4 million and cash consideration of USD 4.9 million upon the achievement of defined milestones related to Peace of Meat’s biomass and bioreactor size, density, capacity and production. The acquisition agreement specified that each milestone must be reached within a six-month period, over a total period of two years, which can be extended by up to nine additional months under circumstances set forth in the acquisition agreement. As of the date of approval of these financial statements, Peace of Meat had fully achieved the first two such milestones. No liability is being provisioned before milestones achievement. |
Identifiable assets acquired and liabilities assumed:
Peace Of Meat condensed Balance Sheet | USD thousands | |||
Current assets | 425 | |||
Non-current assets | 588 | |||
Current liabilities | (578 | ) | ||
Non-current liabilities | (16 | ) | ||
Tangible assets net | 419 |
F - 27
Note 16 - Subsidiaries (cont.)
Peace Of Meat initial consolidation effect | USD thousands | |||
Closing cash consideration and related acquisition costs | 5,053 | |||
Shares consideration | 4,359 | |||
Initial cash investment in acquiree | 1,223 | |||
Tangible assets, net | (419 | ) | ||
10,216 | ||||
Additional contributions post acquisition date according to milestone achievement: | ||||
Cash consideration | 1,960 | |||
Payment liabilities | 194 | |||
Shares consideration (1,852,730 ordinary shares) | 1,973 | |||
Total | 14,343 | |||
FX rate effect | (890 | ) | ||
Period end intangible asset balance | 13,453 |
The aggregate cash flows for the Group as a result of the acquisition in the Year ended December 31,2021 | USD thousands | |||
Cash and cash equivalents paid | (5,053 | ) | ||
Cash and cash equivalents of the subsidiary | 205 | |||
Cash consideration for milestone achievement during the period | (1,960 | ) | ||
Net reduction of cash flow as of acquisition date | (6,808 | ) |
As of December 31, 2021, the recoverable amount of the in-process IPR&D was based on its value in use and was determined by discounting the future cash flows to be generated from it by using the discounted cash flows method, on the annual year test. The recoverable amount of the IPR&D exceeds their carrying amount, thus no impairment loss was recognized. The discount rate used for calculating intangible assets recoverable amount is 23.0%, in addition to taking into consideration the risks associated in small stock premium companies.
F - 28
A. | In November 2020, the Israeli Securities Authority, or ISA, initiated an administrative proceeding claiming negligent misstatement regarding certain immediate and periodic reports published by the Company’s predecessor (Ophectra) during the years 2017 and 2018, prior to the merger with MeaTech and prior to establishment of the settlement fund in connection with the Merger. In February 2021, the trustee of the settlement fund informed the Company that the ISA views the Company as a party to this proceeding, notwithstanding the settlement and establishment of the settlement fund. This proceeding is of an administrative nature and carries a potential penalty in the form of a monetary fine which, under applicable Israeli law, could be as high as NIS 5 million. In April 2021, following negotiations with the ISA, the Company agreed to settle the matter for $0.2 million (NIS 0.7 million), for which the Company recorded a provision. The settlement is subject to approval of the ISA’s Enforcement Committee. |
B. | In February 2021, a civil claim was lodged against the settlement fund, relating to Ophectra's activities prior to establishment of the settlement fund, in an amount of USD $0.8 million (NIS 2.5 million). The Company believes that the probability is low of a final ruling against the settlement fund. |
F - 29
A. | Balances with related parties |
Year ended | Year ended | Year ended | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2021 | 2020 | 2019 | ||||||||||
USD thousands | USD thousands | USD thousands | ||||||||||
Related companies receivables | 0 | 0 | 87 | |||||||||
Trade and other payables | 261 | 117 | 52 |
B. | Expense amounts with respect to related parties |
Year ended December 31, | Year ended December 31, | Year ended December 31, | ||||||||||
2021 | 2020 | 2019 | ||||||||||
USD thousands | USD thousands | USD thousands | ||||||||||
General and administrative expenses | ||||||||||||
Salaries, wages and related expenses | 588 | 316 | 89 | |||||||||
Legal and professional services | 301 | 281 | 58 | |||||||||
Share-based payments | 777 | 488 | 0 | |||||||||
Research & Development expenses | ||||||||||||
Salaries, wages and related | 338 | 121 | 0 | |||||||||
Share-based payments | 66 | 64 | 15 |
1. | Key Management Personnel The Company recognizes four key management personnel as related parties, namely Mr. Sharon Fima – former Chief Executive Officer (CEO), served as CEO un until January 24 2022, Mr. Omri Schanin - Deputy CEO, Mr. Guy Hefer – Chief Financial Officer (CFO) and Mr. Dan Kozlovski – Chief Technologies Officer (CTO), who served as Vice President of Research and Development (VP R&D) until February 2022.
Mr. Sharon Fima, the previous CEO and CTO, who also served as a director, was employed by the Company (including MeaTech Ltd. prior to the merger described in Note 1A above) between September 1, 2019 and January 24, 2022. Until July 2021, Mr. Fima was entitled to a gross annual salary of NIS 0.5 million (USD 0.1 million) plus generally accepted social benefit contributions for senior executives and the use of a company car, including a related tax gross-up. Commencing August 1, 2021, Mr. Fima was entitled to an annual gross salary of NIS 0.6 million (USD 0.2 million). Mr. Fima also received options valued at NIS 0.2 million (USD 0.1 million) to be recognized over three-year vesting period commencing March 2020, some of which were forfeited subsequent to the balance sheet date following the CEO replacement. |
F - 30
Note 18 – Related and Interested Parties (cont.)
B. | Expense amounts with respect to related parties (cont.) |
The Deputy CEO, who also served as a director until January 2022, has been employed by the Company (including MeaTech Ltd. prior to the merger described in Note 1A above) since September 1, 2019. Mr. Schanin was entitled to a gross annual salary of NIS 0.4 million (USD 0.1 million) plus generally accepted social benefit contributions for senior executives. Commencing August 1, 2021, Mr. Schanin is entitled to an annual gross salary of NIS 0.5 million (USD 0.2 million). Mr. Schanin also received options valued at an aggregate of NIS 0.8 million (USD 0.25 million) to be recognized over three-year vesting periods commencing August 2021.
The CFO, has been employed by the Company since October 18, 2020. Mr. Hefer was entitled to a gross annual salary of NIS 0.4 million (USD 0.1) plus generally accepted social benefit contributions for senior executives. Commencing August 1, 2021, Mr. Hefer is entitled to an annual gross salary of NIS 0.5 million (USD 0.2 million). Mr. Hefer also received options valued at an aggregate of NIS 0.75 million (USD 0.23 million) to be recognized over three-year vesting periods commencing in 2021.
The CTO (previously VP R&D), has been employed by the Company (including MeaTech Ltd. prior to the merger described in Note 1A above) since December 5, 2019. Mr. Kozlovski was entitled to a gross annual salary of NIS 0.4 million (USD 0.1 million) plus generally accepted social benefit contributions for senior executives. Commencing August 1, 2021, Mr. Kozlovski is entitled to an annual gross salary of NIS 0.5 million (USD 0.2 million). Mr. Kozlovski also received options valued at of NIS 0.07 million (USD 0.02 million)to be recognized over three-year vesting period commencing in 2019. |
2. | Directors |
Mr. Steve H. Lavin served as active chairman of the Company's Board of Directors between May 2020 and January 2022, and he was entitled to an annual compensation of USD 0.2 million as well as share-based compensation.
Mr. Danny Ayalon served as director between May 2020 and January 2022, and was entitled to an annual compensation of USD 0.03 million as well as share-based compensation.
Additional non-executive directors were compensated in accordance with the terms of the Israeli Companies Regulations (Rules Regarding Payment and Expenses for External Directors), 2000, as amended until July 31, 2021 and are since entitled to annual compensation of USD 0.03 million as well as share-based compensation.
F - 31
Leases in which the Group is the lessee | ||
1. | Under an office leasing agreement dated November 1, 2019, MeaTech leased office space and parking spaces, for a monthly fee of USD 10 thousand (NIS 32 thousand), including management fees, for a period of two years, with an option to extend the term of the lease by one more year. The Company initially recognized a long-term lease liability and a right-of-use asset in the amount of USD 214 thousand (NIS 743 thousand). The incremental interest rate used for estimating the liability is 2.25%. On November 2021 the Company extended the agreement for an additional period of 2.3 years. |
2. | Under an office leasing agreement dated August 9, 2020, the Company leased office space and parking spaces, for a monthly fee of USD 8 thousand (NIS 27 thousand), including management fees, for a period of one year, with an option to extend the term of the lease by one more year. The Company initially recognized a long-term lease liability and a right-of-use asset in the amount of USD 102 thousand (NIS 348 thousand). The incremental interest rate used for estimating the liability is 4.3%. This agreement has ended during 2021. |
3. | Under an office leasing agreements dated between March and October 2021 for periods of 1.5-2 years, POM and Meatech Europe BV are leasing several spaces from a shared spaces provider for a monthly aggregated fee of USD 11 thousand (EUR 10 thousand). The Company initially recognized a long-term lease liability and a right-of-use asset in the amount of USD 259 thousand (EUR 220 thousand). The incremental interest rate used for estimating the liability is 3%. |
4. | Right-of-Use Asset |
USD thousands | ||||
Balance as at January 1, 2020 | 197 | |||
Additions during the year | 102 | |||
Amortization during the year | (146 | ) | ||
Effect of changes in exchange rates | 15 | |||
Balance as at December 31, 2020 | 168 | |||
Additions following the acquisition of POM | 16 | |||
Additions during the year | 512 | |||
Amortization during the year | (286 | ) | ||
Effect of changes in exchange rates | (3 | ) | ||
Balance as at December 31, 2021 | 407 |
5. | Maturity analysis of for the Company’s lease liabilities |
December 31, | December 31, | |||||||
2021 | 2020 | |||||||
USD thousands | USD thousands | |||||||
Up to one year | 165 | 180 | ||||||
1-5 years | 246 | 0 | ||||||
Total | 411 | 180 |
F - 32
Note 19 – Leases (cont.)
6. | Amounts recognized in the statement of operation |
Year ended December 31, | Year ended December 31, | |||||||
2021 | 2020 | |||||||
USD thousands | USD thousands | |||||||
Amortization of ROU asset | 286 | 146 | ||||||
Interest expenses on lease liability | 9 | 5 |
F - 33
Year ended December 31, 2021 | Year ended December 31, 2020 | Year ended December 31, 2019 | ||||||||||
Issued and paid-in share capital as at January 1 | 79,866,264 | 19,870,337 | 0 | |||||||||
Weighted average of the number of ordinary shares of MeaTech 3D Ltd. issued during the year | 36,088,237 | 40,241,860 | 0 | |||||||||
Weighted average of the number of ordinary shares used to calculate basic earnings per share | 115,954,501 | 60,112,197 | 19,484,478 |
In prior periods, the weighted average number of the ordinary shares of MeaTech (now known as MeaTech MT Ltd.) was multiplied by the exchange ratio according to which ordinary shares of MeaTech 3D Ltd. were issued in return for ordinary shares of MeaTech in the 2020 reverse acquisition.
At December 31, 2021, 41,902,044 options, warrants and RSUs (in 2020 and 2019, 45,768,424 and 9,839 options respectively) were excluded from the diluted weighted average number of ordinary shares calculation, as their effect would have been anti-dilutive.
F - 34
A. | To secure its undertakings in connection with its lease agreements as described in Note 19, MeaTech provided a bank guarantee in the amount of USD 27 thousand (NIS 85 thousand) For which there's a restricted deposit. MeaTech also restricted a deposit of USD 26 thousand (NIS 80 thousand) in favor of a bank to secure its liabilities with respect to credit cards. The guarantee and deposit were assigned to MeaTech 3D Ltd. upon the Merger. |
B. | To secure its undertakings in connection with its future lease agreement, MeaTech 3D Ltd. provided a bank guarantee in the amount of USD 334 thousand (NIS 1,040 thousand) For which there's a restricted deposit. |
C. | To secure its undertakings in connection with its lease agreements as described in Note 13, POM provided a bank guarantee in the amount of USD 18 thousand (EUR 15 thousand) For which there's a restricted deposit. |
A. | Framework for risk management |
B. | Credit risk |
C. | Liquidity risk |
D. | Market risk |
F - 35
Note 23 – Financial Instruments (cont.)
E. | Fair value |
In connection with the Company’s Nasdaq public offering, all existing price protection mechanisms were eliminated, as a result of which financing income was recorded.
Note 24 – Subsequent Events
A. | Management Updates
In January 2022, Mr. Sharon Fima stepped down from the positions of Chief Executive Officer, Chief Technology Officer and Director, citing the Company’s current stage of development. Messrs. Steven H. Lavin (Chairman) and Danny Ayalon also stepped down from the Board of Directors, citing the Company’s current stage of development and to pursue other ventures, and Mr. Omri Schanin stepped down from the Board of Directors and continues to serve as MeaTech’s Deputy CEO.
The Company’s Board of Directors appointed Mr. Arik Kaufman to the position of Chief Executive Officer and Mr. Yaron Kaiser to the position of Chairman of the Board of Directors. | |
B. | Move to New Premises In March 2022, the Company moved to its new headquarters at 5 David Fikes St., Rehovot, Israel, and terminated the lease at its previous headquarters. The laboratory and office space total approximately 18,300 square feet. The lease for this facility will expire in January 2026, although the Company has an option to renew it for four years. The annual rent (including parking fees) is approximately USD 0.7 million, linked to the Israeli CPI. This move is expected to affect the Company’s estimates regarding lease maturities and right-of-use assets in future reporting periods. |
F - 36
Exhibit No. | Description | |
* | * | Previously filed as an exhibit to our registration statement on Form F-1 (File No. 333-253257) as filed with the SEC on March 11, 2021 and incorporated by reference herein |
# | English translation of original Hebrew document. |
MEATECH 3D LTD. | ||
By: | /s/ Arik Kaufman | |
Arik Kaufman | ||
Chief Executive Officer |