Exhibit 99.1

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

AS OF JUNE 30, 2019

 

IN U.S. DOLLARS

 

INDEX

 

    Page
     
Condensed Consolidated Interim Balance Sheets   F-2
     
Condensed Consolidated Interim Statements of Operations   F-3
     
Condensed Consolidated Interim Statements of Changes in Shareholders’ Equity   F-4
     
Condensed  Consolidated Interim Statements of Cash Flows   F-5
     
Notes to the Condensed Consolidated Interim Financial Statements   F-6

 

- - - - - - - - - - - - - -

 

F-1

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

U.S. dollars

 

   June 30,   December 31, 
   2019   2018 
   Unaudited   Audited 
ASSETS        
         
CURRENT ASSETS:        
Cash and cash equivalents  $39,201   $144,948 
Restricted cash   15,423    14,674 
Accounts receivable, net   122,730    200,776 
Other current assets   81,141    65,011 
Inventory, net   117,593    53,344 
           
Total current assets   376,088    478,753 
           
NON-CURRENT ASSETS:          
Property and equipment, net   275,472    300,702 
Intangible asset, net   3,607,628    3,821,844 
Goodwill   3,026,036    3,026,036 
           
Total non-current assets   6,909,136    7,148,582 
           
Total assets   7,285,224    7,627,335 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
           
CURRENT LIABILITIES:          
Short term bank credit   53,748    — 
Short-term loans   14,024    — 
Trade payables   673,210    709,269 
Employees and payroll accruals   430,753    359,273 
Accrued expenses and other current liabilities   604,179    842,142 
Convertible loans   319,380    226,661 
           
Total current liabilities   2,095,294    2,137,345 
           
NON-CURRENT LIABILITIES:          
Capital note   35,777    32,000 
Convertible loans   3,244,382    1,809,816 
Warrants presented at fair value   1,289,388    945,025 
           
Total non-current liabilities   4,569,547    2,786,841 
           
Total liabilities   6,664,841    4,924,186 
           
SHAREHOLDERS’ EQUITY:          
Ordinary shares of NIS 0.01 par value - Authorized: 200,000,000 ordinary shares as of June 30, 2019 and December 31, 2018, respectively; Issued and outstanding: 24,033,660 and 23,491,948 ordinary shares as of June 30, 2019 and December 31, 2018, respectively   64,815    63,301 
Additional paid in capital   19,842,626    19,698,606 
Accumulated deficit   (19,287,058)   (17,058,758)
           
Total shareholders’ equity   620,383    2,703,149 
           
Total liabilities and shareholders’ equity  $7,285,224   $7,627,335 

 

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

F-2

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS

U.S. dollars

 

   Six months ended
June 30,		 
   2019   2018 
   Unaudited 
         
Revenues  $235,149   $157,357 
           
Cost of revenues   111,947    252,607 
Amortization of intangible assets   214,216    237,214 
           
Gross loss   91,014    332,464 
           
Operating expenses:          
           
Research and development   445,362    540,652 
Less - research and development grants   (114,615)   (106,442)
Research and development, net   330,747    434,210 
Sales and marketing   395,228    284,377 
General and administrative   575,073    618,787 
           
Total operating expenses   1,301,048    1,337,374 
           
Operating loss   1,392,062    1,669,838 
Financial (income) expenses, net   836,238    (668,157)
           
Net loss  $2,228,300   $1,001,681 
           
Net loss per ordinary share:          
Basic and diluted net loss per ordinary share  $0.09   $0.04 
           
Weighted average number of ordinary shares used in computing basic and diluted net loss per ordinary share   23,637,768    22,333,633 

 

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

 

F-3

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

U.S. dollars

 

   Ordinary shares             
   Number
of ordinary shares		   Amount   Additional
paid-in
Capital		   Accumulated deficit   Total 
   Unaudited 
                     
Balance as of December 31, 2017 (Audited)   21,737,263   $58,559   $17,830,361   $(15,086,200)  $2,802,720 
                          
Issuance of ordinary shares   1,167,615    3,116    958,654    -    961,770 
Issuance of ordinary shares in connection with conversion of convertible loans   90,454    241    44,986    -    45,227 
Issuance of ordinary shares in connection with Professional service rendered   175,000    508    150,992    -    151,500 
Beneficial conversion feature related to convertible loans   -    -    338,266    -    338,266 
Issuance of warrants   -    -    132,970    -    132,970 
Exercise of options   64,631    181    813    -    994 
Stock based compensation   -    -    76,996    -    76,996 
Net loss   -    -    -    (1,001,681)   (1,001,681)
                          
Balance as of June 30, 2018   23,234,963   $62,605   $19,534,038   $(16,087,881)  $3,508,762 
                          
Balance as of December 31, 2018 (Audited)   23,491,948   $63,301   $19,698,606   $(17,058,758)  $2,703,149 
                          
Issuance of ordinary shares in connection with conversion of convertible loans   429,212    1,204    71,762    -    72,966 
Issuance of ordinary shares in connection with Professional service rendered   112,500    310    12,959    -    13,269 
Stock based compensation   -    -    59,299    -    59,299 
Net loss   -    -    -    (2,228,300)   (2,228,300)
                          
Balance as of June 30, 2019   24,033,660   $64,815   $19,842,626   $(19,287,058)  $620,383 

 

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

 

F-4

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

U.S. dollars

 

   Six months ended
June 30,		 
   2019   2018 
   Unaudited 
         
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss  $(2,228,300)  $(1,001,681)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   36,171    54,226 
Amortization   214,216    237,214 
Fair value of warrants granted for services   -    5,100 
Interest and accretion back in connection with convertible loans   426,988    826,452 
Stock based compensation   59,299    76,996 
Professional service received in connection with issuance of ordinary shares   13,269    151,500 
Change in operating assets and liabilities:          
Change in restricted cash   (749)   (351)
Change in accounts receivable   78,046    26,678 
Change in other current assets   (16,130)   (12,568)
Change in inventories   (64,249)   31,687 
Change in trade payables   (36,059)   (142,220)
Change in employees and payroll accruals   71,480    4,645 
Change in accrued expenses and other current liabilities   (237,963)   (91,431)
Change in fair value of warrants and capital note   (321,403)   (1,519,369)
Net cash used in operating activities   (1,362,578)   (1,353,122)
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchase of property and equipment   (10,941)   (6,485)
Net cash used in investing activities   (10,941)   (6,485)
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Proceeds from convertible loans and related warrants   1,200,000    320,000 
Proceeds from issuance of ordinary shares   -    567,615 
Proceeds from stock options exercise   -    994 
Increase in short term bank credit   53,748    74,610 
Proceeds from short-term loans   14,024    145,898 
Repayment of the promissory note principal   -    (25,510)
Repayment of short-term bank loan   -    (72,108)
Net cash provided by financing activities   1,267,772    1,011,499 
           
Decrease in cash and cash equivalents   (105,747)   (348,108)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD   144,948    450,305 
           
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD  $39,201   $102,197 
           
SUPPLEMENTAL INFORMATION AND DISCLOSURE OF NON-CASH FINANCING ACTIVITIES          
Conversion of convertible loans including interest to ordinary shares  $72,966   $45,227 
Issuance of ordinary shares  $-   $394,155 

 

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

 

F-5

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 1:- GENERAL

 

  a. P.V. Nano Cell Ltd. (the “Company”) was incorporated in June 2009 under the laws of Israel. The Company along with its two fully owned Israeli subsidiaries: Nano Size Ltd. (“Nano Size”) and Digiflex Ltd (“Digiflex”) are mainly engaged in developing, manufacturing, marketing and commercializing conductive inks for digital inkjet conductive printing applications and manufacturing printing machines, which offers solutions for inkjet print-quality technologies. The Company, Nano Size, Digiflex and Digiflex fully owned subsidiaries jointly defined as the “Group”.

 

During 2013, the Company formed a Chinese joint venture (“JV”) together with three shareholders. The Company owned 40% of the outstanding equity securities of the JV. The JV was inactive and dissolved during 2018.

  

  b. Since its inception, the Group has incurred operating losses and has used cash in its operations. During the six months ended June 30, 2019, the Group used cash in operating activities of approximately $1.4 million, incurred a net loss of approximately $2.2 million and had a total accumulated deficit of approximately $19.3 million as of June 30, 2019. The Group requires additional financing in order to continue to fund its current operations and to pay existing and future liabilities.

 

The Group intends to finance operating costs over the next twelve (12) months through issuance of equity securities or debts and by increasing its inflow from revenue. The Group is currently negotiating with third parties in an attempt to obtain additional sources of funds which, in management’s opinion, would provide adequate cash flows to finance the Group’s operations. The satisfactory completion of these negotiations is essential to provide sufficient cash flow to meet current operating requirements. However, the Group cannot give any assurance that it will be able to achieve a level of profitability from the sale of its products to sustain its operations in the future. These conditions raise substantial doubt about the Group’s ability to continue as a going concern.

 

The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on recoverability and reclassification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

 

NOTE 2:- BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

  a. Basis of presentation:

  

These unaudited condensed consolidated interim financial statements have been prepared as of June 30, 2019 and for the six months period then ended. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. These unaudited condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and the accompanying notes of the Company for the year ended December 31, 2018 that are included in the Company’s Annual Report on Form 20-F, filed with the SEC on May 15, 2019 (the “Annual Report”).

 

The significant accounting policies that have been applied in the preparation of these condensed consolidated interim financial statements are identical to those that were applied in preparation of the Company’s most recent annual financial statements in connection with its Annual Report.

 

The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S. GAAP”).

 

F-6

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

U.S. dollars

  

NOTE 2:- BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)

 

  b. Recently issued accounting standards not yet adopted in the current year:

 

1.In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09 supersedes the revenue recognition requirements in Accounting Standards Codification (“ASC 605”), Revenue Recognition, and requires entities to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The new revenue standard permits companies to either apply the requirements retrospectively to all prior periods presented or apply the requirements in the year of adoption through a modified retrospective approach with a cumulative adjustment. Due to the Company’s emerging growth company status, the Company will adopt the standard using the modified retrospective approach in its financial statements as of December 31, 2019. The Company is currently evaluating the effect that the standard may have on its consolidated financial statements and disclosures.

 

  2. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which will require lessees to recognize assets and liabilities for leases with lease terms of more than 12 months. Consistent with current GAAP, the recognition, measurement, and presentation of expenses and cash flows arising from a lease by a lessee primarily will depend on its classification as a financial or operating lease. However, unlike current GAAP, which requires only capital leases to be recognized on the balance sheet, the new guidance will require both types of leases to be recognized on the balance sheet.  The ASU is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. Due to the Company’s emerging growth company status, these new standards will become effective for the Company's annual reporting period beginning in 2020 and interim reporting periods beginning first quarter of 2021, unless the FASB's recent proposal to delay by a year the required adoption date becomes effective. The Company is currently evaluating the effects of this guidance will have on its consolidated financial statements.

  

NOTE 3:- LOANS AND CONVERTIBLE BRIDGE FINANCING

 

  a.

On October 10, 2018, the Company entered into a Convertible Loan Agreement with an existing investor who invested relatively low amounts previously (“CLA October 2018”). Pursuant to this Agreement, the investor provided the Company with a convertible loan in an aggregate principal amount of $1,000,000 at a conversion price as defined in the convertible loan agreement but no less than $0.17. the convertible loan bears an interest rate at Israeli prime plus 4% per annum. Under the terms of the CLA October 2018, the investor was granted an option to lend the Company an additional amount up to $2,000,000, (“Additional Loan Amount”) and also issued the investor a warrant to purchase ordinary shares for an aggregate purchase price of $5,000,000, and an additional warrant conditioned upon the investment of an additional Loan Amount to purchase ordinary shares for an aggregate purchase price of up to $5,000,000 calculated pro-rata to the amount out of Additional Loan Amount provided.

 

In March and April 2019, such investor invested an amount of $500,000 at each month (totaled of additional $1,000,000) on the account of the account of the Additional Loan Amount (“CLA March-April 2019). The Company also issued the investor a warrant to purchase ordinary shares for an aggregate purchase price of $5,000,000, such convertible loan bears same terms as the CLA October 2018.

 

The granted warrants classified as liability in accordance with ASC 480, their fair value aggregated to $165,470 as of June 30, 2019.

 

In August 2019 such investor invested additional $100,000 on the account of the Additional Loan Amount, as of the date of this report, $900,000 out of the Additional Loan Amount were not invested yet.

 

  b.

In January, February and April 2019, the Company entered into several convertible loan agreements with existing shareholders (“CLA January-April 2019), whereby they provided the Company with a convertible loan in an aggregate principal amount of $200,000 the convertible loan bears an interest rate at Israeli prime plus 4% per annum. Under these agreements, the Company issued lenders warrants to purchase ordinary shares for an aggregate purchase price of $1,000,000. The conversion price for all the loan amount and the warrants is defined in the convertible loan agreement but no less than $0.17.

 

The granted warrants classified as liability in accordance with ASC 480, at the issuance date, their fair value aggregated to $98,377 (the Company used the following assumptions: 0% dividend yield, 59.69% expected volatility, 2.11% risk free rate and 2 expected life in years) and $86,032 as of June 30, 2019.

 

  c. The fair value of the warrants granted as part of the convertible loan agreements (“CLA”) were calculated by a reputable appraiser and along with finder’s fees as applicable were bifurcated out of the principal loans, commencing those dates the Company is calculating the accretion back to the principal amount during the CLA period along with the related interest and record them as ‘Interest and accretion back in connection with convertible loans’ as part of the financial income, net line item within the statement of operations.

 

F-7

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 3:- LOANS AND CONVERTIBLE BRIDGE FINANCING (Cont.)

 

    The Company’s CLA’s presented as part of its current and non-current liabilities as of June 30, 2018 as follows:

 

Type of CLA  Original
principal
loans
amounts		    Additional principal loans provided   Loans
already
converted		   Remaining
principal
loans
amount		   Converted
through		   Loans
presented
as of
June 30,
2019		 
                         
CLA August 2017(**)  $905,555   $22,322   $(115,322)  $812,555    2020   $901,936(*****)
CLA March 2018(*)   150,000    -    -    150,000    2019    141,094(*****)
CLA May 2018(*)   170,000    -    -    170,000    2019    178,286(*****)
CLA October 2018(**)   1,000,000    -    -    1,000,000    2020(***)   721,695(*****)
CLA November 2018(**)   225,000    -    -    225,000    2020(***)   179,360(*****)
CLA December 2018(**)   400,000    -    -    400,000    2020(***)   241,900(*****)
CLA January-April 2019 (**)   200,000    -    -    200,000    2021(***)   124,718   Refer to Note 3b
CLA March-April 2019 (**)   1,000,000    -    -    1,000,000    2020(****)   1,074,773   Refer to Note 3a
                               
   $4,050,555   $22,322   $(115,322)  $3,957,555        $3,563,762 

 

(*) Aggregated to $319,380 and presented within the current liabilities
(**) Aggregated to $3,244,382 and presented within the non-current liabilities
(***) Structured as a 24 month- convertible loans or less in case of a Public Offering (“PO”) event
(****) Structured as convertible loans up to October 2020 or less in case of a PO event
(*****)  Issued in connection with the 2017 and 2018 CLA’s

 

NOTE 4:- LEGAL PROCEEDINGS

  

  a. On March 11, 2018, a lawsuit captioned I.T.S Industrial Technologic Ltd. vs. (1) Digiflex Ltd., and (2) Dan Vilenski., a former director of Digiflex, Claim No. 512833740, was filed in the Magistrate Court in Rishon Letzion in Israel. On March 11, 2019, the Company settled this claim for a total of NIS 400,000 ($106,724 based on the exchange rate of $1.00 / NIS 3.748 in effect as of December 31, 2018), paid in 12 monthly installments commencing April 2019.

 

  b. On May 17, 2019, a lawsuit captioned Yaskawa Europe Technologies Ltd. vs. (1) Digiflex Ltd. and (2) P.V. Nano Cell Ltd., Claim No. 39107-05-19, was filed in the Magistrate Court in Kfar Saba in Israel. The complaint alleges that Digiflex owes Yaskawa NIS 249,898 ($70,078 based on the exchange rate of $1.00 / NIS 3.566 in effect as of June 30, 2019) for the value of eight (8) systems of linear stages. The Company fully accrued such amount and is currently in the process of preparing a Statement of Defense

 

F-8

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 5:- SHARE CAPITAL

 

  a. Ordinary shares:

 

The share capital as of June 30, 2019 and December 31, 2018 is composed of ordinary shares of NIS 0.01 ($0.003 based on the exchange rate of $1.00 / NIS 3.566 in effect as of June 30, 2019) par value as follows:

 

   Number of ordinary shares   Number of ordinary shares 
   Authorized   Issued and outstanding   Authorized   Issued and outstanding 
   June 30, 2019   December 31, 2018 
                 
Ordinary shares   200,000,000    24,033,660    200,000,000    23,491,948 

 

  b. Issuance of ordinary shares:

 

  1. In January 2019 the Company issued 50,000 ordinary shares to one of the Company’s service provider. The company recorded an expense of $5,738 for the six months ended June 30, 2019 in connection with the issuance of those restricted ordinary shares.

 

  2. Between February and May 2019, the Company issued 12,500 ordinary shares to one of the Company’s service provider. The company recorded an expense of $1,506 for the six months ended June 30, 2019 in connection with the issuance of those restricted ordinary shares

 

  3. In April 2019 the Company issued 50,000 ordinary shares to one of the Company’s service provider. The company recorded an expense of $6,025 for the six months ended June 30, 2019 in connection with the issuance of those restricted ordinary shares.

 

  c. Stock option plan:

 

Under the Company’s 2010 option plan, options may be granted to officers, directors, employees, consultants and service providers of the Company.

 

The vesting period of the options is subject for Board approval and can vary from grant to grant. Options vest over a period of zero to three years from date of grant. Any options that are cancelled or forfeited before expiration become available for future grants. The options may be exercised for a period of seven years from grant.

 

In April 30, 2019 the Company granted 207,500 options to its employees and consultants to purchase its ordinary shares, their fair value as of the issuance date aggregated to $8,727 (the Company used the following assumptions: 0% dividend yield, 59.69% expected volatility, 2.33% - 2.71% risk free rate and 4.15 - 7 expected life in years), such options include an exercise price of $0.27 per one option and a various vesting schedule. 

 

The total number of ordinary shares available for future grants as of June 30, 2019 was 1,360,898.

 

F-9

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 5:- SHARE CAPITAL (Cont.)

  

A summary of the Company’s stock option activities and related information for the six months ended June 30, 2019, is as follows: 

 

   Number of options 
     
Outstanding options as of December 31, 2018   1,714,039 
Granted   207,500 
Forfeited   (107,158)
      
Outstanding options as of June 30, 2019   1,814,381 

  

  d. Stock based compensation were recorded as follows:

 

   Six months ended
June 30,		 
   2019   2018 
   Unaudited 
         
Research and Development  $8,077   $18,362 
Sales and Marketing   3,728    7,419 
General and Administrative   47,494    51,215 
           
   $59,299   $76,996 

 

  e. The Company’s outstanding warrants classified as equity as of June 30, 2019 are as follows:

 

Outstanding     Issuance year   Exercise price     Exercisable through  
                   
  117,209     2009   $ (*)    Exit event (**)
  59,384     2013     0.92     2023 (**)
  170,000     2018     0.50     2023 (**)
  600,000     2018     0.50     2023 (**)
  466,667     2018   $ 0.50     2023 (**)
                       
  1,413,260                    

 

(*) Represents an amount lower than $0.01
(**) Issued in connection with the 2009, 2013 and 2018 arrangements.

 

All warrants are exercisable to ordinary shares. The exercise price of the warrants and the number of ordinary shares issuable thereunder is subject to standard anti-dilution features, including dividends, stock splits, combinations and reclassifications of the Company’s capital stock. In accordance with ASC 815, “Derivatives and Hedging”, the warrants were classified as equity instruments.

 

F-10

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 6:- Warrants presented at fair value

 

  a. The Company’s outstanding warrants classified as a liability as of June 30, 2019 are as follows:

 

Outstanding     Exercise price     Issuance year     Exercisable through   Fair value  
                         
  1,760,040     $ 1.50       2014     2019   $ - (*******)
  120,000     $ 0.92 (*)      2014       (*****)    54 (*******)
  296,813     $ 1.50       2015     2020     2 (*******)
  374,001     $ 1.50       2016     2021     123 (*******)
  905,555     $ 0.17       2017     2022     41,487 (*******)
  333,333     $ 1.50       2017     2022     881 (*******)
  53,333     $ 1.50       2017     2022     52 (*******)
  50,000     $ 1.50       2017     2022     59 (*******)
  33,332     $ 1.00-1.20       2017     2022     127 (*******)
  33,332     $ 1.00-1.20       2017     2022     127 (*******)
  675,926     $   (**)      2017     2022     82,116 (*******)
  11,111     $ 1.20       2017     2022     36 (*******)
  300,000     $ 0.50       2018     2023     5,048 (*******)
  1,659,971     $ 0.17       2018     2022     43,035 (*******)
  29,411,765     $ 0.27 (***)      2018     2020 (******)    337,525 (*******)
  20,588,236         (****)        (****)      (****)    236,267 (*******)
  6,617,647     $ 0.27 (***)      2018     2020 (******)    80,170 (*******)
  11,764,706     $ 0.27 (***)      2018     2020 (******)    158,064 (*******)
  1,411,765     $ 0.27 (***)      2018     2024   52,713 (*******)
  5,882,352     $ 0.27 (***)      2018     2021 (******)  86,032    Refer to Note 3b
  14,705,882     $ 0.27 (***)      2018     2020 (******)  $ 165,470    Refer to Note 3a
                                 
  96,989,100                         $ 1,289,388  

 

(*) Subject to changes as describe in the agreement.
(**) Less than $0.01.
(***) Subject to a mechanism described in the agreement but not less than $0.17, therefore, the outstanding amount were calculated based on an exercise price of $0.17, which result the maximum potential amount of warrants.
(****) Since the actual number of warrants cannot be determined as of June 30, 2019, the outstanding amount were calculated based on an exercise price of $0.17, which result the maximum potential amount of warrants.
(*****) M&A or qualified PO as described in the agreement.
(******) Two years or an PO, the earlier.
(*******)  Issued in connection with the 2014 through 2018 financing rounds.

 

b. The roll-forward of the Company’s warrants and capital note presented at fair value are as follows:

 

     
Warrants and capital note presented at fair value as of December 31, 2017   2,093,036 
Proceeds from issuance of ordinary shares and convertible securities   288,593 
Fair value of warrants granted for services   5,100 
Changes in Fair value of warrants and capital note   (1,519,369)
      
Warrants and capital note presented at fair value as of June 30, 2018   867,360 

 

       
Warrants and capital note presented at fair value as of December 31, 2018     977,025  
Proceeds from issuance of ordinary shares and convertible securities     26,737  
Changes in Fair value of warrants and capital note     321,403  
         
Warrants and capital note presented at fair value as of June 30, 2019     1,325,165  

 

F-11

 

 

P.V. NANO CELL LTD. AND ITS SUBSIDIARIES

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

U.S. dollars

 

NOTE 7:- REVENUE CLASSIFIED BY GEOGRAPHICAL AREA

 

Revenues reported in the condensed consolidated interim financial statements derived from the Company’s country of domicile (Israel) and foreign countries based on the location of the customers, are as follows:

 

   Six months ended,
June 30,		 
   2019   2018 
   Unaudited 
         
Israel  $124,713   $62,018 
United states   72,395    47,538 
South Korea   839    12,929 
Germany   4,921    8,851 
Philippines   2,408    6,249 
Other   29,873    19,772 
           
   $235,149   $157,357 

 

NOTE 8:- Concentration risk

 

During the six months ended June 30, 2019 and 2018, revenues from one major customer reflected 44% and 24% of the total condensed consolidated revenues, respectively.

 

 

NOTE 9:- SUBSEQUENT EVENTS

 

  a. In July 2019 one of the CLA August 2017 holders converted additional portion of his converted notes to ordinary shares.

  

  b. In August and September 2019 the Company entered into several convertible loan agreements with existing shareholders and with a new investor, whereby they provided the Company with convertible loans in an aggregate principal amount of $350,000 and $200,000, respectively, the convertible loans bears an interest rate at Israeli prime plus 4% per annum. Under these agreements, the Company issued the lenders warrants to purchase ordinary shares for an aggregate purchase price of $1,750,000 and $1,000,000, respectively. The conversion price for both the loan amount and the warrants is defined in the convertible loan agreement but no less than $0.17.

 

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F-12