SECURITIES AND EXCHANGE COMMISSION
(Mark One)
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REGISTRATION
STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For
the fiscal year ended December 31, 2022 |
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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SHELL
COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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Title
of each class |
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Trading
Symbol |
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Name
of each exchange on which registered |
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Ordinary
shares, par value NIS 0.001 per share |
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NYAX
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The
Nasdaq
Stock Market LLC |
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Large Accelerated
Filer ☐ |
Accelerated Filer ☐
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Non-accelerated
Filer ☒ |
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Emerging Growth
Company ☒
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iii | |||
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iv | |||
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1 | |||
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1 | |||
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A. |
Directors and Senior Management |
1 |
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B. |
Advisers |
1 |
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C. |
Auditors |
1 |
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1 | |||
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A. |
Offer Statistics |
1 |
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B. |
Method And Expected Timetable |
1 |
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1 | |||
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A. |
[Reserved] |
1 |
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B. |
Capitalization and Indebtedness |
1 |
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C. |
Reasons for the Offer and Use of Proceeds |
1 |
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D. |
Risk Factors |
1 |
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28 | |||
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A. |
History and Development of the Company |
28 |
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B. |
Business Overview |
28 |
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C. |
Organizational Structure |
52 |
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D. |
Property, Plants and Equipment |
52 |
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52 | |||
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A. |
Operating Results |
52 |
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B. |
Liquidity and Capital Resources |
64 |
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C. |
Research and Development, Patents and Licenses, etc. |
65 |
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D. |
Trend Information |
65 |
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E. |
Critical Accounting Estimates |
65 |
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66 | |||
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A. |
Directors and Senior Management |
66 |
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B. |
Compensation |
69 |
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C. |
Board Practices |
72 |
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D. |
Employees |
82 |
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E. |
Share Ownership |
82 |
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F. |
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
82 |
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82 | |||
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A. |
Major Shareholders |
82 |
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B. |
Related Party Transactions |
83 |
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C. |
Interests of Experts and Counsel |
86 |
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86 | |||
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A. |
Consolidated Statements and Other Financial Information |
86 |
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B. |
Significant Changes |
86 |
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86 | |||
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A. |
Offering and Listing Details |
86 |
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B. |
Plan of Distribution |
86 |
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C. |
Markets |
86 |
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D. |
Selling Shareholders |
86 |
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E. |
Dilution |
86 |
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F. |
Expenses of the Issue |
86 |
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87 | |||
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A. |
Share Capital |
87 |
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B. |
Memorandum and Articles of Association |
87 |
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C. |
Material Contracts |
87 |
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D. |
Exchange Controls |
87 |
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E. |
Taxation |
87 |
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F. |
Dividends and Paying Agents |
95 |
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G. |
Statement by Experts |
95 |
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H. |
Documents on Display |
95 |
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I. |
Subsidiary Information |
96 |
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J. |
Annual Report to Security Holders |
96 |
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96 | |||
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97 | |||
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A. |
Debt Securities |
97 |
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B. |
Warrants and Rights |
97 |
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C. |
Other Securities |
97 |
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D. |
American Depositary Shares |
97 |
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97 | |||
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97 | |||
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97 | |||
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97 | |||
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A. |
Disclosure Controls and Procedures |
97 |
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B. |
Management’s Annual Report on Internal Control Over Financial Reporting |
97 |
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C. |
Attestation Report of the Registered Public Accounting Firm |
97 |
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D. |
Changes in Internal Control Over Financial Reporting |
97 |
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97 | |||
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97 | |||
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| 98 | |||
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98 | |||
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98 | |||
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98 | |||
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99 | |||
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99 | |||
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99 | |||
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99 | |||
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99 | |||
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99 | |||
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99 | |||
| 101 | |||
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F-1 | |||
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our expectations regarding general market conditions, including as a result of the COVID-19 pandemic and
other global economic trends; |
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general economic, political, demographic and business conditions in Israel; |
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fluctuations in inflation, interest rates and exchange rates in the global economic environment over the
world; |
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our ability to implement our growth strategy; |
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the success of operating initiatives, including advertising and promotional efforts and new product and
concept development by us and our competitors; |
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our ability to compete and conduct our business in the future; |
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changes in consumer tastes and preferences; |
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the availability of qualified personnel and the ability to retain such personnel; |
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changes in commodity costs, labor, distribution and other operating costs; |
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changes in government regulation and tax matters; |
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other factors that may affect our financial condition, liquidity and results of operations; and |
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other risk factors discussed under “Item 3. Key Information—D. Risk Factors” |
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ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
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Not applicable. |
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ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
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Not applicable. |
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ITEM 3. |
KEY INFORMATION |
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A. |
[Reserved] |
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B. |
Capitalization and Indebtedness
Not applicable. |
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C. |
Reasons for the Offer and Use of Proceeds |
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D. |
Risk Factors
Not applicable.
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unfavorable conditions in our industry or the global economy or reductions in spending on POS technology
could limit our ability to grow our business and negatively affect our results of operations; |
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we operate in a competitive business environment and a failure to compete effectively may adversely affect
our financial condition, results of operations and cash flows in the future; |
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we procure some of our key components from a single or limited number of suppliers. Therefore, we are exposed
to risks of shortages, price fluctuations, tariffs and delays in delivery of such components; |
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the ongoing COVID-19 pandemic has had, and may in the future have, negative effects on our activity and
results; |
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we have a limited operating history at our current scale, and our prospects and future revenues are subject
to a number of uncertainties, which limits our ability to predict them accurately; |
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we have a history of net losses and there are therefore risks related to our ability to achieve or maintain
profitability; |
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if we are unable to attract customers, maintain or grow our retention rates and expand usage with existing
customers, our revenue growth and any future profitability could be harmed; |
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we may be unable to successfully develop and expand our platform, which could limit our ability to grow
and maintain our competitive position and adversely affect our financial condition, results of operations and cash flow; |
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we rely on processing service providers, credit card networks and other entities in the payment transfer
system to process payments, and if they fail or no longer agree to provide their services or we fail to comply with our obligations under
those relationships, our customer relationships could be adversely affected, and we could lose business; |
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any failure to offer high-quality customer support may adversely affect our relationships with our customers
and could adversely affect our business, financial condition and results of operations; |
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the termination of our existing relationships with commercial communications services providers could force
us to adapt our products to a new vendor; |
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information security failures or interruptions of our or our third-party partners’ or service providers’
information technology systems could adversely affect our business, financial condition and results of operations; |
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we are subject to substantial governmental and commercial regulations across our areas of activity. Any
failure to comply with applicable regulations or standards may lead to significant regulatory consequences and could have an adverse effect
on our business, financial condition or results of operations; |
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we rely on our key personnel and, if they leave us, our results and product development could be harmed;
and |
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we are controlled by our founding shareholders. Our founders may make decisions with which other shareholders
may disagree. |
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the transaction may not advance our business strategy; |
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we may not be able to secure required regulatory approvals or otherwise satisfy closing conditions for
a proposed transaction in a timely manner, or at all; |
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the transaction may subject us to additional regulatory burdens that affect our business in potentially
unanticipated and significantly negative ways; |
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we may not realize a satisfactory return or increase our revenue; |
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we may experience difficulty, and may not be successful in, integrating technologies, IT or business enterprise
systems, culture, or management or other personnel of the acquired business; |
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we may incur significant acquisition costs and transition costs, including in connection with the assumption
of ongoing expenses of the acquired business; |
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we may not realize the expected benefits or synergies from the transaction in the expected time period,
or at all; |
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we may be unable to retain key personnel; |
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acquired businesses or businesses that we invest in may not have adequate controls, processes and procedures
to ensure compliance with laws and regulations, including with respect to data privacy and security, and our due diligence process may
not identify compliance issues or other liabilities—moreover, acquired businesses’ technology stacks may add complexity, resource
constraints, and technological debt that makes it difficult and time consuming to achieve such adequate controls, processes, and procedures;
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we may fail to identify or assess the magnitude of certain liabilities, shortcomings, or other circumstances
prior to acquiring or investing in a business, which could result in additional financial, legal or regulatory exposure, which may subject
us to additional controls, policies, procedures, liabilities, litigation, costs of compliance or remediation, or other adverse effects
on our business, operating results, or financial condition; |
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we may have difficulty entering into new product areas, market verticals or geographic territories;
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we may be unable to retain the customers, vendors and partners of acquired businesses; |
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there may be lawsuits or regulatory actions resulting from the transaction; |
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there may be risks associated with undetected security weaknesses, cyberattacks, or security breaches at
companies that we acquire or with which we may combine or partner; |
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there may be local and foreign regulations applicable to the international activities of our business and
the businesses we acquire; and |
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acquisitions could result in dilutive issuances of equity securities or the incurrence of debt. |
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cease selling or using solutions or services that incorporate the intellectual property rights that we
allegedly infringe, misappropriate, dilute or violate; |
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make payment of substantial royalty or license fees, lost profits or other damages; |
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make substantial payments for legal fees, settlement payments or other costs or damages; |
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discontinue some or all of the features, integrations and capabilities available through our solutions;
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indemnify our products’ users or third-party service providers; |
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obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant
technology; or |
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redesign or rebrand our allegedly infringing solutions to avoid infringement, misappropriation, dilution
or violation of third-party intellectual property rights, which could be costly, time-consuming or impossible. |
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decisions by the Israeli government that affect us; |
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actual or anticipated changes or fluctuations in our and our competitors’ results of operations;
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the guidance we may provide to analysts and investors from time to time, and any changes in, or our failure
to perform in line with, such guidance; |
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announcements by us or our competitors of new offerings or new or terminated contracts, commercial relationships
or capital commitments; |
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industry or financial analyst or investor reaction to our press releases, other public announcements, and
filings with the U.S. Securities and Exchange Commission (the “SEC”); |
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rumors and market speculation involving us or other companies in our industry; |
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future sales or expected future sales of our ordinary shares; |
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investor perceptions of us and the industries in which we operate; |
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price and volume fluctuations in the overall stock market from time to time; |
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changes in operating performance and stock market valuations of other technology companies generally, or
those in our industry in particular; |
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failure of industry or financial analysts to maintain coverage of us, the issuance of new or updated reports
or recommendations by any analysts who follow our company, or our failure to meet the expectations of investors; |
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actual or anticipated developments in our business or our competitors’ businesses or the competitive
landscape generally; |
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litigation involving us, other companies in our industry or both, or investigations by regulators into
our operations or those of our competitors; |
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developments or disputes concerning our intellectual property or proprietary rights or our solutions, or
third-party intellectual or proprietary rights; |
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announced or completed acquisitions of businesses or technologies, or other strategic transactions by us
or our competitors; |
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actual or perceived breaches of, or failures relating to, privacy, data protection or data security;
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new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
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actual or anticipated changes in our management or our board of directors; |
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general economic conditions and slow or negative growth of our target markets; and |
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other events or factors, including those resulting from war such as the current conflict in Ukraine, incidents
of terrorism or responses to these events. |
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the level of demand for our integrated POS devices; |
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our ability to grow or maintain our retention rates, expand usage within our customer base, and sell our
solutions to existing and future customers; |
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geopolitical uncertainty, including as a result of the current conflict in Ukraine, and uncertainty as
to the economic conditions specifically affecting industries in which our customers participate. |
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costs and timing of expenses related to hiring additional personnel, technologies or intellectual property,
including potentially significant amortization costs and possible write-downs; |
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the impact of market volatility and economic downturns caused by health epidemics, such as the COVID-19
pandemic, influenza and other highly communicable diseases or viruses; |
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supply chain constraints and increases in component prices; |
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the timing and success of new features, integrations, capabilities and enhancements by us to our platform
or by our competitors to their products or any other change in the competitive landscape of our market; |
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errors in our forecasting of the demand for our products, which could lead to lower revenue, increased
costs or both; |
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the amount and timing of operating expenses and capital expenditures that we may incur to maintain and
expand our business and operations and to remain competitive; |
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security breaches, technical difficulties, disruptions or outages on our platform resulting in service
level agreement credits; |
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changes in the legislative or regulatory environment; |
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legal and regulatory compliance costs in new and existing markets; |
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pricing pressure as a result of competition or otherwise; and |
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fluctuations in foreign currency exchange rates. |
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we are not required to engage an auditor to report on our internal controls over financial reporting pursuant
to Section 404(b) of the Sarbanes-Oxley Act; |
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we are not required to comply with any requirement that may be adopted by the PCAOB regarding mandatory
audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements
(i.e., an auditor discussion and analysis); and |
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we are not required to disclose certain executive compensation related items such as the correlation between
executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
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the Companies Law regulates the methods and processes by which mergers may be consummated and requires
tender offers to be effected for acquisitions of shares above specified thresholds in a company; |
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the Companies Law requires special approvals for certain transactions involving directors, officers or
significant shareholders and regulates other matters that may be relevant to these types of transactions; |
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the Companies Law does not provide for shareholder action by written consent for public companies, thereby
requiring all shareholder actions to be taken at a general meeting of shareholders; |
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our amended and restated articles of association provide that director vacancies may be filled by our board
of directors; |
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our amended and restated articles of association require a vote of the holders of our outstanding ordinary
shares entitled to vote present and voting on the subject matter at a general meeting of shareholders for the removal of directors (other
than external directors regarding whom special rules apply); |
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We have undertaken in certain of our financing agreements not to have a change-of-control without the lender's
approval; and |
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Some of our European licenses may be cancelled or suspended, or we may be subject to other sanctions for
breaches of such licenses, if holders of our shares cross certain prescribed ownership thresholds without the prior approvals of the relevant
regulators. |
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ITEM 4. |
INFORMATION ON THE COMPANY |
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Payments Suite: International payments infrastructure that enables
customers to offer consumers the ability to pay with their preferred local payment methods in their home markets. |
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Telemetry and Management Software Suite: A central intelligence
hub for customers that provides deep, real-time insights to optimize operations. |
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Loyalty and Marketing Suite: A consumer engagement loyalty and
marketing platform that enables retailers to drive engagement with their target consumers. |
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Integrated POS: Our proprietary devices are seamlessly deployable
in-store or on new or existing machines and enable the acceptance of digital payments. |
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$2.4 billion of transaction value; |
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approximately 1.3 billion transactions; and |
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approximately 725,000 managed and connected devices in more than 70 countries. |
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Single, integrated end-to-end platform. We provide our customers
with a comprehensive, end-to-end platform, substantially reducing the need to work with and manage multiple, disparate vendors and systems.
Our omni-channel, 360-degree platform helps customers track operations across multiple channels and access enhanced reporting in one centralized
location. Moreover, we have a broad international footprint, and we are able to offer our solutions in multiple worldwide locations, which
saves our global enterprise customers the need to look for local technology providers to serve their consumers globally. |
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Increased sales. Our solutions offer a wide variety of payment options,
an improved consumer experience and enhanced dynamic pricing capabilities, which help our customers improve their sales. Our solutions
also streamline our customers’ operations with 24/7 monitoring and management of connected devices, employees and other business
activities. Our technology minimizes downtime by optimizing various processes such as automating issue detection and resolution.
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Reduced costs. Our solutions optimize operating costs for our customers
by enabling them to reduce overhead and better manage their employees. In addition, our technology enables remote device diagnostic and
software updates, which save our customers the need to contact third-party providers for device troubleshooting and upgrades. Given constantly
evolving regulations and technical standards, our capital-efficient customer service platform results in enhanced customer experience
and optimized cost of ownership and maintenance for our customers. |
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Enhanced consumer engagement. We help our customers attract consumers
through marketing, branded loyalty programs, and mobile solutions, using consumer data. Through our platform, retailers gain access to
consumer insights and advanced analytics they can use to build direct relationships with consumers and drive increased loyalty and higher
sales. These capabilities have become critical as retailers engage with consumers across multiple channels. Leveraging our omni-channel
marketing engine, we help customers tailor recommendations and deals for consumers. |
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White-glove customer service. Customer success is a key focus for
us through a combination of tailored onboarding services, customer support, and intuitive product design and customer experience. We strive
to foster long-term relationships with our customers by having short sales cycles, adopting a consultative approach, and always being
available. Moreover, our ownership of the end-to-end solution provides major advantages in all aspects related to product integration,
technical support, and customer service. As a result, we are able to tackle our customers’ questions and concerns efficiently, and
we maintain high-quality support levels that save our customers valuable time and effort, generating higher customer satisfaction.
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Diverse and local payment options. We provide a frictionless experience
for consumers as part of a streamlined digital payment experience. We make it possible to accept payments in more than 70 countries and
more than 50 currencies, so consumers can pay in their preferred local payment methods. |
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Loyalty features (discounts, gifts, coupons, and special offers).
Consumers are able to benefit from discounts at the point of sale, as well as gifts, coupons and special offers. |
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Enhanced consumer experience. Our solutions ensure consumers have
an enhanced experience shopping with our customers. For example, consumers can use our mobile app to provide various feedback points and
ratings. In addition, our integrated solutions enable features such as instant refunds, which simplify multiple customer processes that
were traditionally complex to handle. |
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Comprehensive, end-to-end proprietary technology platform. Our platform
enables our customers to handle many aspects of their consumer-facing and back-office operations, all using one single platform. We address
complex, diverse and constantly changing challenges in our customers’ journey to procure retail technology solutions. Our hardware
and software platform caters to our customers’ needs with solutions such as payment processing, telemetry and management software,
loyalty and marketing programs, and integrated POS devices. In the unattended retail market, our key differentiation stems from our ownership
of the entire commerce value chain. Owning all components of our platform and services allows further flexibility in the deployment of
our solutions and highly effective technical support and customer service. Our integrated POS and software solutions easily integrate
into most existing unattended retail environments that are transitioned to cashless models, driving a higher overall installed base.
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Founder-led culture driving continuous customer-driven innovation.
Since 2005, our founding team has methodically built Nayax, creating a culture that advocates entrepreneurship, dynamic teamwork, honesty,
accountability and communication, all of which have the sole purpose of delivering the best results for our customers. We have a long-standing
track record of developing solutions to address our customers’ evolving needs. For example, we were one of the first platforms to
market with emerging vertical use cases such as cashless massage chairs, novelty wash stations (bike wash and pet wash) and EV charging
stations. We continue to have a large development pipeline for new use cases, and we believe we are well-positioned to continue developing
new solutions to help our customers grow their businesses. Given our strong history of innovation in the unattended retail market, we
are well-positioned to further expand into the attended retail market. |
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Differentiated, data-driven insights. Currently, our platform handles
on average approximately Four million transactions per day across more than 700,000 managed and connected devices. As a result, we are
able to gather vast amounts of data consisting of orders, receipts, and consumer information. We leverage this data to provide advanced
analytics to our customers and help them streamline their operations. In addition, the data we collect has tremendous feedback value in
other areas of our business, such as product development and customer satisfaction tracking and improvement. |
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• |
Extensive and efficient global go-to-market strategy. We have a
far-reaching go-to-market strategy tailored to both large enterprises and SMEs, at both the local and global levels. We have a broad commercial
presence spanning more than 70 countries worldwide. We have offices and commercial operations in our key markets of the United States,
Canada, the United Kingdom, Germany, Japan, China, Australia, South Africa and our home market of Israel, while we have licensed distributors
in 46 markets across all continents allowing us to efficiently expand our international footprint. In addition, we have established direct
relationships with over 1,500 original equipment manufacturers (“OEMs”) that integrate our POS devices to their products on
a global level. Lastly, we work with over 700 resellers across our key markets to serve the SMEs market. |
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• |
Robust regulatory compliance and infrastructure on a global scale.
We have built specialized capabilities to augment our platform and provide solutions in the global regulated markets in which we operate.
As such, we have obtained licenses and certifications from a large number of national and international protocols and standards covering
payments security, as well as regulators: Electronic Money Institution License in Europe, licenses for the provision of financial asset
services and credit services in Israel, PCI, EMVCO, telecommunications security (Felica Certified, PTCRB), Health and Safety and quality
standards (FC, CE, IC, RoHS, ACMA) and data security (ISO/IEC 27001). We believe our deep and extensive regulatory compliance expertise
across different geographic regions is a key component to our success and positions us for uninterrupted growth on a global level.
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• |
Intimate relationships with our customers founded on availability, advice
and flexibility. We have established a customer-centric approach that is focused on driving intimacy and customer satisfaction.
We are keen to provide an intuitive and superior product and service experience to all of our customers, from SMEs to large enterprises.
We apply this approach in every customer interaction, from our fast onboarding to after-sales service and support. As a result, we have
had a successful track record of growing with our customers and minimizing churn. |
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Strong business model combining proprietary integrated POS devices with
recurring SaaS revenue and payment processing fees. In 2022, approximately 60% of our revenue came from SaaS revenue and payment
processing fees that are highly recurring in nature. The remaining 40% of our revenue was derived from sales of our integrated POS devices
that are mission-critical to our customers across all the verticals we serve. The high switching costs associated with these integrated
POS devices enhance the retention of our solutions and provide us with substantial recurring SaaS revenue and payment processing fees.
As a result, our revenue churn rate, which we define as the percentage of revenue lost as a result of customers leaving our platform in
the last 12 months, was 3.6% in 2022, 2.6% in 2021 and 3.7% in 2020, despite many retailers being impacted by COVID-19 lockdowns in 2020
and 2021. |
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Retain and grow with our existing customers. Our current installed
customer base is a long-term foundation of our revenue growth, powered by the mission-critical nature of our solutions, the limited customer
churn we experience, and the substantial growth potential of our customers. We intend to continue investing in our relationships with
existing customers through our strong customer success-focused culture and grow revenue from our installed base by deploying more solutions
and driving more transactions through our platform. Our track record of organic growth with our customers is demonstrated by our dollar-based
net retention rate, which was approximately 131% as of December 31, 2022, 137% in 2021 and 102% in 2020. Given our comprehensive, end-to-end
platform, we believe we are well-positioned to offer additional solutions to existing customers, which generates upsell and cross-sell
opportunities. These opportunities are continuously expanding as we further develop and enhance our solutions. We are able to cross-sell
attended payments into our existing unattended customer base, with minimal additional integration effort, replacing existing solutions
from other vendors. For the year ended December 31, 2022, approximately 85% of our total revenue was attributable to existing customers.
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• |
Win new large enterprise and SME customers globally. We believe
there is a substantial opportunity to attract new customers with our current solutions within the customer cohorts we currently serve,
which we generally categorize based upon the current and potential revenue contribution of each customer. We have a proven track record
and strong momentum in winning new and large accounts across several different verticals and markets. Examples include Café+Co, Primo
Water, Canteen, FiveStar and MOL Group. Our go-to-market platform is also built to effectively reach and address the needs of SMEs through
our highly automated and scalable go-to-market strategy. We utilize our digital sales channels, distributors, and OEM partnerships to
profitably reach and address large numbers of SME customers, which represent a material portion of our revenue. We see the SME channel
as core to our growth going forward based on our proven track record with SMEs. For the year ended December 31, 2022, approximately 15%
of our total revenue was attributable to new customers. |
|
• |
Continue to innovate and develop new solutions. We have a proven
track record of launching new products and enhancing our solutions. For example, we have acquired and developed the capabilities to deliver
in-store payments solutions. We intend to continue to cross-sell attended payment solutions into our existing customer base and capitalize
on the substantial opportunity to deliver our complete platform to retailers in the attended market. In the near term, we see an opportunity
to expand our online payment capabilities and will opportunistically look to penetrate the broader omni-channel payments market.
|
|
• |
Continue to expand internationally. We have a track record of geographic
expansion either through subsidiaries in countries that represent key markets for us, or through engagements with distributors in markets
where we do not have a subsidiary. We have established subsidiaries in nine key markets and signed distribution engagements in more than
46 countries. Our sales in each of North America and Europe grew at a CAGR rate of 47% from 2020 to 2022. We intend to continue growing
our geographic footprint as we identify new business opportunities in new and existing markets. We also plan to use online sales channels
to target additional markets that do not necessarily warrant a physical presence. |
|
• |
Enter emerging, high-growth verticals. We intend to leverage our
platform to efficiently expand into new verticals with favorable growth characteristics. For example, we have developed solutions for
the EV charging station vertical when we identified a need for charging station operators to enable credit card payments and remotely
monitor and manage EV charging stations. We believe there are verticals ripe for disruption, such as gaming machines, small business service
providers and micro market, and we see a large opportunity for these verticals to benefit from our technology platform and solutions.
|
|
• |
Pursue targeted and strategic M&A. Since 2014, we have made
four acquisitions to expand our solutions and three acquisitions to improve our commercial reach. We intend to continue to pursue targeted
acquisitions to expand our platform capabilities and optimize our go-to-market strategy in a similar approach to the successful M&A
track record we have established to date. For example, we reinforced our in-store product offering by acquiring Weezmo in early 2021 to
provide enhanced marketing tools for retailers. In 2021, we made a series of investments in Tigapo Ltd. (“Tigapo”) to expand
our platform in the amusement parks vertical in the United States, and, in 2022, we acquired On Track Innovations Ltd. (“OTI”),
a provider of smart payment solutions for unattended machines, to support our strategic business plan and further our growth opportunities
in regions such as Japan. |
| • |
Accept cashless payments: Contactless EMV & Closed loop (Mifare). |
| • |
Supported protocols: Kiosk API, Reader low level API. |
| • |
Physical interface: USB 2.0 FS, UART TTL. |
| • |
Integrated with Kiosk CORE (Android, Windows, Linux). |
| • |
Interface pins to Touch, Speaker, LEDs, SAM slots, QR scanner, Magstripe, Contact. |
| • |
Remote software updates and small form factor design. |
|
• |
Marshall, which connects PC-based machines to our integrated POS devices; |
|
• |
LYNX, which provides input / output data to third-party systems; and |
|
• |
Cortina, which enables third-party systems to interface with our payment gateway, as depicted below.
|
|
Company |
|
Country of Incorporation |
|
Percentage Ownership and Voting Interest |
|
Main Activities |
|
Nayax LLC |
|
USA (Maryland) |
|
100% |
|
Sale of the Company’s products and services |
|
Nayax Europe UAB |
|
Lithuania |
|
100% |
|
Processing transactions on behalf of the Company’s customers in Europe
|
|
Nayax AU PTY Ltd. |
|
Australia |
|
100% |
|
Sale of the Company’s products and services |
|
Nayax (UK) Limited |
|
UK |
|
100% |
|
Sale of the Company’s products and services |
|
ITEM 4A. |
UNRESOLVED STAFF COMMENTS |
|
ITEM 5. |
OPERATING AND FINANCIAL REVIEW AND PROSPECTS |
|
• |
Customers. We empower our customers to modernize payment processing
and seamlessly adapt to an increasingly digital ecosystem. Our omni-channel, 360-degree platform is designed to address the many needs
of customers across verticals, industries and geographies. |
|
• |
Consumers. Our platform is built to simplify the process for retail
purchasing. Consumers benefit from the ability to choose from a diverse set of payment methods and access loyalty rewards from their preferred
merchants. |
|
• |
Subscription fees for access to our SaaS solutions |
|
• |
Payment processing fees |
|
• |
One-time payment for selling our integrated POS devices |
|
|
Year ended December 31, |
|||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
SaaS Revenue ($ millions) |
45.3 |
34.6 |
25.1 |
|||||||||
|
YoY Growth |
30.9 |
% |
37.8 |
% |
26.8 |
% | ||||||
|
Payment Processing Fees ($ millions) |
59.5 |
36.5 |
18.2 |
|||||||||
|
YoY Growth |
63 |
% |
100.5 |
% |
17.4 |
% | ||||||
|
|
Year ended December 31, |
|||||||||||||||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||||||||||||||
|
|
Revenue ($ millions) |
Rate of total income |
Revenue ($ millions) |
Rate of total income |
Revenue ($ millions) |
Rate of total income |
||||||||||||||||||
|
SaaS Revenue and Payment Processing Fees |
104.8 |
60.4 |
% |
71.1 |
59.7 |
% |
43.4 |
55.1 |
% | |||||||||||||||
|
Revenue from sale of integrated POS devices |
68.7 |
39.6 |
% |
48.0 |
40.3 |
% |
35.4 |
44.9 |
% | |||||||||||||||
|
|
Year ended December 31, |
|||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
Net revenue retention |
131 |
% |
137 |
% |
102 |
% | ||||||
|
|
Year ended December 31, |
|||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
|
US Dollars in thousands |
|||||||||||
|
Interest on bank loans and bank fees |
993 |
964 |
821 |
|||||||||
|
Change in fair value options |
(423 |
) |
414 |
– |
||||||||
|
Finance expenses in respect of loans from others |
70 |
217 |
248 |
|||||||||
|
Finance expenses in respect of shareholders and related companies |
(15 |
) |
136 |
27 |
||||||||
|
Finance expenses in respect of other liabilities |
167 |
202 |
302 |
|||||||||
|
Finance expenses in respect of leases liabilities |
260 |
214 |
379 |
|||||||||
|
Financing income in respect of finance sub-lease |
(2 |
) |
(14 |
) | ||||||||
|
Benefit in respect of government guarantee loans |
- |
-- |
(389 |
) | ||||||||
|
Exchange rate differences |
1,968 |
(490 |
) |
2,500 |
||||||||
|
|
3,020 |
1,655 |
3,874 |
|||||||||
|
|
Year ended December 31, |
|||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
Number of customers |
47,385 |
29,695 |
18,836 |
|||||||||
|
Number of managed and connected devices (in thousands) |
725 |
517 |
371 |
|||||||||
|
Number of transactions (in millions) |
1,304 |
795 |
469.9 |
|||||||||
|
|
Year ended December 31, |
|||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
Number of customers |
47,385 |
29,695 |
18,836 |
|||||||||
|
YoY growth |
60 |
% |
58 |
% |
31 |
% | ||||||
|
|
Year ended December 31, |
|||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
Number of managed and connected devices (in thousands) |
725 |
517 |
371 |
|||||||||
|
YoY growth |
40 |
% |
39 |
% |
9 |
% | ||||||
|
|
Year ended December 31, |
|||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
Number of transactions (in millions) |
1,304 |
795 |
469.9 |
|||||||||
|
YoY growth |
64 |
% |
69 |
% |
4 |
% | ||||||
|
|
Year ended December 31, |
|||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
|
In USD thousands |
|||||||||||
|
Loss for the period |
(37,509 |
) |
(24,769 |
) |
(6,083 |
) | ||||||
|
Finance expenses, net |
3,020 |
1,655 |
3,874 |
|||||||||
|
Tax expense (benefit) |
451 |
632 |
(15 |
) | ||||||||
|
Depreciation and amortization |
9,028 |
7,198 |
5,908 |
|||||||||
|
EBITDA |
(25,010 |
) |
(15,284 |
) |
3,684 |
|||||||
|
Share-based payment costs |
8,747 |
8,850 |
2,965 |
|||||||||
|
Non-recurring issuance costs(1)
|
1,790 |
1,879 |
- |
|||||||||
|
Equity method investee |
1,794 |
538 |
- |
|||||||||
|
Adjusted EBITDA |
(12,679 |
) |
(4,017 |
) |
6,649 |
|||||||
|
(1) |
Consists primarily of (i) fees and expenses, other than underwriter discount and commissions, incurred
in connection with our May 2021 initial public offering on the TASE and (ii) expenses incurred in connection with our listing on Nasdaq.
|
|
|
Year ended December 31, |
|||||||
|
|
2022 |
2021 |
||||||
|
|
In USD thousands |
|||||||
|
Revenues |
173,514 |
119,134 |
||||||
|
Cost of revenues |
113,476 |
70,970 |
||||||
|
Gross Profit |
60,038 |
48,164 |
||||||
|
Research and development expenses |
22,132 |
19,040 |
||||||
|
Selling, administrative and general expenses |
64,092 |
45,379 |
||||||
|
Depreciation and amortization in respect of technology and capitalized development costs |
4,268 |
3,810 |
||||||
|
Other expenses |
1,790 |
1,879 |
||||||
|
Equity method investee |
1,794 |
538 |
||||||
|
Operating loss |
(34,038 |
) |
(22,482 |
) | ||||
|
Finance expenses, net |
3,020 |
1,655 |
||||||
|
Loss before taxes on income |
(37,058 |
) |
(24,137 |
) | ||||
|
Tax benefit (expense) |
(451 |
) |
(632 |
) | ||||
|
Net income (loss) for the year |
(37,509 |
) |
(24,769 |
) | ||||
|
|
Year ended December 31, |
|||||||
|
|
2022 |
2021 |
||||||
|
|
In USD thousands |
|||||||
|
Revenue from the sale of integrated POS devices |
68,726 |
47,987 |
||||||
|
Recurring revenue |
104,788 |
71,147 |
||||||
|
Total revenue |
173,514 |
119,134 |
||||||
|
|
Year ended December 31, |
|||||||
|
|
2022 |
2021 |
||||||
|
|
In USD thousands |
|||||||
|
Cost of integrated POS devices sales |
62,872 |
40,165 |
||||||
|
Cost of recurring revenue |
50,604 |
30,805 |
||||||
|
Total cost of revenue |
113,476 |
70,970 |
||||||
|
|
Year ended December 31, |
|||||||
|
|
2022 |
2021 |
||||||
|
|
In USD thousands |
|||||||
|
United States |
60,270 |
36,887 |
||||||
|
Europe (excluding United Kingdom) |
48,664 |
36,475 |
||||||
|
United Kingdom |
21,931 |
16,577 |
||||||
|
Australia |
17,235 |
12,672 |
||||||
|
Israel |
14,129 |
10,764 |
||||||
|
Rest of the World |
11,285 |
5,759 |
||||||
|
Total |
173,514 |
119,134 |
||||||
|
|
Year ended December 31, |
|||||||
|
|
2022 |
2021 |
||||||
|
|
(in USD thousands) |
|||||||
|
Net cash provided by (used in): |
||||||||
|
Net cash flows used in operating activities |
(27,547 |
) |
(12,806 |
) | ||||
|
Net cash flows used in investing activities |
(26,544 |
) |
(22,639 |
) | ||||
|
Net cash flows provided by (used in) financing activities |
6,206 |
114,140 |
||||||
|
Net increase (decrease) in cash |
(47,885 |
) |
78,695 |
|||||
|
ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES |
|
Name |
|
Position(s) |
|
Age |
|
Directors |
|
|
|
|
|
Amir Nechmad |
|
Co-Founder, Director |
|
64 |
|
Yair Nechmad |
|
Co-Founder, Chairman and Chief Executive Officer |
|
61 |
|
David Ben-Avi |
|
Co-Founder, Chief Technology Officer and Director |
|
49 |
|
Rina Shafir |
|
Director |
|
59 |
|
Vered Raz Avayo |
|
Director |
|
53 |
|
Nir Dor |
|
Director |
|
59 |
|
Reuven Ben Menachem |
|
Director |
|
62 |
|
Executive Officers |
|
|
|
|
|
Sagit Manor |
|
Chief Financial Officer |
|
50 |
|
Oren Tepper |
|
Chief Commercial Officer |
|
51 |
|
Keren Sharir |
|
Chief Marketing Officer |
|
43 |
|
Tami Erel |
|
Chief Business Operations Officer |
|
47 |
|
Michael Galai |
|
Chief Legal Officer |
|
56 |
|
Moshe Orenstein |
|
Chief Product Officer |
|
46 |
|
Oded Frenkel |
|
Chief Customer Officer |
|
42 |
|
Ella Shectman |
|
Chief Human Resources Officer |
|
52 |
|
Gal Omer |
Chief Compliance Officer |
40 | ||
|
Sammy Yahiaoui(1)
|
|
Chief Revenue Officer |
|
49 |
|
Boaz Ben David |
|
Vice President, Finance |
|
43 |
|
Remuneration for services(1)
|
|||||||||||||||||||||||||||||
|
Name |
Position |
Scope of employment |
Salary |
Bonus |
Share-based payment |
Management fees |
Consulting fees |
Total |
|||||||||||||||||||||
|
In thousands |
|||||||||||||||||||||||||||||
|
Yair Nechmad |
Co-Founder, Chairman and Chief Executive Officer |
100 |
% |
– |
– |
$ |
1,599 |
$ |
530 |
– |
2,129 |
||||||||||||||||||
|
David Ben-Avi |
Co-Founder, Chief Technology Officer and Director |
100 |
% |
– |
– |
$ |
1,599 |
$ |
517 |
– |
2,116 |
||||||||||||||||||
|
Sagit Manor |
Chief Financial Officer |
100 |
% |
$ |
306 |
$ |
79 |
$ |
606 |
– |
– |
991 |
|||||||||||||||||
|
Sammy Yahiaoui(2)
|
Chief Revenue Officer |
100 |
% |
– |
$ |
64 |
$ |
47 |
– |
$ |
252 |
363 |
|||||||||||||||||
|
Keren Sharir |
Chief Marketing Officer |
100 |
% |
$ |
294 |
– |
$ |
145 |
– |
– |
439 |
||||||||||||||||||
|
(1) |
In accordance with Israeli law and practice, all amounts reported in the above table
are in terms of cost to our Company, as recorded in our audited consolidated financial statements. All of the executive officers listed
in the above table are full-time employees, except for Yair Nechmad and David Ben-Avi, whose compensation was paid under services agreements
we have with them. See “—Services Agreements with our Founders.” |
|
(2) |
Mr. Sammy Yahiaoui has notified the Company of his wish to vacate his office, effective April 8, 2023.
|
|
Board Diversity Matrix | ||||
|
Country of Principal Executive Offices: |
Israel | |||
|
Foreign Private Issuer |
Yes | |||
|
Disclosure Prohibited Under Home Country Law |
No | |||
|
Total Number of Directors |
7 | |||
|
|
Female |
Male |
Non-binary |
Did Not Disclose Gender |
|
Part I: Gender Identity |
| |||
|
Directors |
2 |
5 |
- |
- |
|
Part II: Demographic Background |
| |||
|
Underrepresented Individual in Home Country Jurisdiction |
- | |||
|
LGBTQ+ |
- | |||
|
Did Not Disclose Demographic Background |
1 | |||
|
• |
such majority includes at least a majority of the shares held by all shareholders who are not controlling
shareholders and do not have a personal interest in the election of the external director (other than a personal interest not deriving
from a relationship with a controlling shareholder) that are voted at the meeting, excluding abstentions; or |
|
• |
the total number of shares voted by non-controlling shareholders and by shareholders who do not have a
personal interest in the election of the external director against the election of the external director does not exceed 2% of the aggregate
voting rights in the company |
|
• |
an employment relationship; |
|
• |
a business or professional relationship even if not maintained on a regular basis (excluding insignificant
relationships); |
|
• |
control; and |
|
• |
service as an office holder, excluding service as a director in a private company prior to the initial
public offering of its shares if such director was appointed as a director of the private company in order to serve as an external director
following the initial public offering. |
|
• |
he or she meets the qualifications for being appointed as an external director, except for the requirement
|
|
• |
(i) that the director be an Israeli resident (which does not apply to companies such as ours whose securities
have been offered outside of Israel or are listed for trading outside of Israel) and (ii) for accounting and financial expertise or professional
qualifications; and |
|
• |
he or she has not served as a director of the company for a period exceeding nine consecutive years. For
this purpose, a break of less than two years in his or her service as a director shall not be deemed to interrupt the continuity of the
service. |
|
• |
retaining and terminating our independent auditors, subject to ratification by the board of directors,
and in the case of retention, to ratification by the shareholders |
|
• |
pre-approving audit and non-audit services to be provided by the independent auditors and related fees
and terms; |
|
• |
overseeing the accounting and financial reporting processes of the Company and audits of our financial
statements, the effectiveness of our internal control over financial reporting and making such reports as may be required of an audit
committee under the rules and regulations promulgated under the Exchange Act; |
|
• |
reviewing with management and our independent auditor our annual and interim financial statements prior
to publication or filing (or submission, as the case may be) to the SEC; |
|
• |
recommending to the board of directors the retention and termination of the internal auditor and the internal
auditor’s engagement fees and terms, in accordance with the Companies Law, approving the yearly or periodic work plan proposed by
the internal auditor and examining whether the internal auditor was afforded all required resources to perform its role; |
|
• |
reviewing with our general counsel and/or external counsel, as deemed necessary, legal and regulatory matters
that could have a material impact on the financial statements; |
|
• |
identifying irregularities in our business administration by, among other things, consulting with the internal
auditor or with the independent auditor, and suggesting corrective measures to the board of directors; |
|
• |
reviewing policies and procedures with respect to transactions between the Company and officers and directors
(other than transactions related to the compensation or terms of service of the officers and directors), or affiliates of officers or
directors, or transactions that are not in the ordinary course of the Company’s business and deciding whether to approve such acts
and transactions if so required under the Companies Law; and |
|
• |
establishing procedures for the handling of employees’ complaints as to the management of our business
and the protection to be provided to such employees. |
|
• |
recommending to the board of directors the approval of the compensation policy for office holders and,
once every three years, regarding any extensions to a compensation policy that was adopted for a period of more than three years;
|
|
• |
monitoring the implementation of the compensation policy and periodically making recommendations to the
board of directors with respect to any amendments or updates of the compensation policy; |
|
• |
resolving whether or not to approve arrangements with respect to the terms of office and employment of
office holders; and |
|
• |
exempting, under certain circumstances, transactions with our chief executive officer from the approval
of our shareholders. |
|
• |
from time to time, reviewing the implementation of our compensation policy in accordance with the requirements
of the Companies Law as well as other compensation policies, incentive-based compensation plans and equity-based compensation plans (insofar
as these relate to office holders in the Company), and overseeing the development and implementation of such policies and recommending
to our board of directors any amendments or modifications the committee deems appropriate, including as required under the Companies Law;
|
|
• |
reviewing and approving the employment terms of our office holders, including granting of options and other
incentive awards and reviewing and approving corporate goals and objectives relevant to the compensation of our executive officers, including
evaluating their performance in light of such goals and objectives; and |
|
• |
approving and exempting certain transactions regarding office holders’ compensation pursuant to the
Companies Law. |
|
• |
such majority includes at least a majority of the shares held by shareholders who are not controlling shareholders
and shareholders who do not have a personal interest in such compensation policy which voted at the meeting, disregarding abstentions;
or |
|
• |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal
interest in the compensation policy and who vote against the policy, does not exceed 2% of the aggregate voting rights in the company.
|
|
• |
the education, skills, experience, expertise and accomplishments of the relevant office holder; |
|
• |
the office holder’s position and responsibilities; |
|
• |
prior compensation agreements with the office holder; |
|
• |
the ratio between the cost of the terms of employment of an office holder and the cost of the employment
of other employees of the company, including employees employed through contractors who provide services to the company, in particular
the ratio between such cost to the average and median salary of such employees of the company, as well as the impact of disparities between
them on the work relationships in the company; |
|
• |
if the terms of employment include variable components—the possibility of reducing variable components
at the discretion of the board of directors and the possibility of setting a limit on the value of non-cash variable equity-based components;
and |
|
• |
if the terms of employment include severance compensation—the term of employment or office of the
office holder, the terms of the office holder’s compensation during such period, the company’s performance during such period,
the office holder’s individual contribution to the achievement of the company goals and the maximization of its profits and the
circumstances under which he or she is leaving the company. |
|
• |
with regards to variable components: |
|
• |
with the exception of office holders who report to the chief executive officer, a means of determining
the variable components on the basis of long-term performance and measurable criteria; provided that the company may determine that an
immaterial part of the variable components of the compensation package of an office holder shall be awarded based on non-measurable criteria,
or if such amount is not higher than three months’ salary per annum, taking into account such office holder’s contribution
to the company; and |
|
• |
the ratio between variable and fixed components, as well as the limit of the values of variable components
at the time of their payment, or in the case of equity-based compensation, at the time of grant. |
|
• |
a claw-back provision under which the office holder will return to the company, according to conditions
to be set forth in the compensation policy, any amounts paid as part of the office holder’s terms of employment, if such amounts
were paid based on information later discovered to be wrong, and such information was restated in the company’s financial statements;
|
|
• |
the minimum holding or vesting period of variable equity-based components to be set in the terms of office
or employment, as applicable, while taking into consideration long-term incentives; and |
|
• |
a limit to retirement grants. |
|
• |
overseeing and assisting our board in reviewing and recommending nominees for election as directors;
|
|
• |
assessing the performance of the members of our board; and |
|
• |
establishing and maintaining effective corporate governance policies and practices. |
|
• |
at least a majority of the shares held by all shareholders who are not controlling shareholders and do
not have a personal interest in such matter, present and voting on such matter, are voted in favor of the compensation package, excluding
abstentions; or |
|
• |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal
interest in such matter voting against the compensation package does not exceed 2% of the aggregate voting rights in the Company.
|
|
• |
information on the advisability of a given action brought for his, her or its approval or performed by
virtue of his or her position; and |
|
• |
all other important information pertaining to such action. |
|
• |
refrain from any act involving a conflict of interest between the performance of his or her duties in the
company and his or her other duties or personal affairs; |
|
• |
refrain from any activity that is competitive with the business of the company; |
|
• |
refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage
for himself, herself or others; and |
|
• |
disclose to the company any information or documents relating to the company’s affairs which the
office holder received as a result of his or her position as an office holder. |
|
ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
|
• |
each person, or group of affiliated persons, known by us to own beneficially 5% or more of our outstanding
ordinary shares; |
|
• |
each of our executive officers and members of our board of directors; and |
|
• |
all of our executive officers and members of our board of directors as a group. |
|
Name of Beneficial Owner |
Number of
Ordinary Shares Beneficially Owned |
Percentage of Ordinary Shares Beneficially Owned |
||||||
|
5% or Greater Shareholders |
||||||||
|
Amir Nechmad |
8,691,921 |
26.4 |
% | |||||
|
Yair Nechmad |
8,967,316 |
27.2 |
% | |||||
|
David Ben-Avi |
7,869,591 |
23.9 |
% | |||||
|
Other Executive Officers and Board Members |
||||||||
|
Rina Shafir |
* |
* |
||||||
|
Vered Raz Avayo |
* |
* |
||||||
|
Nir Dor |
* |
* |
||||||
|
Reuven Ben Menachem |
* |
* |
||||||
|
Sagit Manor |
* |
* |
||||||
|
Keren Sharir |
* |
* |
||||||
|
Tami Erel |
* |
* |
||||||
|
Michael Galai |
* |
* |
||||||
|
Moshe Orenstein |
* |
* |
||||||
|
Oded Frenkel |
* |
* |
||||||
|
Ella Shechtman |
* |
* |
||||||
|
Boaz Ben David |
* |
* |
||||||
|
Oren Tepper |
* |
* |
||||||
|
Gal Omer |
* |
* |
||||||
|
Sammy Yahiaoui(1)
|
* |
* |
||||||
|
All executive officers and Board members as a group (18 individuals) |
25,528,828 |
77.5 |
% | |||||
|
* |
Represents beneficial ownership of less than 1% of our total outstanding ordinary
shares. |
|
(1) |
Mr. Sammy Yahiaoui has notified the Company of his wish to vacate his office, effective
April 8, 2023. |
|
ITEM 8. |
FINANCIAL INFORMATION |
| A. |
Consolidated Statements and Other Financial Information |
|
B. |
Significant Changes |
|
ITEM 9. |
THE OFFER AND LISTING |
|
A. |
Offering and Listing Details |
|
B. |
Plan of Distribution |
|
C. |
Markets |
|
D. |
Selling Shareholders |
|
E. |
Dilution |
|
F. |
Expenses of the Issue |
|
ITEM 10. |
ADDITIONAL INFORMATION |
|
A. |
Share Capital |
|
B. |
Memorandum and Articles of Association |
|
C. |
Material Contracts |
|
D. |
Exchange Controls |
|
E. |
Taxation |
|
• |
the expenditures are approved by the relevant Israeli government authority, determined by the field of
research; |
|
• |
the research and development are for the benefit of the company; and |
|
• |
the research and development are carried out by or on behalf of the company seeking such tax deduction.
|
|
• |
certain financial institutions; |
|
• |
insurance companies; |
|
• |
dealers or certain traders in securities that mark their securities to market for U.S. income tax purposes;
|
|
• |
persons holding ordinary shares as part of a straddle, integrated or similar transaction; |
|
• |
persons who acquire ordinary shares in connection with employment; |
|
• |
persons whose functional currency for U.S. federal income tax purposes is not the U.S. dollar; |
|
• |
entities classified as partnerships for U.S. federal income tax purposes and their partners; |
|
• |
tax-exempt entities, individual retirement accounts, or “Roth IRAs”; |
|
• |
persons that own or are deemed to own 10% or more of the Company’s stock by vote or value; or
|
|
• |
persons holding ordinary shares in connection with a trade or business outside the United States.
|
|
• |
a citizen or individual resident of the United States; |
|
• |
a corporation, or other entity taxable as a corporation, created or organized in or under the laws of the
United States, any state therein or the District of Columbia; or |
|
• |
an estate or trust the income of which is subject to U.S. federal income taxation regardless of its source.
|
|
F. |
Dividends and Paying Agents |
|
G. |
Statement by Experts |
|
H. |
Documents on Display |
|
I. |
Subsidiary Information |
|
J. |
Annual Report to Security Holders |
|
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
|
ITEM 12. |
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES |
|
A. |
Debt Securities |
|
B. |
Warrants and Rights |
|
C. |
Other Securities |
|
D. |
American Depositary Shares |
|
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 |
|
A. |
Disclosure Controls and Procedures
|
|
B. |
Management’s Annual Report on Internal Control Over Financial
Reporting |
|
C. |
Attestation Report of the Registered Public Accounting Firm
|
|
D. |
Changes in Internal Control Over Financial Reporting |
|
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, |
|||||||
|
|
2022 |
2021 |
||||||
|
|
(in USD thousands) |
|||||||
|
Audit (1) |
592 |
428 |
||||||
|
Audit-related fees (2) |
- |
- |
||||||
|
Tax fees (3) |
42 |
63 |
||||||
|
All other fees (4) |
- |
- |
||||||
|
Total |
634 |
491 |
||||||
| (1) |
Audit fees consist of services that would normally be provided in connection with statutory and regulatory filings or engagements,
including services that generally only the independent accountant can reasonably provide. |
| (2) |
Audit-related fees for assurance and related services that were reasonably related to the performance of the audit not reported under
“Audit Fees”. |
| (3) |
Tax fees consist of fees for professional services for tax compliance, tax advice and tax audits. |
| (4) |
“All other fees” consist of all other fees in the years ended December 31, 2022 and 2021 related to services in
connection with non-audit compliance and review work. |
|
ITEM 16D. |
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES |
|
ITEM 16E. |
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS |
|
ITEM 16F. |
CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT |
|
ITEM 16G. |
CORPORATE GOVERNANCE |
|
ITEM 16H. |
MINE SAFETY DISCLOSURE |
|
ITEM 16I. |
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS |
|
ITEM 17. |
FINANCIAL STATEMENTS |
|
ITEM 18. |
FINANCIAL STATEMENTS |
|
ITEM 19. |
EXHIBITS |
|
Exhibit No. |
|
Description |
| |
||
|
|
|
|
| |
||
|
|
|
|
| |
||
|
|
|
|
| |
||
|
|
|
|
| |
||
|
|
|
|
| |
||
|
|
|
|
| |
||
|
|
|
|
| |
||
|
101 |
The following financial statements from the Company’s 20-F for the fiscal year ended December 31,
2022 formatted in Inline XBRL: (i) Inline Consolidated Statements of Comprehensive Loss, (ii) Inline Consolidated Statements of Financial
Position, (iii) Inline Consolidated Statements of Changes in Equity, (iv) Inline Consolidated Statements of Cash Flows, and (v) Inline
Notes to the Consolidated Financial Statements. | |
|
104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
|
|
|
Nayax Ltd. | |||
|
|
|
| |||
|
Date: |
March 1, 2022 |
|
By: |
/s/ Yair Nechmad | |
|
|
|
|
|
Name: |
Yair Nechmad |
|
|
|
|
|
Title: |
Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
By: |
/s/ Sagit Manor | |
|
|
|
|
|
Name: |
Sagit Manor |
|
|
|
|
|
Title: |
Chief Financial Officer |
NAYAX LTD.
Consolidated Financial Statements
2022 Annual Report
TABLE OF CONTENTS
|
|
Page |
|
Report of Independent Registered Public Accounting Firm (PCAOB ID 1309) |
F- 3 |
|
Consolidated financial statements – in thousands of US Dollars: |
|
|
F - 4-F - 5 | |
|
F - 6 | |
|
F - 7 | |
|
F - 8 | |
|
F - 9-F - 10 | |
|
F - 11-F - 70 |
F - 2
|
Tel
Aviv, Israel |
/s/ Kesselman
& Kesselman |
|
March 1, 2023
|
Certified Public Accountants
(Isr.) |
|
A member firm of PricewaterhouseCoopers
International Limited |
F - 3
|
December 31 |
||||||||||||
|
2022 |
2021 |
|||||||||||
|
(Audited) |
||||||||||||
| Note |
U.S. dollars in thousands |
|||||||||||
|
LIABILITIES
AND EQUITY |
||||||||||||
|
CURRENT
LIABILITIES: |
||||||||||||
|
Short-term
bank credit |
13
|
7,684
|
-
|
|||||||||
|
Current
maturities of long-term bank loans |
13
|
1,052
|
2,406
|
|||||||||
|
Current
maturities of loans from others and other long-term liabilities
|
14,
15 |
4,126
|
3,600
|
|||||||||
|
Current
maturities of lease liabilities |
10
|
2,206
|
1,502
|
|||||||||
|
Payables
in respect of processing activity |
63,336
|
42,826
|
||||||||||
|
Trade
payables |
14,574
|
9,136
|
||||||||||
|
Other
payables |
17,229
|
|
10,718
|
|||||||||
|
Total
current liabilities |
110,207
|
|
70,188
|
|||||||||
|
NON-CURRENT
LIABILITIES: |
||||||||||||
|
Long-term
bank loans |
13
|
1,444
|
2,760
|
|||||||||
|
Long-term
loans from others and other long-term liabilities |
14,
15 |
7,062
|
4,299
|
|||||||||
|
Post-employment
benefit obligations, net |
403
|
602
|
||||||||||
|
Lease
liabilities |
10
|
5,944
|
5,393
|
|||||||||
|
Deferred
income taxes |
16
|
793
|
|
1,088
|
||||||||
|
Total
non-current liabilities |
15,646
|
|
14,142
|
|||||||||
|
TOTAL
LIABILITIES |
125,853
|
|
84,330
|
|||||||||
|
EQUITY:
|
17 |
|
||||||||||
|
Equity
attributed to parent company’s shareholders: |
||||||||||||
|
Share
capital |
8
|
8
|
||||||||||
|
Additional
paid in capital |
151,406
|
150,366
|
||||||||||
|
Capital
reserves |
9,771
|
9,999
|
||||||||||
|
Accumulated
deficit |
|
(56,550
|
) |
|
(28,697
|
)
| ||||||
|
Total equity attributed to shareholders of the company |
104,635 | 131,676 | ||||||||||
|
TOTAL
EQUITY |
|
104,635
|
|
131,676
|
||||||||
|
TOTAL
LIABILITIES AND EQUITY |
|
230,488
|
|
216,006
|
||||||||
|
Year
ended December 31 |
||||||||||||||||
|
2022
|
2021
|
2020
|
||||||||||||||
|
(Audited)
|
||||||||||||||||
|
U.S.
dollars in thousands |
||||||||||||||||
|
Note
|
(Excluding
loss per share data) |
|||||||||||||||
|
Revenues
|
18
|
173,514
|
119,134
|
78,783
|
||||||||||||
|
Cost of revenues
|
19
|
(113,476
|
)
|
(70,970
|
)
|
(41,603
|
)
| |||||||||
|
Gross
Profit |
60,038
|
48,164
|
37,180
|
|||||||||||||
|
Research
and development expenses |
20
|
(22,132
|
)
|
(19,040
|
)
|
(9,300
|
)
| |||||||||
|
Selling,
general and administrative expenses |
21
|
(64,092
|
)
|
(45,379
|
)
|
(26,545
|
)
| |||||||||
|
Depreciation
and amortization in respect of technology and capitalized development costs |
12
|
(4,268
|
)
|
(3,810
|
)
|
(3,559
|
)
| |||||||||
|
Other expenses
|
1a
|
(1,790
|
)
|
(1,879
|
)
|
-
|
||||||||||
|
Share of
loss of equity method investee |
6d
|
(1,794
|
)
|
(538
|
)
|
-
|
||||||||||
|
Loss
from ordinary operations |
(34,038
|
)
|
(22,482
|
)
|
(2,224
|
)
| ||||||||||
|
Finance expenses,
net |
22
|
(3,020
|
)
|
(1,655
|
)
|
(3,874
|
)
| |||||||||
|
Loss
before taxes on income |
(37,058
|
)
|
(24,137
|
)
|
(6,098
|
)
| ||||||||||
|
Tax benefit
(expense) |
16
|
(451
|
)
|
(632
|
)
|
15
|
||||||||||
|
Loss
for the year |
(37,509
|
)
|
(24,769
|
)
|
(6,083
|
)
| ||||||||||
|
Attribution
of income (loss) for the year: |
||||||||||||||||
|
To shareholders
of the Company |
(37,509
|
)
|
(24,763
|
)
|
(6,254
|
)
| ||||||||||
|
To non-controlling
interests |
-
|
(6
|
)
|
171
|
||||||||||||
|
Total
|
(37,509
|
)
|
(24,769
|
)
|
(6,083
|
)
| ||||||||||
|
Loss
per share attributed to shareholders of the Company: |
||||||||||||||||
|
Basic and
diluted loss per share |
23
|
(1.143
|
)
|
(0.820
|
)
|
(0.252
|
)
| |||||||||
F - 6
|
Year
ended December 31 |
||||||||||||
|
2022
|
2021
|
2020
|
||||||||||
|
(Audited)
|
||||||||||||
|
U.S.
dollars in thousands |
||||||||||||
|
Loss
for the year |
(37,509
|
)
|
(24,769
|
)
|
(6,083
|
)
| ||||||
|
Other
comprehensive income (loss) for the year: |
||||||||||||
|
Items
that will not be recycled to profit or loss: |
||||||||||||
|
Gain (loss) from remeasurement
of liabilities (net) in respect of post-employment benefit obligations |
146
|
431
|
(126
|
)
| ||||||||
|
Items
that may be recycled to profit or loss: |
||||||||||||
|
Gain (loss) from translation
of financial statements of foreign activities |
(374
|
)
|
87
|
243
|
||||||||
|
Total
comprehensive loss for the year |
(37,737
|
)
|
(24,251
|
)
|
(5,966
|
)
| ||||||
|
Attribution
of total comprehensive income (loss) for the year: |
||||||||||||
|
To shareholders of the
Company |
(37,737
|
)
|
(24,181
|
)
|
(6,137
|
)
| ||||||
|
To non-controlling interests
|
-
|
(70
|
)
|
171
|
||||||||
|
Total
comprehensive loss for the year |
(37,737
|
)
|
(24,251
|
)
|
(5,966
|
)
| ||||||
F - 7
|
Equity
attributed to shareholders of the Company |
||||||||||||||||||||||||||||||||||||||||
|
Share
capital
|
Additional
paid
in
capital
|
Remeasurement
of
post-
employment
benefit
obligations
|
Other
capital
reserves
|
Call
option
to
purchase
shares
of
subsidiary
|
Foreign
currency
translation
reserve
|
Accumulated
deficit
|
Total
equity
attributed
to
shareholders
of
the
Company
|
Non-
controlling
interests
|
Total
equity
|
|||||||||||||||||||||||||||||||
|
U.S.
dollars in thousands |
||||||||||||||||||||||||||||||||||||||||
|
Balance
at January 1, 2020 |
7
|
16,689
|
(203
|
)
|
9,680
|
(493
|
)
|
-
|
(11,026
|
)
|
14,654
|
1,015
|
15,669
|
|||||||||||||||||||||||||||
|
Changes
during the year; |
||||||||||||||||||||||||||||||||||||||||
|
Income (loss)
for the year |
-
|
-
|
-
|
-
|
-
|
-
|
(6,254
|
)
|
(6,254
|
)
|
171
|
(6,083
|
)
| |||||||||||||||||||||||||||
|
Other comprehensive
income
(loss) for
the year |
-
|
-
|
(126
|
)
|
-
|
-
|
243
|
-
|
117
|
-
|
117
|
|||||||||||||||||||||||||||||
|
Transactions
with non-controlling
interests
|
-
|
-
|
-
|
(356
|
)
|
493
|
-
|
-
|
137
|
(1,186
|
)
|
(1,049
|
)
| |||||||||||||||||||||||||||
|
Share-based
payment |
-
|
-
|
-
|
-
|
-
|
-
|
3,847
|
3,847
|
-
|
3,847
|
||||||||||||||||||||||||||||||
|
Balance
at December 31, 2020 |
7
|
16,689
|
(329
|
)
|
9,324
|
-
|
243
|
(13,433
|
)
|
12,501
|
-
|
12,501
|
||||||||||||||||||||||||||||
|
Changes
during the year; |
||||||||||||||||||||||||||||||||||||||||
|
Loss for
the year |
-
|
-
|
-
|
-
|
-
|
-
|
(24,763
|
)
|
(24,763
|
)
|
(6
|
)
|
(24,769
|
)
| ||||||||||||||||||||||||||
|
Other comprehensive
income
(loss) for
the year |
-
|
-
|
431
|
-
|
-
|
151
|
-
|
582
|
(64
|
)
|
518
|
|||||||||||||||||||||||||||||
|
Non-controlling
interests from
business
combination (See note 6a) |
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,530
|
1,530
|
||||||||||||||||||||||||||||||
|
IPO (See
note 1b) |
1
|
132,559
|
-
|
-
|
-
|
-
|
-
|
132,560
|
-
|
132,560
|
||||||||||||||||||||||||||||||
|
Transactions
with non-controlling
interests (See
note 6 a) |
-
|
-
|
-
|
205
|
-
|
-
|
-
|
205
|
(1,460
|
)
|
(1,255
|
)
| ||||||||||||||||||||||||||||
|
Business
combination under
common control (see
note 6e) |
-
|
-
|
-
|
(26
|
)
|
-
|
-
|
-
|
(26
|
)
|
-
|
(26
|
)
| |||||||||||||||||||||||||||
|
Employee
options exercised |
|
1,118
|
-
|
-
|
-
|
-
|
-
|
1,118
|
-
|
1,118
|
||||||||||||||||||||||||||||||
|
Share-based
payment |
-
|
-
|
-
|
-
|
-
|
-
|
9,499
|
9,499
|
-
|
9,499
|
||||||||||||||||||||||||||||||
|
Balance
at December 31, 2021 |
8
|
150,366
|
102
|
9,503
|
-
|
394
|
(28,697
|
)
|
131,676
|
-
|
131,676
|
|||||||||||||||||||||||||||||
|
Changes
during the year; |
||||||||||||||||||||||||||||||||||||||||
|
Loss for
the year |
(37,509
|
)
|
(37,509
|
)
|
(37,509
|
)
| ||||||||||||||||||||||||||||||||||
|
Other comprehensive
income
(loss) for
the year |
-
|
-
|
146
|
-
|
-
|
(374
|
)
|
-
|
(228
|
)
|
-
|
(228
|
)
| |||||||||||||||||||||||||||
|
Employee
options exercised |
|
1,040
|
-
|
-
|
-
|
-
|
-
|
1,040
|
-
|
1,040
|
||||||||||||||||||||||||||||||
|
Share-based
payment |
-
|
-
|
-
|
-
|
-
|
-
|
9,656
|
9,656
|
-
|
9,656
|
||||||||||||||||||||||||||||||
|
Balance
at December 31, 2022 |
8
|
151,406
|
248
|
9,503
|
-
|
20
|
(56,550
|
)
|
104,635
|
-
|
104,635
|
|||||||||||||||||||||||||||||
F - 8
NAYAX LTD.
F - 9
NAYAX LTD.
|
Year
ended December 31 |
||||||||||||
|
2022
|
2021
|
2020
|
||||||||||
|
(Audited)
|
||||||||||||
|
U.S.
dollars in thousands |
||||||||||||
|
Appendix
A – adjustments required to reflect the cash flows from operating activities: |
||||||||||||
|
Adjustments
in respect of: |
||||||||||||
|
Depreciation and amortization
|
9,028
|
7,198
|
5,908
|
|||||||||
|
Post-employment benefit
obligations, net |
(107
|
)
|
139
|
106
|
||||||||
|
Deferred taxes
|
(181
|
)
|
25
|
(230
|
)
| |||||||
|
Finance expenses, net
|
4,544
|
269
|
3,428
|
|||||||||
|
Expenses in respect of
long-term employee benefits |
245
|
193
|
5
|
|||||||||
|
Share in losses of associate
company |
1,794
|
538
|
-
|
|||||||||
|
Long-term deferred income
|
(104
|
)
|
(26
|
)
|
-
|
|||||||
|
Expenses in respect of
share-based payment |
8,747
|
8,850
|
2,965
|
|||||||||
|
Total adjustments
|
23,966
|
17,186
|
12,182
|
|||||||||
|
Changes
in operating asset and liability items: |
||||||||||||
|
Increase in restricted
cash transferable to customers for processing activity |
(10,424
|
)
|
(5,529
|
)
|
(11,930
|
)
| ||||||
|
Decrease (increase) in
receivables from processing activity |
(10,986
|
)
|
(5,429
|
)
|
5,003
|
|||||||
|
Increase in trade receivables
|
(8,272
|
)
|
(5,136
|
)
|
(3,894
|
)
| ||||||
|
Increase in other current
assets |
(936
|
)
|
(1,352
|
)
|
(389
|
)
| ||||||
|
Increase in inventory
|
(12,592
|
)
|
(2,631
|
)
|
(511
|
)
| ||||||
|
Increase in payables
in respect of processing activity |
20,510
|
13,832
|
7,203
|
|||||||||
|
Increase (decrease) in
trade payables |
4,519
|
(3,775
|
)
|
3,154
|
||||||||
|
Increase in other payables
|
4,177
|
4,797
|
1,753
|
|||||||||
|
Total changes in operating
asset and liability items |
(14,004
|
)
|
(5,223
|
)
|
389
|
|||||||
|
Total adjustments required
to reflect the cash flow from operating activities |
9,962
|
11,963
|
12,571
|
|||||||||
|
Appendix
B – Information regarding investing and financing activities not involving cash flows: |
||||||||||||
|
Purchase of property
and equipment on credit |
215
|
118
|
575
|
|||||||||
|
Acquisition of patents
against derecognition of loan |
-
|
-
|
806
|
|||||||||
|
Acquisition of right-of-use
assets through lease liabilities |
2,048
|
1,428
|
1,235
|
|||||||||
|
Share based payments
costs attributed to development activities, capitalized as intangible assets |
909
|
649
|
883
|
|||||||||
| F - 10 |
NOTE 1 - GENERAL
a. Background
a. Nayax Ltd. (hereafter – the “Company”) was incorporated in January 2005. The Company provides processing and software as a service (SaaS) business operations solutions and services via a global platform. The Company is marketing its POS devices and SaaS solutions it developed in more than 60 countries worldwide (including Israel) through subsidiaries (the Company and the subsidiaries, hereafter – the “Group”) and through local distributors.
b. On May 13, 2021, the Company completed an initial public offering (IPO) on the Tel Aviv stock exchange (TASE) in which it sold 4.4 million ordinary shares of NIS 0.001 par value for a gross amount, before issuance costs, of $141.6 million and $132.5 million, net of issuance costs. The IPO was a non-uniform offering, as this term is defined by Israeli Securities Regulations (Manner of Offering Securities to the Public), 2007, to institutional investors in Israel and outside of Israel.
c. On September 21, 2022, Company's ordinary shares were listed on the Nasdaq Global Select Market under the symbol NYAX. As of that date, the company is dual listed on Nasdaq and as well as on the Tel Aviv Stock Exchange.
d. In connection with Company's May 2021 IPO on the TASE, the expenses incurred in the profit or loss report for the year ended December 31, 2021, other than underwriter discount and commissions, were $1,879 thousand and include bonuses in respect of the IPO to a number of its employees for a total of $979 thousand. In connection with Company's September 2022 listing on Nasdaq, the expenses incurred in the profit or loss report for the year ended December 31, 2022 are $1,790 thousand.
e. On September 11, 2022 Company's shareholders approved a reverse share split in a ratio of 10:1. All issued and outstanding Company's Ordinary Shares have been retroactively adjusted to reflect the reverse share split for all periods presented in these financial statements prior the approval.
b. Current geopolitical conflict between Russia and Ukraine
On February 24, 2022, following Russia's invasion of Ukraine, a military conflict broke out in eastern Europe and dragged a political tension between countries from the European Union and United States to Russia.
Although this conflict caused various disruptions in a global scale, in many aspects, the risks inherent in conducting business in these countries are highly remote since the Company has no revenue generated in the countries involved directly or indirectly at the Russia-Ukraine conflict and the Company has a relatively small scale of business research and development conducted only in Ukraine. The operation of research and development in Ukraine considered to be immaterial in comparison to entire Company's research and development operations and as of the date of these financial statements there was no impact noted.
As of the date of these financial statements, the Company has no operating subsidiary which are organized under the laws of the Russian Federation and has no subsidiaries which are incorporated in other countries which are subject to economic sanctions on the Russian Federation. Neither of the Company's controlling shareholder nor the Company's principal operating subsidiary or other subsidiaries are targets of sanctions.
| F - 11 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL (continued):
c. Impact of COVID-19 (continued):
a) General
In December 2019, the COVID-19 pandemic broke out in China, which quickly spread world wide in early 2020, causing global economic uncertainty and distress due to mandatory shut-downs of many businesses, slower manufacturing and disruption of national and international shipments and travel (hereinafter: "COVID"), while on the other hand, significantly increasing global demand for different electronic products. This trend coupled with the slowdown in manufacturing, created a global shortage for the components required to make many electronic products.
As part of the efforts to cope with COVID, most countries worldwide imposed certain restrictions on their populations, including limits on movement, gathering in the public space; caps on the numbers of employees allowed in workplaces and more. Those restrictions have had a direct impact on many industries, with some of them experiencing complete halt.
Such global shortage in the availability of components started to adversely affect the gross profit rate from selling the hardware since third quarter of 2021, due to an increase in the price of many components used by the Company for manufacturing its hardware products, some of them significantly.
b) Efficiency plans
In response to the COVID crisis in Israel and worldwide, the Company implemented two efficiency plans for coping with the situation. The first plan started shortly after the outbreak in March 2020. This plan mostly involved a 15%-20% reduction in monthly hours of employees and sent 10% of its staff in Israel on unpaid leave. This plan ended in July 2020.
The second efficiency plan implemented by the Company began in October 2020. The plan mostly involved a reduction of up to 10% of Israeli-based employees' salaries. This plan ended in January 2021.
For the avoidance of doubt, all employees sent on unpaid leave returned to normal work, and all payroll reductions and/or hour cuts were eliminated.
c) Government support
• Government guarantee loans
In May 2020, the Company received from an Israeli bank a 15 million NIS ($4.25 million) long-term loan that is backed by a government guarantee, as part of the government assistance plan due to COVID. For more information on the terms of the loan, see note 13(b)(2). For list of liens to secure the loan, see note 25(a)(3).
Additionally, support was received from governments in the domicile of a number of subsidiaries:
• The Australian government – an employment encouragement grant of AU$222 thousand (US$170 thousand)) was received during the year ended December 31, 2020
• The US government - Forgivable loans totaling $483 thousand were received during the year ended December 31, 2020 and forgiven during the year ended December 31, 2021.
Accordingly, these loans were derecognized against a decrease in the payroll expenses in respect of which the loans were received.
| F - 12 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
a. Basis of presentation:
The financial statements of the Group as of December 31, 2022 and 2021 and for each of the three years ended December 31, 2022, are in compliance with International Financial Reporting Standard (hereafter – “IFRS”), as issued by the International Accounting Standards Board (hereafter – “IASB”) were approved for issue by the Board of Directors (the "Board") of the Company on February 28, 2023.
In connection with the presentation of these financial statements, the following is stated:
1) The principal accounting policies set out below have been consistently applied to all periods presented, unless otherwise stated.
2) The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Group’s management to exercise its judgment in the process of applying the Group’s accounting policies. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3. Actual results may differ materially from estimates and assumptions used by the Group's management.
3) The Group's operating cycle is 12 months.
b. Consolidated financial statements
1) Subsidiaries and business combinations
Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is obtained by the Company. They are deconsolidated from the date that control ceases.
When assessing control, the Company considers its potential voting rights, as well as such rights held by other parties to determine whether it has power over an investee. Potential voting rights are rights to obtain voting rights of an investee, such as those arising from convertible instruments or options, including forward contracts. Those potential voting rights are considered only if the rights are substantive.
Business combinations are accounted for using the acquisition method. The cost of acquisition is measured at the fair value of the consideration transferred on acquisition date plus non-controlling interests in the acquired entity. In each business combination, the Group determines whether to recognize non-controlling interests in the acquired entity at fair value on acquisition date or proportionally to the share of non-controlling interests at the fair value of net identifiable assets of the acquired entity.
Goodwill represents the excess of the acquisition consideration and the amount of non-controlling interests and acquisition-date fair value of any previous equity interest in the acquired entity over the net identifiable assets acquired and liabilities assumed. If the resulting amount is negative, the acquirer recognizes the resulting gain on the acquisition date.
Intra-group transactions and balances, including revenues, expenses and dividends in respect of transactions between Group entities were eliminated. Gains and losses on intra-group transactions that are recognized as assets (such as inventory and property and equipment) are also eliminated.
Accounting policies of the subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.
| F - 13 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
b. Consolidated financial statements (continued):
2) Transactions with non-controlling interests' owners which do not result in loss of control
Transactions with non-controlling interests owners which do not result in loss of control are accounted for as transactions with shareholders. In such transactions, the difference between the fair value of any consideration paid or received and the amount in which the non-controlling interests are adjusted to reflect the changes in their proportional interest in a subsidiary are recognized directly in equity and attributed to the owners of the Company.
3) Associates
An associate is an entity over which the Group exercises significant influence, but not control. The investment in an associate is accounted for by the equity method.
4) The equity method
According to the equity method of accounting, the investment is initially recognized at cost and its carrying amount varies such that the Group recognizes its share of the associate's earnings or losses from acquisition date.
Goodwill relating to associates is included in the investment’s carrying amount and tested for impairment as part of the entire investment.
The Group’s share of post-acquisition profit or loss is recognized in the statements of profit or loss , and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying amount of the investment. When the Group’s share of losses in an associate equal or exceeds its interest in the associate (including any other unsecured long term receivables), the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there are any indications that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the investment (the higher of the value in use and the fair value less costs to sell) and its carrying amount and recognizes the impairment amount in the income statement.
c. Translation of foreign currency balances and transactions:
1) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (hereafter - the “Functional Currency”). When determining the functional currency of Group companies and whether their functional currency is identical to that of the Company, the materiality of the foreign operations as an extension of the reporting entity was taken into account.
The consolidated financial statements are presented in US Dollars which is the functional and presentation currency of the Company and Group entities, except Nayax Retail and Weezmo, whose functional currency is the NIS.
Set forth below are the exchange rates of the US Dollar against the NIS, Euro, Pound Sterling and Australian Dollar as of December 31, 2022, 2021 and 2020:
|
Exchange
rate of the
US Dollar
against the
NIS
|
Exchange
rate of
the
US
Dollar
against
the
Euro
|
Exchange
rate of
the
US
Dollar
against
the
Pound
Sterling
|
Exchange
rate of
the
US
Dollar
against
the
Australian
Dollar
|
|||||||||||||
|
December 31, 2022
|
3.519
|
0.937
|
0.83
|
1.472
|
||||||||||||
|
December 31, 2021
|
3.11
|
0.884
|
0.74
|
1.376
|
||||||||||||
|
December 31, 2020
|
3.215
|
0.814
|
0.736
|
1.305
|
||||||||||||
2) Transactions and balances
Transactions made in a currency which is different from the functional currency ("foreign currency") are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or revaluation, if the items are revalued. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the end-of-year exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of profit or loss. Gains and losses from changes in exchange rates are presented in the statement of profit or loss among "finance expenses, net".
3) Translation of financial statements of Group entities:
The results and financial position of Group entities, whose functional currency is different than the presentation currency, are translated into the presentation currency as follows:
|
(a) |
Assets and liabilities for each statement of financial position statement presented are translated at the closing rate at the date of the statement of financial position; | |
|
(b) |
Income and expenses for each statement of profit or loss are translated at average exchange rates for the period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and | |
|
(c) |
All resulting exchange differences are recognized in other comprehensive income. |
On consolidation, exchange differences arising from the translation of the net investment in foreign operations whose functional currency is different than that of the Company are recognized in other comprehensive income. When a foreign operation is fully disposed of, exchange differences that were recorded in other comprehensive income are recognized in the statement of profit or loss as part of the gain or loss on sale.
Goodwill and fair value adjustments arising from acquisition of foreign operations, are accounted for as assets and liabilities of the foreign operations and translated at closing rate. Exchange differences arising from the translation as aforesaid are carried to other comprehensive income.
d. Cash and cash equivalents
Cash and cash equivalents include cash on hand and short-term bank deposits, which are not restricted by liens, with original maturities of three months or less. For additional information about the restricted cash, see note 8 below.
| F - 15 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
e. Inventory
Finished goods inventories purchased by the Company are stated at the lower of cost and net realizable value. Cost is determined on a moving average basis. The cost of inventory includes all acquisition costs, conversion costs and other direct costs incurred in bringing the inventory to its current location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.
The Group periodically reviews the condition and age of the inventory, and where necessary makes impairment provisions.
f. Property and equipment
Property, plant and equipment items are initially recognized at acquisition cost. Subsequent costs are included as incurred in the asset’s carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. When a part of a property, plant and equipment item is replaced, its carrying amount is derecognized.
All other repair and maintenance costs are charged to the statement of profit or loss during the financial period in which they are incurred. Depreciation on assets is calculated using the straight-line method to depreciate their cost to their residual value over their estimated useful lives, as follows:
|
%
| ||
|
Computers and peripheral
equipment |
33
| |
|
Rental of POS devices
|
20
| |
|
Machinery and equipment
|
10
|
Leasehold improvements are depreciated by the straight-line method over the earlier of the term of the lease or the estimated useful life of the improvements.
The assets’ residual values, their useful lives and the depreciation method are reviewed and adjusted, if appropriate, at least once a year.
g. Intangible assets:
1) Research and development
Intangible assets arising from development projects or from internally-developed new products, development of internally-used operational systems and integration of external systems with the Group’s existing systems, are recognized as intangible assets, subject to the following conditions being met:
|
a) |
The technical feasibility of completing the intangible asset so that it will be available for use exists; | |
|
b) |
Management intends to complete the intangible asset and use or sell it; | |
|
c) |
There is an ability to use or sell the intangible asset; | |
|
d) |
The way the intangible asset will generate probable future economic benefits is demonstrable; | |
|
e) |
The technical, financial and other resources to complete the development and to use or sell the intangible asset are available; and | |
|
f) |
The expenditure attributable to the intangible asset during its development can be reliably measured. |
| F - 16 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
g. Intangible assets (continued):
1) Research and development (continued):
The Group monitors all its development projects to identify costs for recognition as an expense in profit or loss and costs for capitalization as an asset in the statement of financial position by making a distinction between:
|
(1) |
Investments in new products (hardware and software), as opposed to expenses aimed at maintaining normal functionality; |
|
|
(2) |
Investment in integrations and opening markets; and | |
|
(3) |
Investment in software for own use. |
The Group reviews, in relation to each investment, whether it is designed to substantially enhance the functionality in a way that would increase the economic benefit flowing to the Group (i.e. higher revenue and/or cost savings).
Investments designed to enhance functionality in a way that would increase the economic benefit flowing to the Group are capitalized as an asset and presented within "goodwill and intangible assets, net" in the statement of financial position (subject to satisfying of the terms as instructed in IAS38 and listed in an extract above).
The main types of costs that are capitalized as an intangible asset as of December 31, 2022 and 2021 are:
|
(1) |
Payroll costs and related expenses, which are attributed by the Group to the different projects that meet the conditions for capitalization; |
|
(2) |
Cost of subcontractors, which are specifically identified to projects that meet the conditions for capitalization. | |
|
(3) |
Share-based payment expenses contributed apportionately with payroll and related suppliers expenses arise from development. |
Research costs are expensed as incurred to the "research and development expenses" item in the statement of profit or loss. Research costs of the Group in the reported periods are immaterial to its financial statements.
Development costs designed to maintain normal functionality or insignificantly enhance functionality, as well as development costs that are not identified with a project that can be capitalized, are expensed as incurred to "research and development expenses" in profit or loss.
Research and development expenses that were previously expensed to profit and loss are not recognized as intangible assets in subsequent reporting periods. Development costs presented as intangible assets are amortized from the point in time in which the asset is available for use, on a straight-line basis, over their useful lives (5 years).
Development assets which have not yet reached the point in which the asset is available for use are tested for impairment every year.
2) Distribution rights
Distribution rights purchased as part of a business combination are recognized at fair value on the acquisition date. Separately purchased distribution rights are recognized at cost, plus directly attributable acquisition costs. The distribution rights have a definite useful life (20 years), and they are presented net of accumulated amortization on a straight-line basis.
3) Customer relationships
Customer relationships purchased as part of a business combination are recognized at fair value on the acquisition date. Separately purchased customer relationships are recognized at cost, plus directly attributable acquisition costs. The customer relationships have a definite useful life (10 years), and they are presented net of accumulated amortization on a straight-line basis.
| F - 17 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
g. Intangible assets (continued):
4) Technology
Technology purchased as part of a business combination is recognized at fair value on the acquisition date. Technology has a definite useful life (5-7 years) and is presented net of accumulated amortization on a straight-line basis.
5) Goodwill
Goodwill arising from the acquisition of a subsidiary represents the overall excess of: (1) the consideration transferred; (2) the amount of any non-controlling interests in the acquiree; (3) in a business combination achieved in stages, also the existing fair value as of the acquisition date of the Group’s previously held equity interest in the acquiree, over the net amount as of the acquisition date, of the identifiable assets acquired and the acquiree’s liabilities and contingent liabilities assumed.
For the purpose of impairment testing, goodwill acquired in a business combination is allocated, as from the acquisition date to each of the cash generating units or groups of cash generating units of the Group that are expected to benefit from the synergies of the combination.
Impairment testing of a cash generating unit to which goodwill was allocated is undertaken annually and whenever there is any indication of impairment of the cash generating unit, by comparing the carrying amount of the cash generating unit, including the goodwill, to its recoverable amount, which is the higher of its value in use and the fair value less costs to sell.
Any impairment loss is first allocated to write-down the carrying amount of any goodwill allocated to the cash generating unit, and afterwards to the remaining assets of the cash generating unit, on a proportionate basis using the carrying amounts of each asset of the cash generating unit.
Any impairment loss on goodwill is recognized immediately in profit or loss and is not subsequently reversed.
h. Impairment of non-financial assets
Intangible assets that have an indefinite useful life, such as goodwill, as well as intangible assets that are not yet available for use, are not amortized and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that such assets might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less selling costs and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels of identifiable cash flows (cash-generating units). Non-monetary assets, other than goodwill, that were impaired are reviewed for possible reversal of the impairment recognized in respect thereof at each statement of financial position date.
| F - 18 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
i. Leases:
The Group accounts for a contract as a lease contract if the contract conveys the right to control the use of an identified asset for a period of time in exchange for a consideration:
1) The Group as a lessee:
In transactions in which the Group acts as lessee, the Group recognizes a right-of-use asset against a lease liability on the commencement date of the lease contract, except in the case of lease transactions with a lease term of up to 12 months and lease transactions for which the underlying asset is of low value; in those cases, the Group recognizes the lease payments on a straight-line basis as an operating cost over the lease period.
As part of the measurement of the lease liability, the Group does not separate between lease and non-lease components, such as: management services, maintenance services and more, which are included in the relevant transaction.
The lease liability on the commencement date includes outstanding lease payments discounted by the interest rate implicit in the lease, if that rate can be readily determined, or by the lessee’s incremental borrowing rate. The Group used the incremental borrowing rate, which is the rate of interest that the Group would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. Subsequent to the commencement date, the Company measures the lease liability using the effective interest method.
The right-of-use asset on the commencement date is measured based on the lease liability plus lease payments paid on or before inception date plus initial direct costs and less lease incentives received. The right-of-use asset is measured using the cost model and depreciated over the shorter of its useful life and the lease period. When there are indications for impairment, the Group tests the right-of-use asset for impairment in accordance with the provisions of IAS 36.
2) The Group as a lessor:
Amounts due from lessees under finance leases are recognized as receivables at the amount of the Group’s net investment in the leases. Finance lease income is allocated to accounting periods so as to reflect a constant periodic rate of return on the Group’s net investment outstanding in respect of the leases.
Subsequent to initial recognition, the Group regularly reviews the estimated unguaranteed residual value and applies the impairment requirements of IFRS 9, recognizing an allowance for expected credit losses on the lease receivables.
Finance lease income is calculated with reference to the gross carrying amount of the lease receivables, except for credit-impaired financial assets for which interest income is calculated with reference to their amortized cost (i.e. after a deduction of the loss allowance).
3) Subleases
In transactions where the Group leases an underlying asset (a head lease) and sub-leases that underlying asset to a third party (sublease), the Group checks whether the risks and rewards relevant to the right-of-use asset were transferred by, among other things, checking the sub-lease period in reference to the useful life of the right-of-use asset arising from the head lease.
| F - 19 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
i. Leases (continued):
3) Subleases (continued):
When substantially all the risks and rewards incidental to ownership of the right-of-use asset were transferred, the Group accounts for the sub-lease as a finance lease. At sublease commencement date, the leased asset is derecognized and a “receivable in respect of finance lease” is recognized in an amount equal to the present value of the lease proceeds discounted by the lease’s implicit interest rate. Any difference between the balance of the leased asset prior to derecognition and the receivable balance in respect of the lease is recognized in profit and loss.
j. Government grants
Government grants are recognized at fair value when there is reasonable assurance that the grant will be received and that the Group will meet all the terms attached thereto. A forgivable loan from a government is treated as a government grant when there is reasonable assurance that the Group will meet the terms for forgiveness of the loan.
Government grants relating to costs are recognized in profit or loss on a systematic basis over the periods in which the Group recognizes as expenses the related costs for which the grants are intended to compensate.
Government grants received as participation in research and development carried out by the Group fall into the scope of "forgivable loans" as defined in IAS 20 – “Accounting for Government Grants and Disclosure of Government Assistance”.
In cases where on the date on which the entitlement to receive the grant is established (hereafter – the “entitlement date”) the Group’s management concludes that there is no reasonable assurance that the grant to which the Group is entitled will not be repaid, the Group recognizes, on that date, a financial liability accounted for in accordance with the provisions applicable under IFRS 9 to financial liabilities measured using the effective interest method.
In cases where the Group’s management concludes that there is reasonable assurance that the grant received will not be repaid, or if it is not expected that the Company will be required to pay royalties in respect thereof, the grant is carried, at that date, to profit or loss as a reduction of research and development expenses.
If in subsequent periods the Group's management concludes for the first time that the grant will be repaid or that royalties will be paid by the Group in respect thereof, the Group recognizes a financial liability on that date, against profit or loss as an increase in research and development expenses. This liability will be measured at amortized cost in accordance with the provisions of IFRS 9 using the effective interest method. Amounts payable on account of repayment of the grant or as royalties are recognized as the settlement of the liability.
k. Financial instruments:
Classification of financial assets
The Group classifies its financial assets into the following categories: financial assets at fair value through profit or loss and financial assets at amortized cost. The classification depends on the business model for managing the financial assets and the contractual terms of the cash flows in respect thereof.
| F - 20 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
k. Financial instruments (continued):
Classification of financial assets (continued):
Financial assets at amortized cost are financial assets held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and their contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Financial assets at fair value through profit or loss are financial assets not classified into one of the categories of financial assets at amortized cost or financial assets at fair value through other comprehensive income.
These assets are classified as current assets, except if they are expected to be settled within more than 12 months after the statement of financial position date, in which case they are classified as non-current assets. The Group’s financial assets at amortized cost are included in the following items: “receivables in respect of processing activity”, “trade receivable”, “other current assets”, “cash and cash equivalents”, “short- term bank deposits”, “restricted cash transferable to customers in respect of processing activity”, “long-term receivables” and “long-term bank deposits” in the statement of financial position.
Recognition and measurement
Ordinary course purchase and sales of financial assets are recorded in the Group’s books of accounts on the date on which the asset is delivered to the Group or by the Group.
Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership associated with these assets. Financial assets at fair value through profit or loss are presented in subsequent periods at fair value. In subsequent periods, financial assets at amortized cost are measured based on the effective interest method.
Financial assets measured at fair value through profit or loss are initially recognized at fair value and transaction costs are carried to profit or loss. Gains or losses arising from changes in the fair value of financial assets at fair value through profit or loss are presented in profit or loss under “finance expenses, net”, in the period in which they are incurred.
Impairment of financial assets measured at amortized cost
The Group recognizes a provision for loss in respect of expected credit losses on debt instruments measured at amortized cost, lease receivables and assets in respect of contracts with customers that arise from transactions within the scope of IFRS 15.
At each statement of financial position date, the Group assesses whether the credit risk of the financial asset has increased significantly since it was initially recognized, whether assessed on an individual or collective basis. For that purpose, the Group compares the risk of default at the reporting date with the risk of default on the initial recognition date, taking into account all reasonable and supportable information that is available, including forward-looking information.
For financial assets that experience a significant increase in their credit risk since initial recognition, the Group measures the impairment for loss at the amount of expected credit losses over the entire life of the instrument. Otherwise, the provision for loss is measured at the expected credit loss in a 12-month period.
However, the Group measures the provision for loss at an amount equal to expected credit losses over the instrument’s life for trade receivables or assets in respect of contract with customers arising from transactions within the scope of IFRS 15, and for receivables in respect of lease, stemming from transactions within the scope of IFRS 16.
| F - 21 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
k. Financial instruments (continued):
Offsetting of financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position, only when there is an immediate legally enforceable right (which is not conditional upon the occurrence of a future event) to offset the recognized amounts under all of the following circumstances: in the ordinary course of business, in the event credit default, insolvency or bankruptcy of the entity and of all counterparties, and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
Financial liabilities
Financial liabilities are classified as measured at amortized cost or at fair value through profit or loss.
Financial liabilities measured at amortized cost:
Upon initial recognition, the Group measures the financial liabilities at fair value, net of transaction costs. In subsequent periods these financial liabilities are measured at amortized cost. Any differences between the amount of initial recognition (net of transaction costs) and the redemption value are recognized in the statement of profit or loss over the term of the financial liability, in accordance with the effective interest method.
Fees paid in respect of receipt of a credit facility are recognized as transaction costs attributed to the relevant loan, to the extent that it is probable that a portion or all of the credit facility amount shall be utilized. In such a case, the recognition of fees is deferred until the funds are actually withdrawn as part of the loan. If there is no evidence that a portion or all of the credit facility will be utilized, the fee is capitalized as a prepaid payment in respect of financing services and amortized over the term of the relevant credit facility.
Financial liabilities measured at fair value through profit or loss:
The Group measures these financial liabilities at fair value. Transaction costs are recognized in profit or loss. Financial liabilities are classified as current liabilities, unless if the Group has an unconditional right to defer the settlement of the liability by at least 12 months after the end of the reporting period, in which case they are classified as non-current liabilities.
l. Trade receivables
Trade receivables are amounts due from customers for sales of POS devices or services performed in the ordinary course of business.
m. Trade payables
Trade payables are the Group’s obligations to pay for goods or services that have been rendered by suppliers in the ordinary course of business.
n. Income taxes
Income tax expense or benefits for the reported years include current and deferred taxes. Taxes are recognized in profit or loss, except for taxes arising from business combination and taxes relating to items carried to other comprehensive income or directly to equity, which are also recognized in other comprehensive income or equity, respectively, together with the item in respect of which they were created.
| F - 22 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
n. Income taxes (continued):
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted in the countries in which Group companies operate and generate taxable income at the statement of financial position date. The Group periodically evaluates the tax aspects applicable to its taxable income based on the relevant tax laws and makes provisions in accordance with the amounts expected to be paid to the tax authorities.
The Group recognizes deferred income tax using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
The amount of deferred taxes is determined using tax rates (and laws) that have been enacted or substantially enacted by the statement of financial position date and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.
Deferred tax assets are recognized for temporary differences that are tax deductible, up to the amount of the differences that are expected to be utilized in the future, against taxable income. Deferred tax assets are recognized in respect of unused carryforward losses, if it is probable that future taxable profit will be available against which the unused tax losses can be utilized.
The Group does not recognize deferred taxes on temporary differences arising on investments in subsidiaries, since the timing of the reversal of the temporary differences is controlled by the Group and it is probable that these temporary differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are set off only if: (a) An enforceable legal right exists to set off current tax assets against current tax liabilities; and; (b) Deferred tax assets and liabilities relate to income tax imposed by the same tax authority on the same entity or on different entities that intend to settle the balances on a net basis.
o. Employee benefits:
1) Post-employment benefits:
a. Defined contribution plans
For most of its employees in Israel, the Company operates various pension and severance pay schemes which were approved in accordance with Section 14 to the Severance Pay Law. The schemes are generally funded through payments to insurance companies or trustee-administered funds.
These plans constitute defined contribution plans since the Company pays fixed contributions into separate and independent entities. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
The contributions are recognized as an expense for employee benefits when they are due. Prepaid contributions are recognized as an asset to the extent that a cash refund or a reduction in the future payments is available.
| F - 23 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
o. Employee benefits (continued):
b. Defined benefit plans
Labor laws and agreements in Israel, and the practice of the Group, require it to pay retirement benefits to employees dismissed or retiring in certain other circumstances. The amounts of benefits that such employees are entitled to receive upon retirement is based on the number of years of employment and the employee’s last monthly salary, subject to the conditions set in the agreements. These liabilities are accounted for as defined benefit plans.
Total retirement benefit obligation as recognized in the statements of financial position is the present value of the defined benefit obligation at the statement of financial position date, less the fair value of plan assets. The defined benefit obligation is calculated annually by an independent actuary using the projected unit credit method.
The present value of the obligation is determined by discounting the estimated future cash outflows (after taking into account the expected rate of salary increases) using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid and that have terms to maturity approximating to the terms of the related liability.
The Company recognizes remeasurements of the net defined benefit obligations in other comprehensive income in the period in which they are incurred. Those remeasurements are created as a result of experience adjustments and changes in actuarial assumptions and differences between plan assets return and the amounts included in net interest on net defined benefit obligations.
Past and current service costs are recognized immediately in profit or loss under the payroll line items, while interest expenses on the net liabilities are recognized in expense on a current basis under the finance expenses line item.
“Plan assets”, as defined in IAS 19, are measured at fair value, and they are deducted from the balance of the defined benefit obligation for statement of financial position presentation.
2) Other long-term benefits
Other long-term employee benefits are employee benefits that are not short term, post-employment and termination benefits, as defined in IAS 19. The liability for other long-term employee benefits is measured in the same way of measuring the obligation for defined benefit plans (see (1) above). However, remeasurements of other long-term employee benefits are not recognized in other comprehensive income, but to profit or loss.
3) Vacation and recreation benefits
Under labor laws in Israel every employee is legally entitled to vacation and recreation benefits, both computed on an annual basis. This entitlement is based on the term of employment. The Group charges a liability and expense due to vacation and recreation pay, based on the benefits that have been accumulated for each employee.
| F - 24 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
o. Employee benefits (continued):
3) Vacation and recreation benefits (continued):
Where the Group expects that the liability in respect of the vacation pay benefit will be settled within 12 months from the end of the annual reporting period during which the employees provided the relating services, the liability in respect of this benefit is measured in accordance with the additional amount, which the Group expects to pay in respect of the unutilized benefit accrued as of the end of the reporting period. If the Group does not expect that the liability in respect of the vacation pay benefit will be settled in full within that period, the liability for this benefit is measured as a liability for other long-term employee benefits (see (2) above).
4) Bonus plan
During the year ended December 31, 2021, the Company’s management for the first time adopted a remuneration program for all of the Group’s employees (apart from sales people and apart from employees that are relatives of the Company’s controlling shareholders) in effect from 1 July 2021. According to the terms of the program, at the beginning of every calendar year (and in the current year at the beginning of the second half of 2021) personal annual targets shall be set for each employee, and pursuant to their fulfillment and to the Company’s general targets, the employees shall be entitled to bonuses.
p. Revenue recognition
The Group has revenues from sales of Point of Sales (POS) devices, software as a service (SaaS) and payment processing fees.
1) Revenue measurement
The revenue of the Group is measured at the amount of the consideration to which the Group expects to be entitled in exchange for transferring promised terminals or services to a customer, excluding amounts collected on behalf of third parties, such as certain selling taxes. Revenue is presented net of VAT and after elimination of intra-group revenue.
2) Timing of revenue recognition
The Group recognizes revenue when the customer obtains control of the promised goods or service under the contract with the customer. For each performance obligation, the Group determines, when entering into a contract, if it satisfies the performance obligation over time or at a point in time.
The group satisfies a performance obligation over time if one of the following criteria is met: (1) the customer is receiving and consuming the benefits of the Group’s performance as the Group performs; (2) the Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or (3) the Group’s performance does not create an asset with an alternative use to the Group, and the Group has an enforceable right to payment for performance completed to that date.
| F - 25 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
p. Revenue recognition (continued):
3) Types of revenues of the Group
Revenue from sales of POS devices
The Group sells POS devices to customers.
Pursuant to IFRS 15, goods or services promised to a customer are distinct if the customer can benefit from the good or service supplied (either on its own or together with other resources that are readily available); and the Group’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.
The POS devices sold to the Group’s customers enable multiple functionalities. The sale of the POS device does not oblige the customer to purchase a full solution or to make a further purchase of the Group’s services. Accordingly, the POS devices constitute a performance obligation that is separate from the service component, and the Group recognizes revenues from sales of POS devices at a point in time, when control of the POS devices is transferred to its customers.
SaaS revenue and payment processing fees (hereafter –"Recurring revenue")
The Group provides management services and payment processing services. The consideration for the management services includes monthly fees in respect of each POS device. The consideration for the payment processing fees includes processing services, which are mostly calculated as a percentage of the transaction’s value and/or a defined fee for each processed transaction. Payment is made per the normal payment terms of the Company, which are generally 15 to 60 days from the date of the invoice. The revenue from those services is recognized in the period the services are rendered.
The Group recognizes the payment processing fees collected from its customers on a gross basis, since the Group controls the specified services before it is transferred to the customers, in accordance with the provisions of IFRS 15. In particular, the Group is primarily responsible for fulfilling the promise to provide the payment processing services to the customer, and the Group has discretion in establishing the price for the specified services. As a payment service provider, the Group acts as a merchant of record for its merchants. The Group bears the risk of chargebacks if amounts cannot be recovered from the customer. The fees paid to the processing companies are recognized as expenses under cost of revenue.
Allocation of the consideration in transactions that include the sale of POS devices and the above related services is based on the relative stand-alone selling price of each performance obligation based on the price at which a good or service is sold separately.
q. Share-based payments
From time to time, the Group’s Board of Directors approves plans for the award of options to the Group’s employees and suppliers, whereby the Group receives services from its employees and/or suppliers in consideration for equity instruments (options) of the Group.
The amount recognized for share-based payments to employees is determined in reference to the fair value of the options granted on the grant date. Non-market vesting terms are included among the assumptions used to estimate the number of options expected to vest, such that the expense is recognized during the vesting period, which is the period in which the employee is required to complete the set service period. As to other service providers, the cost of the transactions is measured in accordance with the fair value of the goods or services received in return for the equity instruments that were granted. Where it is not possible to measure reliably the fair value of the goods or services received in consideration for equity instruments, they are measured at the fair value of the granted equity instruments.
| F - 26 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
q. Share-based payments (continued):
At each statement of financial position date, the Group revises its estimates as to the number of options expected to vest, based on the non-market vesting and service conditions, and recognizes the impact of the change compared to the original estimates, if any, in the statement of profit or loss, with a corresponding adjustment to equity.
r. Earnings (Loss) per share
The computation of basic earnings (loss) per share is based on the profit (loss) attributable to holders of ordinary shares, divided by the weighted average number of ordinary shares in issue during the period, excluding treasury shares. When calculating the diluted earnings (loss) per share, the Group adds to the average number of ordinary shares outstanding, that was used to calculate the basic earnings per share, the weighted average of the number of shares to be issued assuming that all shares that have a potentially dilutive effect would be converted into shares. Said potential shares are only taken into account in cases where their effect is dilutive (reducing the earnings per share or increasing the loss per share).
s. Provisions
Provisions are recorded in the books of accounts when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are measured at the present value of the cash flows expected to be required to settle the obligation using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognized as interest expense.
t. New International Financial Reporting Standards, amendments to standards and new interpretations:
1) Amendment to IAS 1 "Presentation of Financial Statements" (hereinafter – "Amendment to IAS 1")
The amendment clarifies, among other things, that:
|
(a) The Amendment to requires companies to disclose their material accounting policy information rather than their significant accounting policies. | ||
|
(b) The amendment defines what is ‘material accounting policy information’ and explains how to identify when accounting policy information is material. The amendment further clarifies that immaterial accounting policy information does not need to be disclosed. If it is disclosed, it should not obscure material accounting information. | ||
|
(c) The Amendment to IAS 1 is applicable for annual periods beginning on or after 1 January 2023. According to provisions of the amendment, early adoption is permitted. | ||
The Company is currently evaluating the effects of adopting the Amendment to IAS 1 on its financial statements.
| F - 27 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (continued):
2. Amendment to IAS 8 "Accounting Policies, Changes in Accounting Estimates and Errors" (hereinafter: "Amendment to IAS 8")
(a) The amendments to IAS 8 clarify how entities should distinguish changes in accounting policies from changes in accounting estimates. That distinction is important because changes in accounting estimates are applied prospectively only to future transactions and other future events, but changes in accounting policies are generally also applied retrospectively to past transactions and other past events, and also to present events and present transactions.
(b) The Amendments to IAS 8 will be applied retrospectively for annual periods beginning on or after January 1, 2023. According to provisions of the Amendments, early adoption is permitted. Initial application of Amendments to IAS 8 is not expected to have material impact on the Group's consolidated financial statements.
NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
As part of the financial reporting process, the Group’s management is required to make certain assumptions and estimates that affect the value of assets, liabilities, income, expenses and some of the disclosures provided in the Group’s consolidated financial statements. By their nature these estimates may be subjective and complex and may therefore differ from actual results.
The accounting estimates and judgments used in the preparation of the financial statements are continually reviewed and are based on historical experience and other factors, including expectations as to future events that are believed to be reasonable under the current circumstances.
Set forth below is a description of the material accounting estimates and judgments used in the preparation of financial statements, at the formulation of which the Group was required to make assumptions as to circumstances and events involving significant uncertainty. The Group takes into account, as applicable, the relevant facts, historical experience, impact of external factors and reasonable assumptions in accordance with the circumstances.
1) Development assets
The Group capitalizes development costs and recognizes them as intangible assets in accordance with the accounting policy listed in note 2(g). In accordance with this policy, costs incurred in respect of development projects are recognized as development assets only when a number of conditions listed in that note are met, whereas other development expenses, that do not meet these terms, are recognized as an expense in profit or loss as incurred.
The Group’s management exercises judgment as to the fulfillment of the conditions allowing capitalization of development costs for each of the development projects it implements; in cases where management determines that those conditions are, indeed, met, development assets are recognized at the amount of the development costs invested in the project.
The Group’s management also determines the relating estimated useful life and amortization expenses of the said development assets. The estimate is based on the projected period for the marketing of the products to be developed on the basis of the said development assets. These estimates may change significantly as a result of technological innovations and the activity of the Group’s competitors, in response to extreme cyclical changes in the sector.
The Group's management shall increase the amortization expenses when the estimated useful life will decrease compared to previous estimates, or, alternatively, it shall recognize impairment or write-off development assets that have become technologically obsolete.
| F - 28 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued):
2) Distribution rights, customer relationship and technology
Distribution rights, customers relationship and technology recognized as a result of business combinations carried out by the Group are amortized on an ongoing basis on a straight-line basis in accordance with expected useful life. The Company assesses the need to change the intangible assets’ useful lives on an ongoing basis.
3) Determining the lease terms and the discount rate in respect thereof
The Group applies IFRS 16 to account for leases. In determining the lease term and determining the discount rate of a lease liability, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Based on historical experience and its business plans, the Company assesses whether it is expected that the extension options included in the lease agreements it entered into shall be exercised or not.
4) Fair value of share-based payments
The fair value of the Group's equity instruments that were granted to its employees and consultants is determined using valuation methods. Fair value of stock-option awards was determined using a the Black-Scholes option pricing model, which requires a number of assumptions, of which the most significant are the expected share price, volatility, and the expected option term. Expected volatility was calculated based on comparable public companies in the same industry. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term.
5) Deferred tax assets
Deferred tax assets are recognized in respect of carryforward losses and unused deductible temporary differences, if it is probable that future taxable income will exist against which they can be utilized. A management estimate is required to determine the amount of the deferred tax asset that can be recognized based on the timing, amount of expected taxable income, its origin and tax planning strategy.
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANICAL RISK MANAGEMENT
Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk and cash flow interest rate risk), credit risk and liquidity risk. The Group's risk management plan focuses on the uncertainty of the financial markets seeking to minimize potential negative impacts on the Group’s financial performances. Group’s risk management is carried out under policies approved by senior management. This policy relates to management of foreign exchange risks, market risks and cash management risks.
1) Market risks:
a) Foreign exchange risks
The Group operates internationally and is exposed to fluctuations in exchange rates of various currencies, primarily with respect to the exchange rates of the NIS, Euro, GPB and AUD against the US Dollar.
Foreign exchange risks arise from commercial transactions, assets or liabilities, or net investments in foreign operations which are denominated in a currency which is not the entity’s functional currency.
| F - 29 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANICAL RISK MANAGEMENT (continued):
Financial risk factors (continued):
1) Market risks (continued):
a) Foreign exchange risks (continued):
Foreign exchange risks arise when future commercial transactions or recognized assets and liabilities are denominated in a currency which is not the entity’s functional currency.
|
Sensitivity
test for changes in exchange rate | |||
|
Foreign
currency |
Years
|
Income
(loss) from change | |
|
10%
increase in exchange rate |
10%
decrease in exchange rate | ||
|
USD
in thousands | |||
|
NIS
|
2022
|
(2,168)
|
2,168
|
|
2021
|
1,408
|
(1,408)
| |
|
2020
|
(2,777)
|
2,777
| |
|
EUR
|
2022
|
1,288
|
(1,288)
|
|
2021
|
788
|
(788)
| |
|
2020
|
126
|
(126)
| |
|
GPB
|
2022
|
713
|
(713)
|
|
2021
|
824
|
(824)
| |
|
2020
|
167
|
(167)
| |
|
AUD
|
2022
|
201
|
(201)
|
|
2021
|
184
|
(184)
| |
|
2020
|
89
|
(89)
| |
b) Risk in respect of interest rate change
Risks related to interest rates stem from changes in interest rates, which may have an adverse effect on the Group’s net income or cash flows. Changes in interest rates trigger changes in the Group’s interest income and expenses in respect of interest-bearing assets and liabilities.
The Company does not have material assets or liabilities bearing variable interest, as it has only loans from an Israeli bank which have the Prime interest's impact, which the effect of possible changes in Prime rate with that respect is immaterial. Therefore, the Group’s revenues and operating cash flows are not materially impacted from changes in market interest rates.
2) Credit risks
Credit risk is managed on a Group level. Credit risks arise mainly from cash and cash equivalents, bank deposits and credit exposures to receivables. The Group carries out a risk assessment by assessing the credit quality of each customer, taking into account the customer's financial position, past experience and other factors. The Group settles the processing fee before remitting funds to the customers.
| F - 30 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANICAL RISK MANAGEMENT (continued):
2) Credit risks (continued):
Based on the above, the loss balance for trade receivables as of December 31, 2022 and 2021 was determined as follows:
|
December
31, 2022 |
Not
overdue |
Over
30
days
overdue
|
Over
60
days
overdue
|
Over
120
days
overdue
|
Total
|
|||||||||||||||
|
US
Dollar in thousands |
||||||||||||||||||||
|
Gross carrying amount
– trade receivables |
17,361
|
1,439
|
1,818
|
9,226
|
29,844
|
|||||||||||||||
|
Less – provision
of allowance for credit loss |
-
|
-
|
-
|
(2,432
|
)
|
(2,432
|
)
| |||||||||||||
|
Trade receivable
|
17,361
|
1,439
|
1,818
|
6,794
|
27,412
|
|||||||||||||||
|
December
31, 2021 |
Not
overdue |
Over
30
days
overdue
|
Over
60
days
overdue
|
Over
120
days
overdue
|
Total
|
|||||||||||||||
|
US
Dollar in thousands |
||||||||||||||||||||
|
Gross
carrying amount – trade receivables |
10,590
|
3,259
|
1,025
|
6,013
|
20,887
|
|||||||||||||||
|
Less – provision
of allowance for credit loss |
-
|
-
|
-
|
(1,549
|
)
|
(1,549
|
)
| |||||||||||||
|
Trade receivable
|
10,590
|
3,259
|
1,025
|
4,464
|
19,338
|
|||||||||||||||
Most of the Group’s cash and cash equivalents as of December 31, 2022 and 2021 were deposited with Israeli, European and American banks.
In the opinion of the Group, the credit risk arising from those balances with banks is low.
In respect of the processing activity, the Group has a restricted cash balance for transfer to customers and is also entitled to receive proceeds from international processing companies. In the opinion of the Group, the credit risk arising from the balances with those processing companies is low.
3) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and credit facilities to fund operations. In view of the dynamic nature of its business activity, the Group maintains financing flexibility through maintaining the availability of credit facilities from banks, loans from shareholders and investments in share capital.
| F - 31 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANICAL RISK MANAGEMENT (continued):
3) Liquidity risk (continued):
The table below analyzes the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities. The amounts presented in the table represent undiscounted cash flows.
|
Less
than
one
year |
Between
1
and
2
years |
Between
3
and
5
years |
More
than
5
years |
Total
|
||||||||||||||||
|
US
Dollars in thousands |
||||||||||||||||||||
|
December
31, 2022: |
||||||||||||||||||||
|
Short-term loans
|
7,874
|
-
|
-
|
-
|
7,874
|
|||||||||||||||
|
Long-term bank loans
|
1,136
|
1,515
|
-
|
-
|
2,651
|
|||||||||||||||
|
Long-term loans from
others |
3,917
|
3,699
|
-
|
-
|
7,616
|
|||||||||||||||
|
Liability in respect
of purchase of servers |
193
|
177
|
-
|
-
|
370
|
|||||||||||||||
|
Lease liabilities
|
2,402
|
2,392
|
3,400
|
483
|
8,677
|
|||||||||||||||
|
Payables in respect of
processing activity |
63,336
|
-
|
-
|
-
|
63,336
|
|||||||||||||||
|
Trade payables
|
14,574
|
-
|
-
|
-
|
14,574
|
|||||||||||||||
|
Other payables
|
17,229
|
-
|
-
|
-
|
17,229
|
|||||||||||||||
|
Total
|
110,661
|
7,783
|
3,400
|
483
|
122,327
|
|||||||||||||||
|
Less
than
one
year |
Between
1
and
2
years |
Between
3
and
5
years |
More
than
5
years |
Total
|
||||||||||||||||
|
US
Dollars in thousands |
||||||||||||||||||||
|
December
31, 2021: |
||||||||||||||||||||
|
Long-term bank loans
|
2,547
|
1,286
|
1,714
|
-
|
5,547
|
|||||||||||||||
|
Long-term loans from
others |
3,069
|
231
|
-
|
-
|
3,300
|
|||||||||||||||
|
Liability in respect
of purchase of servers |
322
|
218
|
193
|
-
|
733
|
|||||||||||||||
|
Lease liabilities
|
1,924
|
1,525
|
4,024
|
293
|
7,766
|
|||||||||||||||
|
Payables in respect of
processing activity |
42,826
|
-
|
-
|
-
|
42,826
|
|||||||||||||||
|
Trade payables
|
9,136
|
-
|
-
|
-
|
9,136
|
|||||||||||||||
|
Other payables
|
10,718
|
-
|
-
|
-
|
10,718
|
|||||||||||||||
|
Total
|
70,542
|
3,260
|
5,931
|
293
|
80,026
|
|||||||||||||||
Group Management periodically reviews the ratio between future cash flows that will arise from maturities of its liabilities and the future cash flows that will arise from maturities of its financial assets; where necessary, the Group changes its liability mix and the timing of their maturity.
4) Capital risk
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stockholders and to maintain an optimal capital structure to reduce the cost of capital.
From time to time the Group assesses, as applicable, the need to raise funds from external investors.
| F - 32 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4 - FINANCIAL INSTRUMENTS AND FINANICAL RISK MANAGEMENT (continued):
4) Capital risk (continued):
|
Short-term
credit
|
Long-term
bank
loans |
Loans
from
others
|
Lease
liabilities
|
Other
liabilities
|
Total
|
|||||||||||||||||||
|
US
Dollars in thousands |
||||||||||||||||||||||||
|
Balance
at January 1 2022 |
-
|
5,166
|
3,220
|
6,895
|
721
|
16,002
|
||||||||||||||||||
|
Changes
in 2022: |
||||||||||||||||||||||||
|
Liabilities added in
respect of new leases |
-
|
-
|
-
|
2,014
|
-
|
2,014
|
||||||||||||||||||
|
Other liabilities added
in respect of long-term loans and short-term credit from banks |
5,874
|
-
|
6,908
|
-
|
-
|
12,782
|
||||||||||||||||||
|
Liabilities added in
respect of acquisitions |
2,000
|
-
|
-
|
1,696
|
-
|
3,696
|
||||||||||||||||||
|
Cash flows paid
|
-
|
(2,282
|
)
|
(2,577
|
)
|
(2,146
|
)
|
(288
|
)
|
(7,293
|
)
| |||||||||||||
|
Amounts recognized in
profit or loss and other changes |
(190
|
)
|
(388
|
)
|
(184
|
)
|
(309
|
)
|
(71
|
)
|
(1,142
|
)
| ||||||||||||
|
Balance
at December 31 2022: |
7,684
|
2,496
|
7,367
|
8,150
|
362
|
26,059
|
||||||||||||||||||
|
Balance
at January 1 2021 |
11,589
|
7,329
|
5,703
|
6,474
|
994
|
32,089
|
||||||||||||||||||
|
Changes
in 2021: |
||||||||||||||||||||||||
|
Liabilities added in
respect of new leases |
-
|
-
|
-
|
1,428
|
-
|
1,428
|
||||||||||||||||||
|
Cash flows paid
|
(11,393
|
)
|
(1,971
|
)
|
(2,175
|
)
|
(1,406
|
)
|
(295
|
)
|
(17,240
|
)
| ||||||||||||
|
Amounts recognized in
profit or loss and other changes |
(196
|
)
|
(192
|
)
|
(308
|
)
|
399
|
22
|
(275
|
)
| ||||||||||||||
|
Balance
at December 31 2021: |
-
|
5,166
|
3,220
|
6,895
|
721
|
16,002
|
||||||||||||||||||
|
Balance
at January 1 2020 |
8,030
|
3,253
|
2,328
|
5,905
|
632
|
20,148
|
||||||||||||||||||
|
Changes
in 2020: |
||||||||||||||||||||||||
|
Liabilities added in
respect of new leases |
-
|
-
|
-
|
1,235
|
-
|
1,235
|
||||||||||||||||||
|
Other
liabilities added in respect of suppliers of property, plant and equipment |
-
|
-
|
-
|
-
|
575
|
575
|
||||||||||||||||||
|
Cash flows received
|
2,976
|
4,734
|
3,804
|
-
|
-
|
11,514
|
||||||||||||||||||
|
Cash flows paid
|
-
|
(1,003
|
)
|
(920
|
)
|
(1,498
|
)
|
(280
|
)
|
(3,370
|
)
| |||||||||||||
|
Amounts recognized in
profit or loss |
583
|
345
|
491
|
832
|
67
|
1,987
|
||||||||||||||||||
|
Balance
at December 31 2020: |
11,589
|
7,329
|
5,703
|
6,474
|
994
|
32,089
|
| F - 33 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Set forth below is a breakdown of revenues from external parties by geographic regions:
|
For the year ended December
31 |
||||||||||||
|
2022 |
2021 |
2020 |
||||||||||
|
US Dollars in thousands
|
||||||||||||
|
USA
|
60,270 | 36,887 | 23,676 | |||||||||
|
Europe (excluding UK) |
48,664 | 36,475 | 26,296 | |||||||||
|
UK |
21,931 | 16,577 | 11,097 | |||||||||
|
Australia
|
17,235 | 12,672 | 7,975 | |||||||||
|
Israel |
14,129 | 10,764 | 5,826 | |||||||||
|
Rest
of the world |
|
11,285
|
|
5,759
|
|
3,913
|
||||||
|
|
173,514
|
|
119,134
|
|
78,783
| |||||||
|
Set
forth below is a breakdown of the non-current assets, excluding deferred tax assets and financial assets, by geographic regions:
|
|
For
the year ended December
31 |
||||||||
|
2022
|
2021
|
|||||||
|
US
Dollars in thousands |
||||||||
|
Israel
|
60,459 | 52,415 | ||||||
|
USA
|
6,863 | 4,799 | ||||||
|
Rest
of the world |
|
2,096
|
|
459
|
||||
|
|
69,418
|
|
57,673
|
|||||
In 2022, 2021 and 2020, the Group did not have any single customer representing 10% or more of its sales.
NOTE 6 - BUSINESS COMBINATIONS AND EQUITY METHOD INVESTEES
a. Nayax Retail Ltd. (formerly: UPITec Software Ltd.)
In March 2020 (hereinafter – "closing date"), the Company entered into an agreement for the acquisition of the shares of UPITec Software Ltd, which was later renamed Nayax Retail Ltd. (hereinafter - "Nayax Retail"). Nayax Retail specializes in providing universal computing solutions for retailers on the basis of the SAP Business One information system. Under the terms and conditions of the agreement, the Company acquired a 51% equity interest in Nayax Retail upon deal closing, for NIS 5.1 million (approx. $1.43 million) which are payable as follows:
1. NIS 3 million ($0.85 million) in cash on closing date.
2. NIS 2.1 million ($0.58 million) payable in four equal monthly installments, beginning on the first month after closing date.
The remaining shares represent a 49% interest, were supposed to be acquired by the Company over five years, for an aggregate consideration of NIS 4.9 million (approx. $1.5 million), payable in five equal installments (hereinafter: the “Additional Consideration”).
| F - 34 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS AND EQUITY METHOD INVESTEES (continued):
a. Nayax Retail Ltd. (formerly: UPITec Software Ltd.) (continued):
Additionally, in the event of a qualifying transaction (as defined in the agreement), the additional acquisitions would be accelerated, and performed within 14 business days from the date of the qualifying transaction. Accordingly, and given the completion of the initial public offering by the Company (see note 1), the entire additional consideration, as above, was paid at the end of May 2021 against the transfer of all Nayax Retail’s shares to the Company. The Company performed a purchase price allocation study (PPA). As part of the PPA, the assets and liabilities were measured and presented at fair value, including technology and customer relationships that were included in intangible assets.
Additionally, due to the fact that the Company and the sellers engaged in a forward contract for the acquisition of the remaining 49% interest in Nayax Retail, the Group accounted for this as an acquisition of the entire share capital of Nayax Retail with a correspondent liability for the forward contract.
The following table presents the consideration in respect of the acquisition of Nayax Retail, the amounts recognized in respect of the assets purchased and the liabilities assumed on purchase date, at fair value:
|
|
USD in thousands |
|||
|
Cash paid |
855 | |||
|
Deferred consideration |
580 | |||
|
Liability for forward contract for acquisition of subsidiary |
1,348 | |||
|
Total consideration |
2,783 | |||
|
|
||||
|
Amounts recognized in respect of identifiable assets |
||||
|
purchased and liabilities assumed: |
||||
|
Cash and cash equivalents |
169 | |||
|
Trade and other receivables |
218 | |||
|
Property, plant and equipment |
7 | |||
|
Accounts payable |
(236 |
) | ||
|
Post-employment obligation |
(47 |
) | ||
|
Technology |
632 | |||
|
Customer relationships |
414 | |||
|
Deferred tax liabilities |
(241 |
) | ||
|
Total identifiable assets, net |
916 | |||
|
Goodwill |
1,867 | |||
|
Total consideration |
2,783 | |||
|
Cash flows in respect of the purchase included in |
||||
|
cash flows from investing activities |
||||
|
Cash paid |
855 | |||
|
Cash and cash equivalents of the subsidiary |
(169 |
) | ||
|
Purchase of subsidiary, net of purchased cash, as |
||||
|
presented in cash flows from investing activities |
686 | |||
The following is information about revenue and losses of the Group under the assumption that the Nayax Retail transaction was completed on January 1, 2020:
(1) The Group’s revenues in 2020 would have been $79,045 thousand compared to $78,783 thousand as reported.
(2) The 2020 loss would have been $6,163 thousand compared to a loss of $6,083 thousand as reported.
Nayax Retail's revenue and net loss as reported in the consolidated financial statements since acquisition date and through the end of the acquisition year was $2,011 thousand and $872 thousand, respectively.
| F - 35 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS AND EQUITY METHOD INVESTEES (continued):
b. Agreement to acquire Weezmo Technologies Ltd
On January 7, 2021 (hereinafter: the "Acquisition Date"), the Company entered into an agreement with Weezmo Technologies Ltd. ("Weezmo"), which is active in the interactive receipts business in Israel and worldwide, and with seven of Weezmo shareholders and five option holders, according to which the Company acquired preferred shares from three Weezmo shareholders (hereinafter: the "Sellers"), representing 36.13% (31.59% on a fully-diluted basis) of Weezmo's issued share capital. According to the agreement, the consideration to two of the Sellers will be a total of $300 thousand in cash, such that on Acquisition Date, the Company paid $100 thousand and three months after Acquisition Date it paid an additional amount of $200 thousand (hereinafter: the "Cash to Two of the Sellers") in exchange for 5.78% (5.06% fully diluted) of Weezmo's issued share capital.
The consideration to the third Seller (hereinafter: the "Third Seller") is $3.2 million in cash or alternatively through issue of 1,909,716 ordinary shares of the Company to the Third Seller (hereinafter: the "Liability to the Third Seller"), at the discretion of the Company, with the number of shares issued under that alternative being subject to adjustments, as described in the agreement.
In addition, each of Weezmo's additional shareholders (including option holders) with whom the Company entered into the agreement (hereinafter: the "Joining Shareholders") granted the Company a call option to purchase all the ordinary shares of Weezmo or the options held by them (representing a 43.73% stake, or 41.68% on a fully-diluted basis) (hereinafter: the "Call Options"). The Call Options can be exercised by the Company during the thirty-six-month period starting on Acquisition Date. In general, the consideration to all Joining Shareholders for an exercise of the Call Options will be a cash amount of $2.6 million, or alternatively, through an issue of 1,706,213 ordinary shares of the Company to the Joining Shareholders, at the Company's discretion, with the number of shares issued under this alternative being subject to adjustments, as described in the agreement. However, in certain circumstances as stipulated by the agreement, the Joining Shareholders had the right to require the Company to pay some of the consideration in cash.
In addition, the Company granted each of the Joining Shareholders a put option to sell to the Company all shares of Weezmo they hold (hereinafter: the "Put Options"). The Put Options can be exercised by each of the Joining Shareholders starting from the Acquisition Date until the earlier of: (a) 36 months after Acquisition Date (or until another date to be agreed in writing between the Company and any Joining Shareholder); and (b) closing of an initial public offering of the Company's shares (hereinafter: "IPO"); and (c) the closing of the sale of all or substantially all shares of the Company to a third party ("Exit").
The consideration to all Joining Shareholders for the exercise of the Put Options will be $2.6 million in cash or alternatively an allotment of 1,455,301 ordinary shares of the Company to the Joining Shareholders, at the discretion of the Company, with the number of shares issued under that alternative being subject to adjustments, as described in the agreement.
Notwithstanding the above, to the extent that the Put Options are exercised before and subject to closing an IPO or an Exit by Nayax, the number of shares the Company would allot to the Joining Shareholders is a total 1,580,758 ordinary shares. Even in this case, under certain circumstances that are detailed in the agreement, the Joining Shareholders may demand that the Company pay some of the consideration in cash.
Note that the election of the Company to pay in cash to Put and Call Option holders is limited to a period of six months, from Acquisition Date.
On Acquisition Date, the Company received all voting rights of the Sellers and the Joining Shareholders, and also received and exercised the right to appoint all directors on the board of Weezmo. Accordingly, beginning on Acquisition Date, the Company controls Weezmo and includes it in the consolidated financial statements. The portion of Weezmo's income attributed to owners of the Company also includes the portion of non-controlling interest to whom the Company issued the Put Options and from whom it received the Call Options. Accordingly, the rate of non-controlling interests reflected in the Company’s consolidated financial statements of Acquisition Date is approximately 20%.
| F - 36 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS AND EQUITY METHOD INVESTEES (continued):
b. Agreement to acquire Weezmo Technologies Ltd (continued):
The consideration for the business combination comprises a number of elements, as follows:
▪ The Cash to Two of the Sellers, as defined above;
▪ The Liability to the Third Seller, as defined above; and
▪ The liability for the arrangement that includes the Put Options and Call Options, as defined above.
The Company recognized financial liabilities for the Liability to the Third Seller and its liability for the arrangement that includes the Put Options and the Call Options. The Company elected to allocate the entire Put and Call Options instrument as financial liability measured at fair value through profit or loss, as permitted by IFRS 9 to account for a financial liability with an embedded derivative.
Eventually, the Company opted to pay in cash the entire consideration for Weezmo’s shares.
The fair value of the liability to the Third Seller and the liability to the overall put and call options arrangement as of the Acquisition Date and close to the date of actual payment was $5.3 million and $5.8 million, respectively. The difference, at $0.5 million, was recognized in the "finance expenses, net" item in the income statement.
The Company engaged with an external valuer for measuring the fair value of acquisition consideration and its allocation to the assets acquired and liabilities assumed in the acquisition.
The following table presents the consideration for the acquisition of Weezmo, the non-controlling interests and the amounts recognized for assets acquired and liabilities assumed on acquisition date, at fair value:
|
|
USD in thousands |
|||
|
The Cash to Two of the Sellers |
300 | |||
|
The Liability to the Third Seller |
2,937 | |||
|
The liability for the arrangement that includes the Put Options and Call Options |
|
2,386
|
||
|
Total consideration |
|
5,623
|
||
|
|
||||
|
Amounts recognized on acquisition date: |
||||
|
Cash and cash equivalents |
202 | |||
|
Trade and other receivables |
98 | |||
|
Property, plant and equipment |
3 | |||
|
Trade payables |
(25 |
) | ||
|
Other Payables |
(240 |
) | ||
|
Technology |
769 | |||
|
Customer relations |
2,478 | |||
|
Deferred tax liability |
|
(747
|
) | |
|
Total identifiable assets, net |
2,538 | |||
|
Goodwill (*) |
4,615 | |||
|
Less non-controlling interests (**) |
|
(1,530
|
) | |
|
Total Consideration |
|
5,623
|
||
|
Cash flows in respect of the acquisition, as presented in cash flows from investing activities |
||||
|
Cash paid |
(100 |
) | ||
|
Cash and cash equivalents of subsidiary included in consolidated for the first time |
|
202
|
||
|
Acquisition of subsidiary, less cash acquired, as presented in cash flows from investing activity |
|
102
|
||
| F - 37 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS AND EQUITY METHOD INVESTEES (continued):
b. Agreement to acquire Weezmo Technologies Ltd (continued):
|
(*) |
Goodwill is not deductible for tax purposes and arises mainly from projected synergies with activities of the Group and from workforce that does not qualify for recognition as a separate asset. |
|
(**) |
Non-controlling interests were measured at fair value on acquisition date. |
During the period ended December 31, 2021, Put Options representing 43.73% of Weezmo's share capital (41.68% on a fully diluted basis) were exercised in exchange for $2.6 million in cash, and the consideration to the Third Seller totaling $3.2 million was paid.
In May 2021, an agreement was signed with all holders of non-controlling interests whereby the Company acquired their entire interest in Weezmo for $1.25 million, payable in nine cash installments. Through December 31, 2021, an amount of $1,069 thousand was paid. Consequently, the Company’s interest in Weezmo increased to 100%.
The additional revenue included in the consolidated income statement since Acquisition Date resulting from consolidating Weezmo's results was $534 thousand during the year. Additionally, the consolidation of Weezmo resulted in an increase of $576 thousand in the loss for the year.
c. On Track Innovation Ltd.
On January 19, 2022 the Company entered into a binding term sheet with On Track Innovations Ltd. (hereinafter - "OTI"), according to which the parties shall engage in a two-phase transaction, where in the first phase the Company shall provide a loan to OTI (hereinafter - "Loan") and thereafter the Company and OTI shall negotiate to acquire 100% of OTI’s shares by way of reverse triangular merger (hereinafter - "Merger").
On January 27, 2022, the Company executed a Loan agreement with OTI, according to which the Company extended a Loan to OTI totaling $5.5 million to repay its outstanding debts. The Loan will be repaid in two years, bearing a 10% annual interest rate. The loan shall be secured by a floating charge over OTI's assets.
According to the Loan Agreement, the Company may, in its sole discretion, extend the Loan with additional amounts, in order to pay to any creditor of OTI from the date of the Loan agreement and until the closing of the Merger in order to allow OTI to continue to operate in the ordinary course (hereinafter - "Additional Amounts"). Additional Amounts, if any, will be deemed to be as part of a Loan and the terms of the Loan will apply to them in full.
On April 25, 2022 and on July 5, 2022 the Company extended OTI an additional loan amount of $1 million and $1.6 million, respectively. The loan is accounted for as a financial asset at fair value through profit or loss.
If the Merger agreement will not be put to the vote of the shareholders of OTI or if it will not be approved by the shareholders of OTI by the dates in the Loan agreement, for a reason that is not directly and exclusively related to the Company, then (a) the Company shall have the right to either demand the immediate repayment of the Loan from OTI only, or convert it into OTI's equity based on the determined price in the Loan agreement (b) if the Company elected not to demand the immediate repayment or conversion, the interest on the Loan shall be increased to the mentioned interest rate in the Loan agreement, and (c) OTI shall pay, upon demand by the Company, to the Company an agreed amount in the Loan agreement.
On March 17, 2022, the merger agreement with OTI were completed under the preliminary terms as noted at the binding sheet which OTI will become a private wholly-owned subsidiary of the Company. On May 10, 2022, OTI's general assembly of shareholders approved the Merger agreement.
| F - 38 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS AND EQUITY METHOD INVESTEES (continued):
On June 9, 2022, the transactions under the Merger Agreement were completed and the shareholders of OTI received from the Company an aggregate cash consideration of $4.5 million. The cash consideration was paid in full on July 18, 2022 and the long-term liability OTI received from the Company, as part of the first phase of the merger considerations, was eliminated in the consolidated financial statements.
The following table presents the consideration for OTI's merger and the amounts recognized for assets acquired and liabilities on the of the merger, at fair value:
|
|
As of June 9, 2022 |
|||
|
|
USD in thousands |
|||
|
Cash to OTI's shareholders (***) |
4,500 | |||
|
Total consideration |
4,500 | |||
|
|
||||
|
Amounts recognized on merger date: |
||||
|
Cash and cash equivalents |
440 | |||
|
Trade receivables |
983 | |||
|
Inventory |
3,569 | |||
|
Other receivables |
1,397 | |||
|
Right of use assets, net |
1,722 | |||
|
Property and equipment, net |
660 | |||
|
Other assets, net |
145 | |||
|
Technology |
1,711 | |||
|
Customer relations |
5,046 | |||
|
Short-term bank loans |
(2,001 |
) | ||
|
Trade payables |
(1,392 |
) | ||
|
Other payables |
(1,982 |
) | ||
|
Lease liability |
(1,696 |
) | ||
|
Other long term liabilities |
(69 |
) | ||
|
Long term liability from the Company (*) |
(6,757 |
) | ||
|
Total identifiable assets, net (**) |
1,776 | |||
|
Goodwill |
2,724 | |||
|
Total Consideration |
4,500 | |||
|
Cash flows in respect of the acquisition, as presented in cash flows from investing activities |
||||
|
Cash and cash equivalents of subsidiary included in consolidated for the first time |
440 | |||
|
Acquisition of subsidiary, less cash acquired, as presented in cash flows from investing activity |
440 | |||
(*) The long-term liability from the Company was eliminated in the consolidated financial statements.
(**) Due to accumulated loss for tax, deferred tax liabilities were offset up to their aggregated value recognized at the day of the acquisition.
(***) The consideration was fully paid in July 2022.
The following is information about revenues and losses of the Group under the assumption that the OTI transaction was completed on January 1, 2022: (1) The Group’s revenues for the year ended December 31, 2022, would have been $179,008 thousand, compared to $173,515 thousand as reported, and; (2) The Group's losses for year ended December 31, 2022, would have been $42,166 thousand compared to $37,332 thousand as reported.
The additional revenue included in the consolidated income statement since Acquisition Date resulting from consolidating OTI's results was $7,610 thousand during the year. Additionally, the consolidation of OTI resulted in an increase of $909 thousand in the loss for the year.
| F - 39 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS AND EQUITY METHOD INVESTEES (continued):
d. Agreements for the acquisition of the shares of Tigapo Ltd.
On February 4, 2021, the Company entered into a memorandum of understanding (hereinafter: "the First Memorandum of Principles") with Tigapo Ltd. (hereinafter: "Tigapo"), which is developing a smart, cloud-based system for management of gaming arcades. According to the First Memorandum of Principles, the Company invested $300 thousand in Tigapo under a Simple Agreement for Future Equity (SAFE) against a right for allotments of shares in a future investment event in Tigapo at an amount that may not be less than $1.5 million.
In May 2021, the Company acquired Tigapo shares constituting 33.39% (fully diluted) of its capital from a number of shareholders in consideration for a cash payment of $2.1 million (hereinafter: the “Existing Shares”).
In the third quarter of 2021, an additional acquisition agreement was signed in which the Company increased its interest in Tigapo for a $6.8 million consideration, composed of a number of elements, as indicated below:
|
▪ |
$4 million in cash (hereinafter: the "Additional Investment Amount"); | |
|
▪ |
Conversion of the investment in SAFE, as indicated above; | |
|
▪ |
Obligation to provide future consulting services by the Company to Tigapo in the Company's areas of expertise over 3 years, as well as granting a license to use the Nayax brand name; | |
|
▪ |
The Company issued to Tigapo a put option enabling an additional investment of up to $1 million under the same terms applied to the Additional Investment Amount (hereinafter: the "Liability for Put Option"). The put option is a liability financial instrument measured at fair value through profit or loss. | |
|
▪ |
A put option granted by the Company to the remaining shareholders for the sale of the remaining shares of Tigapo and a call option that the remaining shareholders of Tigapo granted the Company to acquire the remaining shares of Tigapo (hereinafter: the "Liability for overall arrangement of put option and call option"). The options are accounted for as a financial liability and a financial asset, respectively, both measured at fair value through profit or loss. The Company presents an asset and a liability for the overall arrangement of the put and call options, which are presented as a net item in the financial statements |
After entering into the agreement discussed above, the Company holds shares of Tigapo, representing 53.55% of its issued share capital. The other shareholders of Tigapo have substantial rights in relation to relevant activities of the investee, which prevents the Company from gaining control over Tigapo. Therefore, the investment is accounted for as an investment in an associate using the equity method. The Company engaged with an external valuer for calculating the fair value of acquisition consideration and its allocation to the assets acquired and liabilities assumed under the acquisition. The following table presents the increase in the overall investment in the third quarter of 2021:
|
|
U.S. dollars in thousands |
|||
|
Cash for the Additional Investment Amount |
4,000 | |||
|
Investment in SAFE |
300 | |||
|
Obligation to provide Services to Tigapo |
312 | |||
|
Liability for Put Option (*) |
372 | |||
|
Liability for overall arrangement of put option and call option (*) |
|
1,777
|
||
|
Total consideration |
|
6,761
|
||
(*) The financial instruments are measured at fair value and included under level 3. The valuation is performed once quarterly by an external valuer. During the year ended December 31, 2022 and 2021, the Company recognized income of $608 thousand and expense of $93 thousand, respectively, for the options valuation in the "finance expenses, net" item in the income statement.
The share of the Company in losses of associates accounted for by the equity method amounted to $1,794 thousand during the year ended December 31, 2022. Tigapo is a private company and its shares do not have a quoted market price.
| F - 40 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS AND EQUITY METHOD INVESTEES (continued):
e. A cooperation agreement for the creation of Nilus Ltd.
On December 10, 2020, Nayax Retail Ltd (hereinafter: "Nayax Retail"), a subsidiary of the Company, engaged with some of the largest distribution companies in the Israeli economy, in a cooperation agreement by way of a shareholders’ agreement for the incorporation of a new company called Nilus for Businesses Ltd. (hereinafter: "Nilus"), with Nayax Retail holding 12% of Nilus’s issued and paid-up capital.
In May and August 2021, the shareholders extended a shareholders’ loan to Nilus at the total amount of NIS 12 million (approximately $3.7 million), with Nayax Retail’s share in the loan amounting to NIS 1,440 thousand (approximately $446 thousand) (hereinafter: the “Shareholders’ Loan”).
In March and October 2022, the shareholders extended a shareholders’ loan to Nilus at the total amount of NIS 10 million (approximately $2.9 million), with Nayax Retail’s share in the loan amounting to NIS 1,200 thousand (approximately $598 thousand) (hereinafter: the “Shareholders’ Loan”).
The amount of the Shareholders’ Loan bears annual interest at the maximum rate set in Section 3(j) to the Income Tax Ordinance. The loan (principal and interest) is repayable in one installment within 36 months from the date of signing the Loan Agreement. Nevertheless, Nilus is entitled to extend the term of the loan for additional periods at its discretion.
The amount paid is presented under “other long-term assets” in the statement of financial position as of December 31, 2022.
f. Restructuring of the Company and Dually Ltd.
According to an agreement signed between the controlling shareholders of the Company, the Company and Dually, according to an in-agreement tax ruling that was received from the Israel Tax Authority, and after receiving an approval from the Company's board of directors and the shareholders meeting dated April 1, 2021, a three-part restructuring process was performed on April 1, 2021 (which is tax exempt under the provisions of Sections 104B, 103T and 104C to the Income Tax Ordinance [New Version] (the "Ordinance"), the end result of which was that all shares of Dually were transferred to the Company (such that Dually became a wholly owned subsidiary of the Company), and 281,202,800 dormant shares (as this term is defined by Section 308(a) of the Companies Law) were created. On April 1, 2021, the Company eliminated all said dormant shares.
Following the above, the Company consolidates Dually’s financial statements as from April 1, 2021.
The restructuring is accounted for in the Company’s financial statements as a business combination under common control with initial recognition based on book value amounts of Dually. As a result of the first-time consolidation, a total of $316 thousand was recognized in cash and cash equivalents. The net identifiable assets that were recognized on acquisition date were recognized against the equity attributed to Company’s shareholders.
The additional income included in the consolidated statement of income or loss from Acquisition Date as a result of the consolidation of Dually’s results amounted to $1,167 thousand through December 31, 2021 (after elimination of the intercompany revenue). Furthermore, the consolidation of Dually’s results caused a $195 thousand decrease in loss during period, from April 1, 2021 through December 31, 2021.
| F - 41 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 - BUSINESS COMBINATIONS AND EQUITY METHOD INVESTEES (continued):
g. Agreement with Bank Hapoalim B.M. and Feit Synergy Ltd. for establishing an entity
On June 9, 2022 the Company entered into an agreement with Bank Hapoalim B.M. (hereinafter - "Bank Hapoalim") and Feit Synergy Ltd. (hereinafter - "Feit") a company controlled by Mr. Alon Feit (all of the parties jointly: the "Parties") for purpose of creating an entity under which the Parties shall establish and operate an innovative international platform, which shall provide financing options for small and medium businesses for acquiring POS devices, automated vending machines and electric vehicle charging stations. Under the terms of the agreement, the Parties shall incorporate a new Israeli company (hereinafter - "IOT"), with an initial holding structure according to which 49.1% of the IOT’s share capital shall be held by the Company, 30.9% by Feit, 20% by Bank Hapoalim.
The agreement sets forth that the Company shall invest in IOT an amount of $1.5 million, Feit shall invest in IOT an amount of $0.5 million, and Bank Hapoalim shall invest in IOT a cash amount of $1.5 million and additional loan of $1.5 million.
Additionally, the agreement includes three options:
| • |
First Call Option - a call option granted to the Company to buy from BHP and Feit such number of shares that following the exercise option the Company will hold 50.1% from IOT. The option can be exercised by the Company between three to twelve years after the signing agreement date. | |
| • |
Second Call Option - a call option granted to the Company to buy from BHP and Feit such number of shares that following the exercise option the Company will hold 100% from IOT. The option can be exercised by the Company at any time during a period of ten years following the exercise of the First Call Option but in no any event of later than fifteen years from the signing agreement date. | |
| • |
Put Option – a put options granted by the Company to BHP and Feit to sell the remaining shares of IOT. The Put Option shall be exercisable commencing at any time following the lapse of 3 years following the signing agreement date and ending upon the lapse of the Second Call Option period. |
IOT has been established on July 5, 2022 and as of the date of the approval of the financial statements, the agreement has not yet been finalized.
NOTE 7 - CASH AND CASH EQUIVALENTS:
Cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short- term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. Below is the composition of cash and cash equivalents by US Dollar and other currencies:
|
December 31, |
||||||||
|
2022 |
2021 |
|||||||
|
US Dollars in thousands |
||||||||
|
US Dollar |
11,415 |
32,196 |
||||||
|
New Israeli Shekel |
1,498 |
28,687 |
||||||
|
Euro |
11,182 |
13,834 |
||||||
|
British pound sterling |
3,909 |
8,020 |
||||||
|
Australian Dollar |
1,650 |
1,045 |
||||||
|
Other currencies |
4,226 |
3,550 |
||||||
|
33,880 |
87,332 |
|||||||
| F - 42 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8 - RESTRICTED CASH TO BE TRANSFERRED TO CUSTOMERS IN RESPECT OF PROCESSING ACTIVITY
Nayax Europe, a subsidiary of the Group, holds a Payment Institution License from the central bank of Lithuania and is licensed to hold and transfer funds to the Group’s customers across Europe for the purpose of the Group processing activity in Europe. In accordance with the requirements of the central bank of Lithuania, the funds of Nayax Europe’s customers are held in a segregated account before being transferred to customers. As of December 31, 2022 and 2021, $34,119 and $23,695 thousand, respectively, were held in segregated accounts for the Group's customers.
NOTE 9 - TRADE RECEIVABLES
Trade receivables are recognized initially at the amount of consideration that is unconditional, unless they contain significant financing components then they are recognized at fair value. The balance subsequently measured at amortized cost less allowance for credit losses. Below is the composition of trade receivables in net values:
|
December 31, |
||||||||
|
2022
|
2021
|
|||||||
|
US
Dollars in thousands |
||||||||
|
Open accounts |
29,844 |
20,887 |
||||||
|
Less – provision of allowance for credit loss |
|
(2,432 |
) |
|
(1,549 |
) | ||
|
Trade receivables - net |
|
27,412 |
|
19,338 |
||||
For information about receivable aging and calculating the impairment of accounts receivables in 2021 and 2022, see note 4(2).
b. Changes in provision of allowance for credit loss:
|
US Dollars in thousands |
||||
|
Balance as of January 1, 2021 |
910 |
|||
|
Amounts provided against profit or loss in respect of receivables for which the provision for loss is measured over the entire life of the receivable balance |
639 |
|||
|
Balance as of December 31, 2021 |
1,549 |
|||
|
Amounts provided against profit or loss in respect of receivables for which the provision for loss is measured over the entire life of the receivable balance |
883 |
|||
|
Balance as of December 31, 2022 |
|
2,432 |
||
Note that the carrying amount of trade receivables represent a reasonable approximation of their fair value, as the impact of discounting is immaterial.
| F - 43 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - LEASES
a. General
As of December 31, 2022, the Group had right of use assets related to leased buildings used as the Group’s offices and related to leases of technological equipment used for the Group’s operating activities. Set forth below are the right-of-use asset years of depreciation and the interest rates used to discount the lease payments:
|
|
Years of depreciation |
Interest rate |
||||||
|
Buildings |
2-4 |
1.5%-5% |
| |||||
|
Technological equipment |
3-5 |
3.88% |
| |||||
b. Composition and movement of right-of-use assets:
The following is the composition of right-of-use asset balances as of December 31, 2022:
|
Buildings |
Technological equipment |
Total |
||||||||||
|
US Dollars in thousands |
||||||||||||
|
Cost: |
||||||||||||
|
Balance as of January 1, 2022 |
7,382 |
331 |
7,713 |
|||||||||
|
Additions during the year |
2,048 |
- |
2,048 |
|||||||||
|
Additions in respect of acquisition |
1,722 |
- |
1,722 |
|||||||||
|
Disposals |
(462 | ) | - | (462 | ) | |||||||
|
Other changes |
|
257 |
|
- |
|
257 |
||||||
|
Balance as of December 31, 2022 |
|
10,947 |
|
331 |
|
11,278 |
||||||
|
Depreciation and amortization: |
||||||||||||
|
Balance as of January 1, 2022 |
2,186 |
252 |
2,438 |
|||||||||
|
Depreciation during the year |
1,731 |
66 |
1,797 |
|||||||||
|
Disposals |
|
(338 |
) |
|
- |
|
(338 |
) | ||||
|
Balance as of December 31, 2022 |
|
3,579 |
|
318 |
|
3,897 |
||||||
|
Right-of-use assets - net |
|
7,368 |
|
13 |
|
7,381 |
||||||
The following is the composition of right-of-use asset balances as of December 31, 2021:
|
Buildings |
Technological equipment |
Total |
||||||||||
|
US Dollars in thousands |
||||||||||||
|
Cost: |
||||||||||||
|
Balance as of January 1, 2021 |
5,752 |
331 |
6,083 |
|||||||||
|
Additions during the year |
1,428 |
- |
1,428 |
|||||||||
|
Other changes |
|
202 |
|
- |
|
202 |
||||||
|
Balance as of December 31, 2021 |
|
7,382 |
|
331 |
|
7,713 |
||||||
|
Depreciation and amortization: |
||||||||||||
|
Balance as of January 1, 2021 |
1,136 |
186 |
1,322 |
|||||||||
|
Depreciation during the year |
|
1,050 |
|
66 |
|
1,116 |
||||||
|
Balance as of December 31, 2021 |
|
2,186 |
|
252 |
|
2,438 |
||||||
|
Right-of-use assets - net |
|
5,196 |
|
79 |
|
5,275 |
||||||
| F - 44 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 - LEASES (continued):
b. Composition and movement of right-of-use assets: (continued):
The following is the composition of right-of-use asset balances as of December 31, 2020:
|
|
Buildings |
Technological equipment |
Total |
|||||||||
|
|
US Dollars in thousands |
|||||||||||
|
Cost: |
||||||||||||
|
Balance as of January 1, 2020 |
4,517 |
331 |
4,848 |
|||||||||
|
Additions during the year |
|
1,235 |
|
- |
|
1,235 |
||||||
|
Balance as of December 31, 2020 |
|
5,752 |
|
331 |
|
6,083 |
||||||
|
|
||||||||||||
|
Depreciation and amortization: |
||||||||||||
|
Balance as of January 1, 2020 |
399 |
120 |
519 |
|||||||||
|
Depreciation during the year |
|
737 |
|
66 |
|
803 |
||||||
|
Balance as of December 31, 2020 |
|
1,136 |
|
186 |
|
1,322 |
||||||
|
|
||||||||||||
|
Right-of-use assets - net |
|
4,616 |
|
145 |
|
4,761 |
||||||
c. Composition and changes in lease liabilities
The following table summarizes the composition of lease liability balances as of December 31, 2022:
|
Buildings |
Technological equipment |
Total |
||||||||||
|
US Dollars in thousands |
||||||||||||
|
Balance as of January 1, 2022 |
6,769 |
126 |
6,895 |
|||||||||
|
Additions during the year |
2,014 |
- |
2,014 |
|||||||||
|
Additions in respect of acquisition |
1,696 |
- |
1,696 |
|||||||||
|
Disposals |
(131 | ) | - | (131 | ) | |||||||
|
Interest expenses |
293 |
3 |
296 |
|||||||||
|
Lease payments |
(2,036 |
) |
(111 |
) |
(2,147 |
) | ||||||
|
Other changes |
(464 |
) |
(9 |
) |
(473 |
) | ||||||
|
Balance as of December 31, 2022 |
|
8,141 |
|
9 |
|
8,150 |
||||||
|
Current maturities of lease liabilities |
2,197 |
9 |
2,206 |
|||||||||
|
Long-term lease liabilities |
|
5,944 |
|
- |
|
5,944 |
||||||
|
Balance as of December 31, 2022 |
|
8,141 |
|
9 |
|
8,150 |
||||||
| F - 45 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 –LEASES (continued):
c. Composition and changes in lease liabilities (continued):
The following table summarizes the composition of lease liability balances as of December 31, 2021:
|
Buildings |
Technological equipment |
Total |
||||||||||
|
US Dollars in thousands |
||||||||||||
|
Balance as of January 1, 2021 |
6,245 |
229 |
6,474 |
|||||||||
|
Additions during the year |
1,428 |
- |
1,428 |
|||||||||
|
Interest expenses |
207 |
7 |
214 |
|||||||||
|
Lease payments |
(1,506 |
) |
(114 |
) |
(1,620 |
) | ||||||
|
Other changes |
395 |
4 |
399 |
|||||||||
|
Balance as of December 31, 2021 |
|
6,769 |
|
126 |
|
6,895 |
||||||
|
Current maturities of lease liabilities |
1,387 |
115 |
1,502 |
|||||||||
|
Long-term lease liabilities |
|
5,382 |
|
11 |
|
5,393 |
||||||
|
Balance as of December 31, 2021 |
|
6,769 |
|
126 |
|
6,895 |
||||||
The following table summarizes the composition of lease liability balances as of December 31, 2020:
|
|
Buildings |
Technological equipment |
Total |
|||||||||
|
|
US Dollars in thousands |
|||||||||||
|
|
|
|
|
|||||||||
|
Balance as of January 1, 2020 |
5,595 |
310 |
5,905 |
|||||||||
|
Additions during the year |
1,235 |
- |
1,235 |
|||||||||
|
Interest expenses |
321 |
10 |
331 |
|||||||||
|
Lease payments |
(1,390 |
) |
(108 |
) |
(1,498 |
) | ||||||
|
Other changes |
|
484 |
|
17 |
|
501 |
||||||
|
Balance as of December 31, 2020 |
|
6,245 |
|
229 |
|
6,474 |
||||||
|
|
|
|
|
|||||||||
|
Current maturities of lease liabilities |
1,212 |
108 |
1,320 |
|||||||||
|
Long-term lease liabilities |
|
5,033 |
|
121 |
|
5,154 |
||||||
|
Balance as of December 31, 2020 |
|
6,245 |
|
229 |
|
6,474 |
||||||
| c. |
The Group incurred expenses in the amounts of $209 thousand, $168 thousand and $244 thousand in 2022, 2021 and 2020, respectively, related to short-term leases, which were included in research and development expenses and selling, general and administrative expenses. |
| F - 46 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11 - PROPERTY AND EQUIPMENT
Composition of property and equipment and accumulated depreciation thereon, grouped by major classifications, and changes therein in 2022, are as follows:
|
Leasehold
improvements
|
Computers
and
peripheral
equipment
|
Rented
POS
devices
|
Machines
and
equipment
|
Total
|
||||||||||||||||
|
US
Dollars in thousands |
||||||||||||||||||||
|
Cost:
|
||||||||||||||||||||
|
Balance as of January
1, 2022 |
3,638
|
6,245
|
523
|
547
|
10,953
|
|||||||||||||||
|
Additions
|
79
|
1,388
|
227
|
39
|
1,733
|
|||||||||||||||
|
Acquired through business
combinations |
239
|
8,043
|
-
|
-
|
8,282
|
|||||||||||||||
|
Disposals
|
-
|
(269
|
)
|
-
|
-
|
(269
|
)
| |||||||||||||
|
Translation differences
|
-
|
(27
|
)
|
(144
|
)
|
-
|
(171
|
)
| ||||||||||||
|
Balance as of December
31, 2022 |
3,956
|
15,380
|
606
|
586
|
20,528
|
|||||||||||||||
|
Accumulated
depreciation: |
||||||||||||||||||||
|
Balance as of January
1, 2022 |
511
|
3,772
|
215
|
230
|
4,728
|
|||||||||||||||
|
Depreciation during the
year |
372
|
1,271
|
113
|
40
|
1,796
|
|||||||||||||||
|
Disposals
|
-
|
(265
|
)
|
-
|
-
|
(265
|
)
| |||||||||||||
|
Acquisitions during the
year |
-
|
7,622
|
-
|
-
|
7,622
|
|||||||||||||||
|
Translation differences
|
-
|
(9
|
)
|
(12
|
)
|
-
|
(21
|
)
| ||||||||||||
|
Balance as of December
31, 2022 |
883
|
12,391
|
316
|
270
|
13,860
|
|||||||||||||||
|
Net
book value: |
||||||||||||||||||||
|
As of December 31, 2022
|
3,073
|
2,989
|
290
|
316
|
6,668
|
|||||||||||||||
Composition of property and equipment and accumulated depreciation thereon, grouped by major classifications, and changes therein in 2021, are as follows:
|
Leasehold
improvements
|
Computers
and
peripheral
equipment
|
Rented
POS
devices
|
Machines
and
equipment
|
Total
|
||||||||||||||||
|
US
Dollars in thousands |
||||||||||||||||||||
|
Cost:
|
||||||||||||||||||||
|
Balance as of January
1, 2021 |
2,452
|
4,889
|
407
|
450
|
8,198
|
|||||||||||||||
|
Additions
|
1,186
|
1,372
|
100
|
97
|
2,755
|
|||||||||||||||
|
Acquired through business
combinations |
3
|
-
|
-
|
3
|
||||||||||||||||
|
Disposals
|
-
|
(26
|
)
|
-
|
-
|
(26
|
)
| |||||||||||||
|
Translation differences
|
-
|
7
|
16
|
-
|
23
|
|||||||||||||||
|
Balance as of December
31, 2021 |
3,638
|
6,245
|
523
|
547
|
10,953
|
|||||||||||||||
|
Accumulated
depreciation: |
||||||||||||||||||||
|
Balance as of January
1, 2021 |
289
|
2,646
|
154
|
62
|
3,151
|
|||||||||||||||
|
Depreciation during the
year |
222
|
1,148
|
61
|
168
|
1,599
|
|||||||||||||||
|
Disposals
|
-
|
(26
|
)
|
-
|
-
|
(26
|
)
| |||||||||||||
|
Translation differences
|
-
|
4
|
-
|
-
|
4
|
|||||||||||||||
|
Balance as of December
31, 2021 |
511
|
3,772
|
215
|
230
|
4,728
|
|||||||||||||||
|
Net
book value: |
||||||||||||||||||||
|
As of December 31, 2021
|
3,127
|
2,473
|
308
|
317
|
6,225
|
|||||||||||||||
Composition of property and equipment and accumulated depreciation thereon, grouped by major classifications, and changes therein in 2020, are as follows:
|
Leasehold
improvements
|
Computers
and
peripheral
equipment
|
Rented
POS
devices
|
Machines
and
equipment
|
Total
|
||||||||||||||||
|
US
Dollars in thousands |
||||||||||||||||||||
|
Cost:
|
||||||||||||||||||||
|
Balance as of January
1, 2020 |
1,436
|
3,567
|
145
|
344
|
5,492
|
|||||||||||||||
|
Additions
|
1,016
|
1,315
|
262
|
106
|
2,699
|
|||||||||||||||
|
Acquired through business
combinations |
-
|
7
|
-
|
-
|
7
|
|||||||||||||||
|
Balance as of December
31, 2020 |
2,452
|
4,889
|
407
|
450
|
8,198
|
|||||||||||||||
|
Accumulated
depreciation: |
||||||||||||||||||||
|
Balance as of January
1, 2020 |
63
|
1,844
|
110
|
27
|
2,044
|
|||||||||||||||
|
Depreciation
|
226
|
802
|
44
|
35
|
1,107
|
|||||||||||||||
|
Balance as of December
31, 2020 |
289
|
2,646
|
154
|
62
|
3,151
|
|||||||||||||||
|
Net
book value: |
||||||||||||||||||||
|
As of December 31, 2020
|
2,163
|
2,243
|
253
|
388
|
5,047
|
|||||||||||||||
NOTE 12 - GOODWILL AND INTANGIBLE ASSETS
Composition of intangible assets and accumulated amortization thereon, grouped by major classifications, and changes therein in 2022 are as follows:
|
Capitalized Development costs ** |
Distribution rights * |
Customer relationships purchased * |
Technology ** |
Goodwill (a) |
Patents ** |
Total |
||||||||||||||||||||||
|
US Dollars in thousands |
||||||||||||||||||||||||||||
|
Cost: |
||||||||||||||||||||||||||||
|
Balance as of January 1, 2022 |
34,209 |
5,292 |
4,188 |
2,921 |
8,271 |
806 |
55,687 |
|||||||||||||||||||||
|
Additions |
14,615 |
- |
- |
- |
- |
- |
14,615 |
|||||||||||||||||||||
|
Acquired through business combinations |
1,261 |
- |
5,046 |
1,711 |
2,724 |
- |
10,742 |
|||||||||||||||||||||
|
Translation differences |
|
(279 |
) |
|
- |
|
(350 |
) |
|
(176 |
) |
|
(799 |
) |
|
- |
|
(1,604 |
) | |||||||||
|
Balance as of December 31, 2022 |
|
49,806 |
|
5,292 |
|
8,884 |
|
4,456 |
|
10,196 |
|
806 |
|
79,440 |
||||||||||||||
|
Accumulated amortization: |
||||||||||||||||||||||||||||
|
Balance as of January 1, 2022 |
13,454 |
1,996 |
843 |
1,546 |
- |
47 |
17,886 |
|||||||||||||||||||||
|
Amortization |
3,642 |
265 |
902 |
564 |
- |
62 |
5,435 |
|||||||||||||||||||||
|
Acquisitions during the year |
1,116 |
- | - | - | - | - |
1,116 |
|||||||||||||||||||||
|
Translation differences |
|
(6 |
) |
|
- |
|
(52 |
) |
|
(55) |
|
- |
|
- |
|
(113 |
) | |||||||||||
|
Balance as of December 31, 2022 |
|
18,206 |
|
2,261 |
|
1,693 |
|
2,055 |
|
- |
|
109 |
|
24,324 |
||||||||||||||
|
Net book value: |
||||||||||||||||||||||||||||
|
As of December 31, 2022 |
|
31,600 |
|
3,031 |
|
7,191 |
|
2,401 |
|
10,196 |
|
697 |
|
55,116 |
||||||||||||||
| F - 48 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - GOODWILL AND INTANGIBLE ASSETS (continued):
Composition of intangible assets and accumulated amortization thereon, grouped by major classifications, and changes therein in 2021 are as follows:
|
Capitalized Development costs ** |
Distribution rights * |
Customer relationships purchased * |
Technology ** |
Goodwill (a) |
Patents ** |
Total |
||||||||||||||||||||||
|
US Dollars in thousands |
||||||||||||||||||||||||||||
|
Cost: |
|
|
||||||||||||||||||||||||||
|
Balance as of January 1, 2021 |
27,477 |
5,292 |
1,636 |
2,111 |
3,478 |
806 |
40,800 |
|||||||||||||||||||||
|
Additions |
6,708 |
- |
- |
- |
- |
- |
6,708 |
|||||||||||||||||||||
|
Acquired through business combinations |
- |
- |
2,478 |
769 |
4,615 |
- |
7,862 |
|||||||||||||||||||||
|
Disposals |
(30 |
) |
- |
- |
- |
- |
- |
(30 |
) | |||||||||||||||||||
|
Translation differences |
|
54 |
|
- |
|
74 |
|
41 |
|
178 |
|
- |
|
347 |
||||||||||||||
|
Balance as of December 31, 2021 |
|
34,209 |
|
5,292 |
|
4,188 |
|
2,921 |
|
8,271 |
|
806 |
|
55,687 |
||||||||||||||
|
|
|
|
||||||||||||||||||||||||||
|
Accumulated amortization: |
|
|
|
|||||||||||||||||||||||||
|
Balance as of January 1, 2021 |
10,244 |
1,730 |
423 |
1,015 |
- |
- |
13,412 |
|||||||||||||||||||||
|
Amortization |
3,240 |
266 |
407 |
523 |
- |
47 |
4,483 |
|||||||||||||||||||||
|
Disposals |
(30 |
) |
- |
- |
- |
- |
- |
(30 |
) | |||||||||||||||||||
|
Translation differences |
|
- |
|
- |
|
13 |
|
8 |
|
- |
|
- |
|
21 |
||||||||||||||
|
Balance as of December 31, 2021 |
|
13,454 |
|
1,996 |
|
843 |
|
1,546 |
|
- |
|
47 |
|
17,886 |
||||||||||||||
|
|
|
|
||||||||||||||||||||||||||
|
Net book value: |
|
|
|
|||||||||||||||||||||||||
|
As of December 31, 2021 |
|
20,755 |
|
3,296 |
|
3,345 |
|
1,375 |
|
8,271 |
|
759 |
|
37,801 |
||||||||||||||
Composition of intangible assets and accumulated amortization thereon, grouped by major classifications, and changes therein in 2020 are as follows:
|
|
Capitalized Development costs ** |
Distribution rights * |
Customer relationships purchased * |
Technology ** |
Goodwill (a) |
Patents ** |
Total |
|||||||||||||||||||||
|
|
US Dollars in thousands |
|||||||||||||||||||||||||||
|
Cost: |
||||||||||||||||||||||||||||
|
Balance as of January 1, 2020 |
20,864 |
5,292 |
1,178 |
1,411 |
1,394 |
- |
30,139 |
|||||||||||||||||||||
|
Additions |
6,613 |
- |
- |
- |
- |
806 |
7,419 |
|||||||||||||||||||||
|
Acquired through business combinations |
- |
- |
414 |
632 |
1,867 |
- |
2,913 |
|||||||||||||||||||||
|
Translation differences |
|
- |
|
- |
|
44 |
|
68 |
|
217 |
|
- |
|
329 |
||||||||||||||
|
Balance as of December 31, 2020 |
|
27,477 |
|
5,292 |
|
1,636 |
|
2,111 |
|
3,478 |
|
806 |
|
40,800 |
||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Accumulated amortization: |
||||||||||||||||||||||||||||
|
Balance as of January 1, 2020 |
7,067 |
1,466 |
246 |
623 |
- |
- |
9,402 |
|||||||||||||||||||||
|
Amortization |
3,177 |
264 |
172 |
382 |
- |
- |
3,995 |
|||||||||||||||||||||
|
Translation differences |
|
- |
|
- |
|
5 |
|
10 |
|
- |
|
- |
|
15 |
||||||||||||||
|
Balance as of December 31, 2020 |
|
10,244 |
|
1,730 |
|
423 |
|
1,015 |
|
- |
|
- |
|
13,412 |
||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Net book value: |
||||||||||||||||||||||||||||
|
As of December 31, 2020 |
|
17,233 |
|
3,562 |
|
1,213 |
|
1,096 |
|
3,478 |
|
806 |
|
27,388 |
||||||||||||||
* Amortization of customer relationship and distribution rights are included under the selling, general and administrative expenses.
** Amortization of technology and development costs are included in the “depreciation and amortization in respect of technology and capitalized development costs”.
| F - 49 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - GOODWILL AND INTANGIBLE ASSETS (continued):
(a) Goodwill
The group tests whether goodwill has suffered any impairment on an annual basis. For the 2022 and 2021 reporting periods, the recoverable amount of the cash-generating units (CGUs) was determined based on value-in-use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management. The discount rate was a pre-tax measure using a rate of return that reflects the relative risk of the investment, as well as the time value of money. Five years of cash flows were included in the discounted cash flow model. Cash flows beyond the five-year period are extrapolated using the estimated growth rates stated below. These growth rates are consistent with forecasts included in industry reports specific to the industry in which each CGU operates.
1. On Track Innovations Ltd. - As part of the business combination for the purchase of On Track Innovations Ltd. (hereinafter – "OTI") the Company recognized goodwill in the total amount of $2,724 thousand (see note 6c). The following key assumptions were used to determine the value in use of the CGU as at December 31, 2022:
|
|
OTI
|
|||
|
|
|
|||
|
Growth rate |
3% |
| ||
|
Discount rate |
20.4% |
| ||
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
| F - 50 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12 - GOODWILL AND INTANGIBLE ASSETS (continued):
(a) Goodwill (continued):
2. Modularity and Nayax Retail- As part of the business combination for the purchase of Modularity Technologies Ltd. (hereinafter – "Modularity") the Company recognized intangible assets (goodwill) in the total amount of $503 thousand. As part of the business combination related to the acquisition of Nayax Retail (see note 6a), the Company recognized intangible assets (goodwill) in the total amount of $1,867 thousand.
The following key assumptions were used to determine the value in use of the CGUs as at December 31, 2022:
|
|
Retail
(Nayax Retail and
Modularity)
|
|||
|
|
|
|||
|
Growth rate |
3% |
| ||
|
Discount rate |
20.6% |
| ||
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
3. Weezmo - As part of the business combination related to the acquisition of Weezmo (see note 6b), intangible assets of goodwill at $4,615 thousand were recognized.
The following key assumptions were used to determine the value in use of the CGUs as at December 31, 2022:
|
|
Weezmo |
|||
|
|
||||
|
Growth rate |
3% |
|||
|
Discount rate |
20.6% |
|||
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
4. Vendsys - As part of the business combination related to the acquisition of Greenhithe Software Solutions Ltd (hereinafter – "VendSys") the Company recognized goodwill in the total amount of $891 thousand. The following key assumptions were used to determine the value in use of the CGU as at December 31, 2022.
|
|
Vendsys |
|||
|
|
|
|||
|
Growth rate |
4% |
| ||
|
Discount rate |
12% |
| ||
The recoverable amount is greater than the carrying amount, and no impairment of goodwill was required.
| F - 51 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13 - CREDIT AND LOANS FROM BANKS
a. Short-term bank credit
| 1) |
In June 2018, the Company received a short-term credit facility of NIS 25 million ($6.9 million) from an Israeli bank bearing variable interest of Prime + 2%. On May 19, 2019 and in October 2020, the Company signed agreements to increase the short-term credit facility, such that as of December 31, 2021 the amount of the short-term credit facility is NIS 42.5 million ($13.2 million). On August 9, 2022, the short-term credit facility from the bank was renewed in an amount of NIS 35 million ($10.6 million). The short-term credit facility from August has the same terms as received in previous short-term credit facility. |
|
| 2) |
As of December 31, 2022, a fully owned subsidiary of the Company has a short-term loan for $2 million (NIS 7.03 million) from an Israeli bank. The short-term loan bears interest of foreign exchange market + 3%. The loan is renewed monthly according to the company sole discretion. |
b. Long-term bank loans
|
December
31, |
||||||||
|
2022
|
2021 |
|||||||
|
US
Dollars in thousands |
||||||||
|
Long-term bank loans |
2,496 |
5,166 |
||||||
|
Less - current maturities |
|
(1,052 |
) |
|
(2,406 |
) | ||
|
|
1,444 |
|
2,760 |
|||||
|
1) |
In June 2018, the Company received a long-term bank loan in the amount of NIS 15 million ($4.14 million) from the Bank,the loan bears interest at the rate of Prime + 3.45% paid monthly. The principal of the loan is repayable in 48 monthly installments as from December 2018. The loan was fully prepaid in February 2022. | |
|
2) |
In May 2020, the Company received a long-term loan from the Bank, backed by a government guarantee, in the amount of NIS 15 million ($4.25 million). The loan bears interest of Prime + 1.5%, payable monthly beginning in May 2021. The loan's principal will be returned in 48 monthly installments beginning in May 2021. | |
The carrying amount of the credit and loans from banks reasonably approximate their fair value.
c. Financial covenants
During 2021 and after the IPO, the Company’s financial covenants were cancelled in respect to short-term borrowings and long-term loans.
| F - 52 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 14 - LONG-TERM LOANS FROM OTHERS
|
December 31, |
||||||||
|
2022 |
2021 |
|||||||
|
US Dollars in thousands |
||||||||
|
Long-term loans from others (*)(**) |
7,367 |
3,219 |
||||||
|
Less - current maturities |
|
(3,585 |
) |
|
(2,989 |
) | ||
|
|
3,782 |
|
230 |
|||||
| (*) |
The balance is composed of loans received from an acquirer of the Group. |
|
(**) |
The carrying amount of the credit and loans from banks reasonably approximate their fair value. |
Below is the composition of the loans:
a. In April 2019, the Group received a loan in the amount of $2.5 million. The loan bears effective annual interest of 4.74% and is being returned in 36 monthly instalments beginning in April 2019. On March 18, 2020, following the COVID crisis, the Group signed an agreement whereunder it will not pay the principal of the loan for a six-month period from March 2020 to August 2020. During January 2022, the loan fully repaid.
b. In February 2020, the Group received a loan in the amount of Euro 3.5 million ($3.8 million). The loan bears effective annual interest of 4.74% and is being returned in 24 equal monthly instalments beginning in February 2021. In March 2021, following the COVID crisis, the Company received an approval to defer repayment of the said loan by six months and expected to be fully repaid during 2023.
c. In December 2, 2022 the company received an additional loan in the amount of Euro 6.5 million ($6,850 million). The additional amount bears effective annual interest rate of 10% and is being returned by an equal 25 instalments where the last payment is expected to be on December 2024.
NOTE 15 - OTHER LONG-TERM LIABILTIES
Composition of other long-term liabilities, net of current maturities
|
December 31, |
||||||||
|
2022
|
2021 |
|||||||
|
US Dollars in thousands |
||||||||
|
Liability in respect of purchase of servers (a) |
175 |
411 |
||||||
|
Liability in respect of royalties to government institutions (b) |
563 |
660 |
||||||
|
Liability for contingent payment due to employee benefit (c) |
1,006 |
760 |
||||||
|
Liability for forward contract for acquisitions, see note 6 |
|
1,536 |
|
2,238 |
||||
|
|
3,280 |
|
4,069 |
|||||
(a) The balance of $91 thousand is paid in 48 monthly installments from July 2019.
The balance of $ 279 thousand is paid in 58 monthly installments from July 2020. The implied interest rate in the transaction is 1.78%.
Current maturities as of December 31, 2022 and 2021 were $97 and $312 thousand, respectively.
(b) The liability in respect of royalties to government institutions was initially recognized at fair value based on the applicable discount rate. The Group capitalized the royalty liability using a discount rate of 14%. Current maturities as of December 31, 2022 and 2021 were $296 and $277 thousand, respectively.
| F - 53 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15 - OTHER LONG-TERM LIABILTIES (continued):
Composition of other long-term liabilities, net of current maturities (continued):
As of December 31, 2022, the Company received an amount of NIS 3.93 million ($1.07 million) from the below support schemes and recognized a liability in respect of these grants in the amount of $773 thousands. Below is information about the support programs:
1) The “Smart Money” program and the “India, China, Japan” program – between 2014-2019, the Israeli Ministry of Economy issued the Company with approvals of eligibility to grants totaling NIS 4.1 million ($1.08 million) to be used a support in increasing the scope of sales in the USA, Japan, China and India. The accumulated amount of grants received through December 31, 2022 is NIS 2 million ($526 thousand).
2) The Halutz and Hadgama project – in November 2017, the Israeli Ministry of Energy issued the Company with an approval of eligibility for a grant of up to NIS 1.5 million ($413 thousand) out of an approved budget of up to NIS 3 million ($826 thousand) as part of the Halutz and Hadgama project for the development of a charging system for electric cars. As of the year ended December 31, 2022 the Company has not received new grants.
3) Public transportation pilot – in May 2019, the Israeli Innovation Authority issued the Company with an approval for eligibility for a grant of up to NIS 1.1 million ($314 thousand) out of an approved budget of up to NIS 2.2 million ($628 thousand) as part of the development of ticketing and validation systems for public transport. The accumulated amount of grants received through December 31, 2021 is NIS 441 thousand ($127 thousand).).
(c) The balance includes liabilities for contingent payments recognized as a separate transaction which is not included in the application of the acquisition method.
As of December 31, 2022 and 2021, regarding the liability for contingent payment of long-term employee benefit, which was not included in the application of the purchase method to the acquisition of VendSys is estimated at $1,006 thousand and $760 thousand, respectively.
As of December 31, 2022 and 2021, the liability has a current maturity to contingent payments in respect of long-term employee benefit that was not included in the application of the purchase method to the acquisition of Modularity is estimated at $56 thousand and $22 thousand, respectively.
NOTE 16 - INCOME TAXES
a. Taxation of the Company in Israel
1) Tax rates:
The Company’s income in Israel (except for income qualifying for reduced tax rates under Israel encouragement law, see paragraph 2 below) is taxed at regular rates.
The Israeli corporate tax rate in 2018 and thereafter is 23%.
Capital gains of the Company in Israel are subject to tax at the regular corporate tax rate applicable during the tax year.
2) In December 2020, the Company received an in-agreement tax ruling, indicating that the enterprise of the Company meets the definition of a Technological Preferred Enterprise, and that the income of the Company from selling POS devices, provision of processing SaaS are deemed "technology income" as defined by Section 51 to the Encouragement of Capital Investment Law, 1959 (hereinafter - "the Law"), which are subject to 12% tax, while income attributed to production are "preferred income", as this term is defined by Section 51 to the Law, which are subject to 16% or 7.5%. tax (depending on the production activity place). This tax ruling applies to the Company beginning in the 2020 tax year through 2024.
| F - 54 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - INCOME TAXES (continued):
a. Taxation of the Company in Israel (continued):
3) In February 7, 2021, the Company received an in-agreement tax ruling, indicating that the restructuring that the Company completed during 2022 which holding the entire (100%) share capital of Dually, is tax exempt. See note 6e.
b. Taxation of subsidiaries outside of Israel
Subsidiaries that are incorporated outside Israel are assessed for tax under the tax laws applicable in their countries of residence.
The principal tax rates applicable in 2022 to subsidiaries outside Israel are as follows:
Companies incorporated in the United States – tax rate of 34.7% (including federal, state and branch profits tax).
Company incorporated in the UK – tax rate of 19%.
Company incorporated in Australia – tax rate of 30%.
Company incorporated in Lithuania –corporate tax rate of 15%.
Generally, inter-company transactions between the Company and subsidiaries outside Israel are subject to the provisions and reporting requirements set out in the Income Tax Regulations (Determination of Market Terms), 2006.
c. Carry forward losses
Deferred tax assets on carryforward losses are recognized if the exercise of the relevant tax benefit is expected in the foreseeable future against a taxable income.
As of December 31, 2022 and 2021, the carryforward tax losses stemming from the Company in Israel amounted to NIS 173,274 thousand ($49,240 thousand) and NIS 86,944 thousand ($27,956 thousand), respectively.
The Group recognizes deferred taxes in respect of carryforward losses stemming from the Group only up to the amount of the liability for deferred tax, since the utilization of those losses is not expected in the foreseeable future. Carryforward tax losses accrued in Israel may be offset over an unlimited time.
d. Tax assessments
The limitation period in Israel of tax assessments filed by taxpayers in respect of tax year 2013 and thereafter is 4 years from the end of the tax year in which a tax return was filed.
Accordingly, the Company’s tax assessments through tax year 2017 are considered to be final.
e. Tax rate reconciliation:
The reconciliation of the theoretical tax benefit (expense) by the Israeli statutory tax rate to the Company's effective benefit (expense) taxes are as follows:
|
For the year ended December
31, |
||||||||||||
|
2022
|
2021 |
2020 |
||||||||||
|
|
US Dollars in thousands
|
|||||||||||
|
Loss before taxes on income |
(37,058 |
) |
(24,137 |
) |
(6,098 |
) | ||||||
|
Tax rate |
23 |
% |
23 |
% |
23 |
% | ||||||
|
Theoretical tax benefit |
8,523 |
5,551 |
1,402 |
|||||||||
|
Share-based payment expenses which are not deductible |
(2,012 |
) |
(2,035 |
) |
(682 |
) | ||||||
|
Carry forward losses without deferred taxes recognition |
(6,872 |
) |
(3,249 |
) |
(527 |
) | ||||||
|
Other |
(90 |
) |
(899 |
) |
(178 | ) | ||||||
|
Effective tax benefit (expense) |
|
(451 |
) |
|
(632 |
) |
|
15 |
||||
f. Deferred income tax:
The composition of deferred taxes as of statement of financial position dates and the change thereof in those years is:
|
Intangible assets |
Provisions for employee rights |
Other |
Losses for tax purposes |
Total
|
||||||||||||||||
|
US Dollars in thousands |
||||||||||||||||||||
|
Balance at January 1, 2022 |
(1,111 |
) |
- |
- |
23 |
(1,088 |
) | |||||||||||||
|
Change in 2022: |
|
|||||||||||||||||||
|
Recognized in income statement |
(77 |
) |
44 |
44 |
170 |
181 |
||||||||||||||
|
Recognized in translation currency difference reserve |
114 |
- |
- |
|
- |
|
114 |
|||||||||||||
|
Balance at December 31, 2022 |
(1,074 |
) |
44 |
44 |
|
193 |
|
(793 |
) | |||||||||||
|
Balance at January 1, 2021 |
(998 |
) |
208 |
91 |
414 |
(285 |
) | |||||||||||||
|
Change in 2021: |
||||||||||||||||||||
|
Recognized in income statement |
665 |
(208 |
) |
(91 |
) |
(391 |
) |
(25 |
) | |||||||||||
|
Deferred taxes created in acquisition of subsidiary |
(747 |
) |
- |
- |
- |
(747 |
) | |||||||||||||
|
Recognized in translation currency difference reserve |
|
(31 |
) |
|
- |
|
- |
|
- |
|
(31 |
) | ||||||||
|
Balance at December 31, 2021 |
|
(1,111 |
) |
|
- |
|
- |
|
23 |
|
(1,088 |
) | ||||||||
|
Balance at January 1, 2020 |
(935 |
) |
129 |
87 |
473 |
(246 |
) | |||||||||||||
|
Change in 2020: |
||||||||||||||||||||
|
Recognized in income statement |
206 |
79 |
4 |
(59 |
) |
230 |
||||||||||||||
|
Deferred taxes created in acquisition of subsidiary |
(241 |
) |
- |
- |
- |
(241 |
) | |||||||||||||
|
Recognized in translation currency difference reserve |
|
(28 |
) |
- |
|
- |
|
- |
|
(28 |
) | |||||||||
|
Balance at December 31, 2020 |
|
(998 |
) |
|
208 |
|
91 |
|
414 |
|
(285 |
) | ||||||||
| F - 56 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 16 - INCOME TAXES (continued):
f. Deferred income tax (continued):
Deferred taxes are presented in the statement of financial position as follows:
|
December
31, |
||||||||
|
2022
|
2021
|
|||||||
|
US
Dollars in thousands |
||||||||
|
Non-current assets |
- |
- |
||||||
|
Non-current liabilities |
|
(793 |
) |
|
(1,088 |
) | ||
|
|
(793 |
) |
|
(1,088 |
) | |||
g. Taxes on income included in profit or loss:
|
|
For the year ended December 31, |
|||||||||||
|
|
2022 |
2021
|
2020 |
|||||||||
|
|
US Dollars in thousands |
|||||||||||
|
Current tax expenses |
(632 |
) |
(607 |
) |
(215 |
) | ||||||
|
Deferred tax income (expenses) |
|
181 |
|
(25 |
) |
|
230 |
|||||
|
|
(451 |
) |
|
(632 |
) |
|
15 |
|||||
NOTE 17 - CAPITAL AND RESERVES
| a. | Composition: |
|
The share capital as of December 31, 2022, is composed of Ordinary shares, all having ILS 0.001 par value, as follows: |
|
Number of shares |
In thousands |
|||||||||||||||
|
|
Authorized |
Issued and paid |
Authorized |
Issued and paid |
||||||||||||
|
December 31, 2022 |
December 31, 2022 |
|||||||||||||||
|
Ordinary shares |
|
70,000,000 |
|
32,956,004 |
|
70,000 |
|
32,956 |
||||||||
The share capital as of December 31, 2021, is composed of Ordinary shares, all having ILS 0.001 par value, as follows:
|
Number of shares |
In thousands |
|||||||||||||||
|
Authorized |
Issued and paid |
Authorized |
Issued and paid |
|||||||||||||
|
December 31, 2021 |
December 31, 2021 |
|||||||||||||||
|
Ordinary shares |
|
70,000,000 |
|
32,752,242 |
|
70,000 |
|
32,752 |
||||||||
The share capital as of December 31, 2020, is composed of Ordinary shares, Ordinary shares A and Ordinary shares B, all having NIS 0.001 par value, as follows:
|
|
Number of shares |
|
In thousands |
|||||||||||||
|
|
Authorized |
|
Issued and paid |
|
Authorized |
|
Issued and paid |
|||||||||
|
|
December 31, 2020 |
|
December 31, 2020 |
|||||||||||||
|
Ordinary shares |
|
33,743,340 |
|
24,842,100 |
|
33,743 |
|
24,842 |
||||||||
|
Ordinary shares A |
1,606,660 |
1,530,480 |
1,607 |
1,530 |
||||||||||||
|
Ordinary shares B |
|
2,650,000 |
1,747,700 |
2,650 |
1,748 |
|||||||||||
|
|
38,000,000 |
28,120,280 |
38,000 |
28,120 |
||||||||||||
| F - 57 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - CAPITAL AND RESERVES (continued):
a. Composition (continued):
In April 2021, all ordinary A shares of NIS 0.001 par value and all ordinary B shares of NIS 0.001 par value – both issued shares and shares included in the Company’s authorized capital – were converted into ordinary shares of NIS 0.001 par value each based on a 1:1 ratio, such that subsequent to the conversion, the Company’s capital comprises only ordinary shares.
In April 2021, the Company increased the registered share capital by 32,000,000 Ordinary shares par value NIS 0.001 each.
In May 2021, the Company completed an IPO. For additional information, see note 1a.
| b. | Share-based payment: |
As of December 31, 2022, the Company has two equity-settled compensation plans to employees and service providers of the Company and its subsidiaries, under which options were allotted: (1) the option plan approved by the Company’s Board of Directors in February 2013 (hereafter – the “2013 Plan”); and (2) global equity-settled incentive plan adopted by the Company’s Board of Directors in December 2018 (hereafter – the “2018 Plan”), as follows:
Under the 2013 Plan, employees of Group companies may be awarded options (hereafter – the “2013 Options”). A 2013 Option may be exercised into one ordinary share against payment of an exercise price set by the Board of Directors on the grant date. Under the 2018 Plan, employees of Group companies may be awarded options (hereafter – the “2018 Options”). A 2018 Option is exercisable into one ordinary share against the payment of exercise price set by the Board of Directors on grant date.
| 1. | 2020 awards: In 2020, the Company granted 778,000 options under the 2018 Plan to employees and service providers of the Company and its subsidiaries (in addition, 246,000 options were granted as part of an option replacement, as detailed below). The vesting period of the 2018 options granted in 2020 was 4 years, with 25% of the options vesting on the first anniversary of inception date and later an additional tranche representing 6.25% of option will vest on the last day of each subsequent calendar quarter. Options not exercised within 5 years of inception date will expire. | |
|
2. |
Replacement of options allotted under the 2013 Plan by options under the 2018 Plan: On October 15, 2020, the Company's Board of Directors resolved to offer holders of options offered under the 2013 Plan in the capital gains track with a trustee under Section 102(b)(2) to the Israel Income Tax
Ordinance [New Version] ("2013 Employee Options" and the "Offerees") to replace the 2013 Employee Options in their possession with new options under the 2018 Plan, with terms that differ from those of the 2013 Employee Options (including a change of exercise price, change of number of options and change of vesting and expiration dates of the options), and with the new options under the 2018 Plan to be Allotted under the capital gains track with trustee under Section 102 to the Ordinance (the "Change of Terms").
According to a tax ruling received from the Israel Tax Authority (ITA) on November 10, 2020, the Company's Board of Directors approved on that day, in relation to interested Offerees, to cancel 249,340 of 2013 Employee Options allocated to them and replace those with 246,000 options that were allotted on November 10, 2020 to those same Offerees under the 2018 Plan.
The new allotments, as above, are governed by the provisions of the capital gains track with trustee under Sections 102(b)(2) and 102(b)(3) to the Ordinance, as applicable.
The Company recognized an expense of $221 thousand in accordance with the 2013 Options’ original vesting period prior to their replacement by the 2018 Options. |
| F - 58 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - CAPITAL AND RESERVES (continued):
b. Share-based payment (continued):
|
The Company recognized an expense of $509 thousand in respect of the 2013 Options benefit balance, which were not replaced by 2018 Options, and whose vesting was conditional upon the occurrence of an IPO. | ||
| 3. |
January 2021 award: On January 7, 2021, the Company allotted to two employees of the Company 40,000 options each (a total of 80,000 options) under the 2018 Plan.
| |
|
The vesting period of the options is four years, where 25% of the options vest on the first anniversary of grant date, and after that, additional 6.25% of the options vest on the last day of each subsequent calendar quarter. Options not exercised by the fifth anniversary of grant date will expire.
| ||
|
The 40,000 options have an exercise price of $6.7 (hereinafter: "Part A Options") and 40,000 options have an exercise price of the par value of the shares (NIS 0.001) and also include accelerated vesting in the event of an IPO or at the termination of the employee's service, meaning that they vested upon completion of the IPO of the Company (hereinafter: "Part B Options") (see note 1 below). |
||
| 4. |
March 2021 award: On March 24, 2021, the Company allotted 282,500 options to employees of the Company and subsidiaries under the 2018 Plan. The exercise price of 253,000 options is $6.7 each (hereinafter: "Part C Options") and the exercise price of 29,500 options that were allotted to employees of subsidiaries in the US is $19.5 each (hereinafter: "Part D Options").
The vesting period of the options is five years, with 20% of the options vest on the first anniversary of grant date, and after that, additional 5% of the options vest on the last day of each subsequent calendar quarter. Options not exercised by the end of the quarter following the end of vesting period will expire. | |
| 5. |
May 2021 award: On May 13, 2021, the Company allotted Mr. Yair Nechmad and Mr. David Ben Avi 725,000 options each, which are convertible into ordinary Company shares. The options shall vest over a five-year period (through 2025), subject to attaining the following targets: |
| a. | To the extent that revenue growth of the Company in any given calendar year over the preceding calendar year (beginning in 2021, relative to 2020) is at least 30%, and subject to a gross profit rate of not less than 40% in that calendar year, 75,000 options will vest and be exercisable into ordinary shares of the Company over a five-year period. | ||
| b. | Additionally to the options vested in accordance with paragraph a. above, for revenue growth of the Company in any given calendar year over the preceding calendar year (beginning in 2021, relative to 2020) of at least 30% and up to 45%, and subject to a gross profit rate of not less than 40% in that calendar year, up to 70,000 additional options will vest and be exercisable into ordinary shares of the Company over a five-year period, with the number of options vesting under this paragraph calculated linearly, based on the revenue growth rate of between 30% and 45% over the previous year. | ||
|
Should the Company fail to meet the targets set out above in a certain calendar year, the options attributed to that calendar year will expire. | |||
|
The exercise price of the said options will be the price set for the Company’s share as part of the IPO (see note 1). The total expense recognized in respect of this award during 2021 is $4,413 thousand based on the expected targets above. |
| F - 59 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - CAPITAL AND RESERVES (continued):
b. Share-based payment (continued):
| 6. |
August 2021 award: On August 22, 2021, the Company's board of directors approved an allotment to employees of the Company and subsidiaries and to service providers of 196,750 options under the 2018 Plan and of 50,000 restricted share units (RSUs). The vesting period of the options and RSUs is the same as March 2021 award. | |
| 7. |
November 2021 award: On November 11, 2021, the Company's board of directors approved an allotment to employees of the Company and subsidiaries of 167,500 options under the 2018 Plan. The vesting period of 127,500 options is the same as March 2021 award and the vesting period of 40,000 options is three years, with 25% of the options vest on the grant date, and after that, additional 6.25% of the options vest on the last day of each subsequent calendar quarter. Options not exercised by the end of the quarter following the end of vesting period will expire. | |
|
On March 28, 2022, the Company's board of directors approved re-pricing for August and November 2021 awards. According to a tax ruling received from the Israel Tax Authority (ITA) on May 31, 2022, the exercise price for 191,750 options was updated to $20.39 and the incremental fair value is $486 thousand. | ||
| 8. |
March 28, 2022 award: On March 28, 2022, the Company allotted 215,500 options and 45,000 restricted share units (RSUs) to employees of the Company and subsidiaries. | |
| 9. |
June 30, 2022 award: On June 30, 2022, the Company allotted 170,000 options and 6,000 restricted share units (RSUs) to employees of the Company and subsidiaries. | |
| 10. |
September 29, 2022 award: On September, 2022, the Company allotted 54,500 options and 18,600 restricted share units (RSUs) to employees of the Company and subsidiaries. | |
| 11. |
December 20, 2022 award: On December, 2022, the Company allotted 10,667 restricted share units (RSUs) to employees of the Company and subsidiaries. | |
|
The vesting period of all grants rewarded during the year ended December, 31 2022 of both options and RSUs are 4 years, with 25% of the options vest on the first anniversary of grant date, and after that, additional 6.25% of the options vest on the last day of each subsequent calendar quarter. Options not exercised within 5 years of inception date will expire. |
| F - 60 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - CAPITAL AND RESERVES (continued):
b. Share-based payment (continued):
The Company used the Black and Scholes option pricing model to measure the fair value of the share options on award dates. The key assumptions used by the Company in this model and the fair value of each option are as follows:
|
Allotment date |
|
Share price |
|
Exercise price |
|
Expected option life |
|
Risk-free interest rate |
|
Average standard deviation (**) |
|
|
Option fair value |
|||||||||||
|
May 20, 2020 |
$ |
9.7 |
$ |
6.7 |
|
5 |
|
0.33 |
% |
|
56 |
% |
$ |
5.5 |
||||||||||
|
October 29, 2020 |
$ |
9.7 |
$ |
6.7 |
5 |
0.38 |
% |
52 |
% |
$ |
5.3 |
|||||||||||||
|
November 10, 2020 |
$ |
9.7 |
$ |
6.7/ NIS 0.001 |
5 |
0.38%/0.46 |
% |
52 |
% |
$ |
5.3/9.7 |
|||||||||||||
|
December 3, 2020 |
$ |
9.7 |
$ |
6.7 |
5 |
0.39 |
% |
52 |
% |
$ |
5.3 |
|||||||||||||
|
January 7, 2021 – Part A Options |
$ |
9.7 |
$ |
6.7 |
5 |
0.46 |
% |
51 |
% |
$ |
5.3 |
|||||||||||||
|
January 7, 2021 – Part B Options |
$ |
9.7 |
NIS 0.001 |
5 |
0.46 |
% |
51 |
% |
$ |
9.7 |
||||||||||||||
|
March 24, 2021 – Part C Options |
$ |
19.5 |
$ |
6.7 |
5.25 |
0.88 |
% |
50 |
% |
$ |
14.1 |
|||||||||||||
|
March 24, 2021 – Part D Options |
$ |
19.5 |
$ |
19.5 |
5.25 |
0.88 |
% |
50 |
% |
$ |
8.7 |
|||||||||||||
|
May 13, 2021 |
$ |
31.9 |
$ |
31.9 |
5.88-9.88 |
1.05%-1.65 |
% |
53.1%-54.67 |
% |
$ |
16.2-$20.1 |
|||||||||||||
|
August 22, 2021 – Options |
$ |
31.7 |
$ |
30.6 |
5.25 |
0.83 |
% |
55 |
% |
$ |
15.5 |
|||||||||||||
|
August 22, 2021 – RSUs |
$ |
31.7 |
- |
- |
- |
- |
$ |
31.7 |
||||||||||||||||
|
November 11, 2021 |
$ |
39 |
$ |
6.7/38.8 |
5.25 |
1.21 |
% |
55 |
% |
$ |
19/$33.2 |
|||||||||||||
|
March 28, 2022 – Options |
$ |
18.4 |
$ |
20.4 |
5 |
2.50 |
% |
56 |
% |
$ |
8.7 |
|||||||||||||
|
March 28, 2022 – RSUs |
$ |
18.4 |
- |
- |
- |
- |
$ |
18.4 |
||||||||||||||||
|
June 30, 2022 – Options |
$ |
18.5 |
$ |
16.7 |
5 |
3.01 |
% |
54 |
% |
$ |
9.7-$10.8 |
|||||||||||||
|
June 30, 2022 – RSUs |
$ |
18.5 |
- |
- |
- |
- |
$ |
18.5 |
||||||||||||||||
|
September 29, 2022 – Options |
$ |
23.9 |
25.5 |
5 |
3.98 |
% |
54.45 |
% |
$ |
11.8-$23.9 |
||||||||||||||
|
September 29, 2022 - RSUs |
$ |
23.9 |
- |
- |
- |
- |
$ |
23.9 |
||||||||||||||||
|
December 20, 2022 - RSUs |
$ |
19.7 |
- | - | - | - | $ |
19.7 |
||||||||||||||||
|
The weighted average for 2020 |
$ |
5.6 |
- |
- |
- |
- |
$ |
5.6 |
||||||||||||||||
|
The weighted average for 2021 |
$ |
17.3 |
- |
- |
- |
- |
$ |
17.3 |
||||||||||||||||
|
The weighted average for 2022 |
$ |
11.1 |
- |
- |
- |
- |
$ |
11.1 |
||||||||||||||||
(**) The expected volatility was determined based on comparable companies.
All allotments to employees and offices in Israel carried out as part of the plan are subject to the terms set out in Section 102 of the Income Tax Ordinance. The allotments to Israelis who are not employees are subject to Section 3(i) to the Income Tax Ordinance. Foreign employees and service providers are subject to the tax law in the relevant countries.
| F - 61 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 17 - CAPITAL AND RESERVES (continued):
b. Share-based payment (continued):
Below is a breakdown of the options and the weighted average exercise price during the reported periods:
|
December
31, 2022 |
December
31, 2021 |
December
31, 2020 |
||||||||||||||||||||||
|
Number
of options |
Weighted
average exercise price |
Number
of options |
Weighted
average exercise price |
Number
of options |
Weighted
average exercise price |
|||||||||||||||||||
|
Number of options and
RSU outstanding at beginning of year |
3,633,778
|
19.1
|
1,830,695
|
6.0
|
1,470,630
|
3.3
|
||||||||||||||||||
|
Options and RSU granted
(1) |
520,767
|
16.5
|
2,226,750
|
27.5
|
1,024,000
|
6.5
|
||||||||||||||||||
|
Options exercised
|
(203,748
|
)
|
5.0
|
(231,962
|
)
|
5.3
|
-
|
-
|
||||||||||||||||
|
Options cancelled or
forfeited (1) |
(126,211
|
)
|
17.0
|
(140,719
|
)
|
8.5
|
(45,166
|
)
|
6.2
|
|||||||||||||||
|
Options expired
|
(1,534
|
)
|
6.7
|
(50,986
|
)
|
5.3
|
(618,769
|
)
|
0.4
|
|||||||||||||||
|
Options and RSU outstanding
at end of year |
3,823,052
|
19.3
|
3,633,778
|
19.1
|
1,830,695
|
6.0
|
||||||||||||||||||
|
Options and RSU exercisable
at end of year |
1,502,887
|
12.3
|
928,970
|
5.6
|
687,011
|
5.0
|
||||||||||||||||||
(1) In 2020, includes 246,000 options that were replaced against waiver of 249,340 options under the 2013 Plan, as indicated above.
As of December 31, 2022, 2021 and 2020, the weighted-average remaining contractual life of exercisable options were 2.7, 3.11 and 3.49 years, respectively.
As of December 31, 2022, 2021 and 2020, the range of exercise prices for share options outstanding at the end of the period was NIS 0.001-$25.52, NIS 0.001-$38.8 and NIS 0.001-$6.7, respectively.
The expenses related to share base compensation for each of the three years in the period ended December 31, 2022 are $9,667, $8,850 thousand and $2,965 thousand during 2021 and 2020, respectively.
The amounts of expense recognized as capitalized development costs and included as intangible assets for each of the three years in the period ended December 31, 2022 are $909, $649 and $883 thousand during 2022, 2021 and 2020, respectively.
The balance of unrecognized benefit as of December 31, 2022, assuming that all conditions set were met, is $12,703 thousand.
| F - 62 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 18 - REVENUES
|
For
the year ended December
31, |
||||||||||||
|
2022
|
2021 |
2020 |
||||||||||
|
US
Dollars in thousands |
||||||||||||
|
Revenue from the sale of integrated POS devices |
68,726 |
47,987 |
35,414 |
|||||||||
|
Recurring revenue: |
||||||||||||
|
SaaS revenue |
45,274 |
34,641 |
25,127 |
|||||||||
|
Payment processing fee |
|
59,514 |
|
36,506 |
|
18,242 |
||||||
|
|
104,788 |
|
71,147 |
|
43,369 |
|||||||
|
|
173,514 |
|
119,134 |
|
78,783 |
|||||||
NOTE 19 - COST OF REVENUES
|
For
the year ended December
31, |
||||||||||||
|
2022
|
2021 |
2020 |
||||||||||
|
US
Dollars in thousands |
||||||||||||
|
Cost of integrated POS devices sales |
62,872 |
40,165 |
24,825 |
|||||||||
|
Cost of recurring revenue |
|
50,604 |
|
30,805 |
|
16,778 |
||||||
|
|
113,476 |
|
70,970 |
|
41,603 |
|||||||
As of the periods ended December 31, 2022, 2021 and 2020 , cost of revenue includes employee related costs and share based compensation in the amount of $6,352 thousand, $4,058 thousand and $2,135 thousand, respectively.
NOTE 20 - RESEARCH AND DEVELOPMENT EXPENSES
|
For
the year ended December
31, |
||||||||||||
|
2022
|
2021 |
2020 |
||||||||||
|
|
US Dollars in thousands |
|||||||||||
|
Payroll and related expenses |
14,820 |
12,970 |
6,189 |
|||||||||
|
Suppliers and subcontractors |
4,193 |
2,557 |
976 |
|||||||||
|
Office and maintenance |
602 |
539 |
259 |
|||||||||
|
Share-based payment |
1,279 |
1,846 |
1,133 |
|||||||||
|
Depreciation and amortization |
|
1,238 |
|
1,128 |
|
743 |
||||||
|
|
22,132 |
|
19,040 |
|
9,300 |
|||||||
| F - 63 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 21 - SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
For
the year ended December
31, |
||||||||||||
|
2022
|
2021
|
2020
|
||||||||||
|
US
Dollars in thousands |
||||||||||||
|
Payroll and related expenses |
32,402 | 24,141 | 15,951 | |||||||||
|
Share-based payment |
7,097 | 7,004 | 1,831 | |||||||||
|
Office and maintenance |
2,365 | 1,814 | 1,274 | |||||||||
|
Advertising and sales promotion |
2,599 | 1,612 | 990 | |||||||||
|
Depreciation and amortization |
3,366 | 2,199 | 1,563 | |||||||||
|
Computers and IT systems maintenance |
4,452 | 2,396 | 1,286 | |||||||||
|
Professional fees |
5,903 | 2,718 | 1,775 | |||||||||
|
Provision for credit losses and bad debts |
630 | 1,019 | 636 | |||||||||
|
Other expenses |
|
5,278
|
|
2,476
|
|
1,239
|
||||||
|
|
64,092
|
|
45,379
|
|
26,545
|
|||||||
NOTE 22 - FINANCE EXPENSES, NET
|
For
the year ended December 31, |
||||||||||||
|
2022
|
2021 |
2020 |
||||||||||
|
US
Dollars in thousands |
||||||||||||
|
Interest on bank loans and bank fees |
993 |
964 |
821 |
|||||||||
|
Change in fair value options |
(423 |
) |
414 |
- |
||||||||
|
Finance expenses in respect of loans from others |
70 |
217 |
248 |
|||||||||
|
Finance expenses in respect of shareholders and related companies |
(15 |
) |
136 |
27 |
||||||||
|
Finance expenses in respect of other liabilities |
167 |
202 |
302 |
|||||||||
|
Finance expenses in respect of leases liabilities |
260 |
214 |
379 |
|||||||||
|
Financing income in respect of finance sub-lease |
- |
(2 |
) |
(14 |
) | |||||||
|
Benefit in respect of government guarantee loans |
- |
- |
(389 |
) | ||||||||
|
Exchange rate differences |
|
1,968 |
|
(490 |
) |
|
2,500 |
|||||
|
|
3,020 |
|
1,655 |
|
3,874 |
|||||||
| F - 64 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 23 - LOSS PER SHARE
a. Basic
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue.
|
For the
year ended December
31, |
||||||||||||
|
|
2022
|
2021
|
2020
|
|||||||||
|
Loss for the year attributed to holders of ordinary shares (US Dollars in thousands) |
|
(37,509
|
) |
(24,763
|
) |
(6,254
|
) | |||||
|
Weighted average of number of ordinary shares in issue (in thousands) |
|
32,817
|
|
30,191
|
|
24,842
|
||||||
|
Basic loss per ordinary share (in dollars) |
|
(1.143
|
) |
|
(0.820
|
) |
|
(0.252
|
) | |||
b. Diluted
Instruments that can potentially dilute basic earnings per share in the future, but were not included in the calculation of diluted earnings per share, as their impact was anti-dilutive:
|
Thousands of shares |
||||||||||||
|
|
As
of December 31, |
|||||||||||
|
|
2022
|
2021
|
2020
|
|||||||||
|
Ordinary shares A |
- | - | 1,530 | |||||||||
|
Ordinary shares B |
- | - | 1,748 | |||||||||
|
Options and RSU issued as part of share-based payment |
3,823 | 3,634 | 1,831 | |||||||||
|
|
|
3,823
|
|
3,634
|
|
5,109
|
||||||
NOTE 24 - RELATED PARTIES
a. Transactions with related parties:
|
For the year ended December 31, |
||||||||||||
|
|
2022 |
2021 |
2020 |
|||||||||
|
|
US Dollars in thousands |
|||||||||||
|
Payroll, options and payments to related parties employed by the Company |
|
5,378 |
|
6,512 |
|
1,519 |
||||||
|
Number of interested parties to which the benefits relate |
8 |
8 |
8 |
|||||||||
|
Payroll to directors |
207 |
25 |
- |
|||||||||
|
Number of directors |
5 |
4 |
- |
|||||||||
|
Transactions - associated companies |
766 |
900 |
3,520 |
|||||||||
|
Shareholders – interest expenses, net |
- |
141 |
27 |
|||||||||
b. Balances with related parties:
|
|
|
December 31, |
||||||
|
|
|
2022 |
|
2021 |
||||
|
|
|
US Dollars in thousands |
||||||
|
Receivables – associated companies |
|
983 |
|
- |
||||
|
Trade payables – related companies and parties |
|
95 |
|
81 |
||||
|
Other payables – related companies and parties |
|
42 |
|
64 |
||||
c. Related parties' employment terms:
| 1) | Employment terms of controlling shareholder and director – Mr. Yair Nechmad – for his service as the Company’s CEO: | |
|
Payment of management and consulting fee to Mr. Yair Nechmad for serving as CEO are performed under a November 2016 agreement (in this paragraph (1), the "Agreement"). Under the Agreement, the services are provided by Mr. Nechmad through Yair Nechmad Ltd., which is fully controlled by Mr. Yair Nechmad, in consideration for a management fee at a monthly cost of NIS 50 thousand ($14.5 thousand), and reimbursement of various expenses. In 2020, a one-time NIS 190 thousand ($55 thousand) payment was made to Mr. Nechmad for management fee differentials in respect to a previous period.
On March 10, 2021, the Board of Directors and the general meeting of the shareholders of the Company approved a revision to the terms of engagement between the Company and Mr. Yair Nechmad, effective January 1, 2021, as follows: The management fee of Mr. Yair Nechmad, CEO of the Company, through Yair Nechmad Ltd, was changed to a monthly cost of NIS 150 thousand ($46 thousand), instead of NIS 50 thousand ($15 thousand).
On May 4, 2021, the Board of Directors and general meeting of the Company approved engagement in revised service agreements with Mr. Yair Nechmad, in which the monthly management fee of each of them was revised to NIS 140 thousand ($43 thousand), beginning on the date completing the IPO on the Tel Aviv Stock Exchange, i.e. May 13, 2021. This amount is to increase each calendar year by 2.5% so the payment for each of the 12 months during the year ended December 31, 2022 accounted to NIS 143 thousand ($43 thousand). For information about the share-based payment to Mr. Yair Nechmad, see note 17 above.
The total expenses related to the son of Mr. Nechmad, Mr. Arnon Nechmad, who is employed in 2022, 2021 and 2020 by the subsidiary Nayax Retail Ltd. and as of December 2022 by the subsidiary EV Metter Ltd. was $83 thousand, $42 thousand and $14 thousand, respectively.
Tal Tannenbaum, who became the daughter-in-law of Yair Nechmad in August 2022, has been a part-time employee of the Company since December 2021. Ms. Tannenbaum received compensation of approximately $26 thousand and $22 thousand in 2022 and 2021, respectively. The company granted to Ms. Tannenbaum 500 options in the March 28, 2022 grant. |
| 2) |
The employment terms of controlling shareholder and director, Mr. David Ben Avi, for his service as the Company’s CTO: | |
|
Payment of management and consulting fee to Mr. David Ben Avi for serving as the Company’s CTO is under a November 2016 agreement (in this paragraph (2), the "Agreement"). Under the Agreement, services are provided by Mr. Ben Aviv through David Ben Avi Holdings Ltd., which is fully controlled by Mr. Ben Avi, in consideration for a monthly management fee at the cost of NIS 50 thousand ($14.5 thousand), and reimbursement of various expenses. In 2020, a one-time NIS 190 thousand ($55 thousand) a payment was made to Mr. David Ben Avi for management fee differentials in respect to previous period.
On March 10, 2021, the Board of Directors and the general meeting of the shareholders of the Company approved a revision to the terms of engagement between the Company and Mr. David Ben-Avi, effective January 1, 2021, as follows: The management fee of Mr. David Ben Avi, CTO of the Company, through David Ben Avi Holdings Ltd, was changed to a monthly cost of NIS 150 thousand ($46 thousand), instead of NIS 50 thousand ($15 thousand). |
| F - 66 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24 - RELATED PARTIES (continued):
c. Related parties' employment terms (continued):
|
On May 4, 2021, the Board of Directors and general meeting of the Company approved engagement in revised service agreements with Mr. David Ben Avi, in which the monthly management fee was revised to NIS 140 thousand ($43 thousand), beginning on the date completing the IPO on the Tel Aviv Stock Exchange, i.e. May 13, 2021. This amount is to increase each calendar year by 2.5% so the payment for each of the 12 months during the year ended December 31, 2022 accounted to NIS 143 thousand ($43 thousand).
For information about the share-based payment to Mr. David Ben-Avi, see note 17b5 above. | ||
|
Mr. Ben Avi's spouse, Ms. Gilat Gordon, who is employed in the Company's Finance Department, was employed in the company until early 2022. The total expenses in 2021 and 2020 was $57 thousand and $60, respectively. | ||
|
The total expenses related to Mr. Ben Avi’s brother, Shai Ben Avi, who is employed by the Company as chief architect, and to a company wholly-owned by Mr. Ben Avi’s brother in 2022, 2021 and 2020 was $375 thousand, $382 thousand and $256 thousand, respectively. During 2020, the Company allotted 30,000 options to Shai Ben Avi.
The total expenses related to Oded Frenkel, Mr. Ben Avi’s brother-in-law, who is employed by the Company as Chief Customer Officer in 2022, 2021 and 2020 was $236 thousand, $259 thousand and $135 thousand, respectively. During 2021 and 2020, the Company allotted 2,500 options each year to Oded Frenkel.
The total expenses related to Reuven Amar, Mr. Ben Avi’s brother-in-law, who is employed by the Company as Engineering Lab Manager in 2022, 2021 and 2020 was $206 thousand, $193 thousand and $107 thousand, respectively. During 2021 and 2020, the Company allotted 2,500 options each year to Reuven Amar. |
| 3) |
Payments to Mr. Amir Nechmad – controlling shareholder and director | |
|
In 2021, 2020 and 2019, the amount paid by the Company to Mr. Amir Nechmad for services rendered to the Company by companies under his control including directors' fees amounted to $96 thousand, $187 thousand and $184 thousand, respectively.
Mr. Amir Nechmad, through Ofer R.G Ltd. (a company wholly owned by Mr. Amir Nechmad), provided shareholders' loans to the Company in theperiod ended December 31, 2021 that carried an annual interest of 6%, and with an aggregate amount of $7.6 million. According to the terms of the loan agreements, Ofer R.G Ltd. had a right to call the loans at any time, but provided that the Company received a ten business days' advance notice. In May 2021, the Company fully repaid the above shareholders' loans.
In April 2021, Mr. Amir Nechmad, through Ofer R.G Ltd., provided the Company a $2 million credit line, from which the Company was able to draw at any time. Amounts drawn by the Company, as above, carried annual interest of 6%.
According to the terms of the credit line, Ofer R.G. Ltd had a right to call loans taken at any time, but provided that the Company is provided a ten business days' advance notice.
In June 2021, the Company repaid the full amount it utilized out of the credit line totaling $1.3 million. |
| F - 67 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 24 - RELATED PARTIES (continued):
c. Related parties' employment terms (continued):
|
4) |
Wise-Sec Ltd.: | |
|
In May 2018, the Company and its shareholders entered into an agreement with Wise-Sec Ltd. ("Wise-Sec") and its shareholders, where after a six-month period from the signing date on the agreement, the Company and/or its shareholders will acquire the shares of Wise-Sec under the terms set in the agreement. Additionally, under the agreement, the Company extended a loan to Wise-Sec as part of a business collaboration between the parties, including providing the Company the ability to use technologies developed by Wise-Sec.
In January 2019, Mr. Yair Nechmad, Mr. David Ben Avi and Mr. Amir Nechmad, controlling shareholders of the Company, entered into an agreement to acquire the entire share capital of Wise-Sec.
Additionally, in 2020 the Company entered with Wise-Sec into an agreement for the acquisition of Wise-Sec’s patents and intellectual property for NIS 2,676 thousand ($806 thousand). | ||
| 5) |
Directors insurance: | |
|
The Company has a directors and office holders insurance policy with limit of liability of NIS 67 million ($20 million) any one occurrence and in the aggregate plus excess limit of $5 million Side A Insurance for the directors & officers only. | ||
|
6) |
On March 9, 2021, the Company's controlling shareholders – Mr. Amir Nechmad, Mr. Yair Nechmad, Yair Nechmad Ltd (for the purpose of the shareholders agreement, Yair Nechmad and Yair Nechmad Ltd are considered as a single shareholder) and Mr. David Ben Avi ("the Controlling Shareholders") – entered into a shareholders' agreement ("the Shareholders' Agreement"). The agreement formalizes the issue of their voting on different matters, including the appointment of directors, and sets certain limitations on the transfer of Company shares, including a first right to offer in relation to the sale of shares on and off a stock exchange, a tag along right and liens on shares. The effective date of the Shareholders' Agreement is September 30, 2020. |
NOTE 25 - LIENS, GUARANTEES AND COMMITMENTS
a. Liens
1) As of the approval date of the financial statements, the company has floating charge obligation to an Israeli bank to secure credit line facility and the activity related in the Israeli bank.
2) The Company has a frame bank guarantee provided by an Israeli bank of NIS 5,000,000 ($1,491 thousand) and used the bank guarantees below:
a) In respect of a bank guarantee provided by an Israeli bank for a lessor, the Company provided a NIS 3,192,000 ($952 thousand) liens, which is under a charge to secure the guarantee.
b) In respect of a bank guarantee provided by an Israeli bank for a government authorities, the Company provided a NIS 712,000 ($212 thousand) deposit, which is under a charge to secure the guarantee.
3) In respect of a bank guarantee provided to Israeli bank for OTI, fully own subsidiary, the Company provided an amount of GBP 1,750 thousand ($2,283 thousand), to secure OTI's short term bank loan. See note 6 and 13.
| F - 68 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 25 - LIENS, GUARANTEES AND COMMITMENTS (continued):
b. Contingent liability
As of the date of the approval of these financial statements, there are no lawsuits pending against the Group.
c. Commitments
1. As part of an agreement with a European processing agency for the provision of loans, the Group has undertaken in December 4, 2022 to reach, aggregate, a minimum processing turnover of Euro 250 million ($264 million) transactions per annum and to reach minimum turnover of 3.5 million transactions per month which includes at least 55% through Visa credit. The agreement stipulates that in the event that the Group fails to meet the assignable thresholds, the event shall constitute a breach event (as defined in the agreement), which will establish a contractual right for the acquirer the right to demand of an immediate repayment of the outstanding balance of the loans. See note 14c
2. In November 2016 and February 2018, the Company and the processing agency entered into a processing agreement where under the Group undertakes to reach a minimum processing turnover in Europe. Furthermore, under the agreement a minimum fee will be paid out of the processing funds that are cleared using the processing agency’s services. In 2020, the Company signed an agreement to extend the terms of minimum processing turnover until December 31, 2025. As of December 31, 2022 and the date of these financial statements, no changes regarding to processing agreement took place.
NOTE 26 - SUBSEQUENT EVENTS
a. Acquisition of Roseman Engineering Ltd.
Roseman, a private entity founded in 1978 under the law of the state of Israel, manages smart systems in the fields of refueling, charging stations and management system for vehicle fleets. On January 31, 2023, the company entered into a binding agreement for the purchase of the entire share capital (hereinafter "Purchased Shares") of Roseman Engineering Ltd. and Roseman Holdings Ltd. (hereinafter, together, "Roseman"). In consideration of the transaction, the transfer and conveyance of the Purchased Shares, the Company will pay to the Seller a gross amount of NIS 15,000 thousand minus the Loans Purchase Price (the “Purchase Price”), such that 88% of the Purchase Price shall be attributed to Roseman Engineering Ltd. and the remain 12% of the Purchase Price shall be attributed to Roseman Holdings Ltd. The agreement is a subject to certain closing conditions and as of the day of these financial statements, the merger is pending the approval of the Competition Authority in Israel (hereinafter "Governmental approval").
| F - 69 |
NAYAX LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Consolidated companies’ appendix as of the statement of financial position date:
|
Company’s name |
ID number |
Country of incorporation |
Relationship with Company |
Area of activities |
Description of business relationship | |||||
|
|
|
|
|
|
| |||||
|
Nayax (UK) Ltd |
7939558 |
UK |
Subsidiary |
Distribution activity |
Distributing Company’s products | |||||
|
Nayax LLC |
15-0107001502002212 |
USA |
Subsidiary |
Distribution activity |
Distributing Company’s products | |||||
|
Nayax Canada Inc |
676838 |
Canada |
Subsidiary |
Distribution activity |
Distributing Company’s products | |||||
|
Nayax S de RL de CV |
15080271770 |
Mexico |
Subsidiary |
Processing activity |
Processing funds of end users | |||||
|
Nayax GmbH |
121/5750/5230 |
Germany |
Subsidiary |
Distribution activity |
Distributing Company’s products | |||||
|
Nayax Au Pty Ltd |
CAN 615 300 402 |
Australia |
Subsidiary |
Distribution activity |
Distributing Company’s products | |||||
|
Nayax Nz Ltd |
6264000 |
New-Zealand |
Subsidiary |
Distribution activity |
Distributing Company’s products | |||||
|
Nayax Europe UAB |
304891914 |
Lithuania |
Subsidiary |
Processing activity (holding financial institution license) |
Processing funds of end users in Europe | |||||
|
Nayax KK |
02-0651970 |
Japan |
Subsidiary |
Distribution activity |
Distributing Company’s products | |||||
|
Nayax China Ltd |
X31022932169738 |
China |
Subsidiary |
Distribution activity |
Distributing Company’s products | |||||
|
Nayax (EU) Ltd |
HE 280566 |
Cyprus |
Subsidiary |
Processing activity |
Processing funds of end users | |||||
|
Greenhithe Software Solutions Ltd. |
2202591 |
New-Zealand |
Subsidiary |
Holds Synectic Solutions Ltd. (incorporated in the USA) engaged in software solutions to the field of vending machines management |
No material business relationship between the parties | |||||
|
Nayax Retails Ltd. |
514364579 |
Israel |
Subsidiary |
Developing technology and providing software solutions in the field of retail |
Provision of retails services to Company’s customers | |||||
|
EV Meter Ltd. |
516263332 |
Israel |
Subsidiary |
Charging system for electric cars |
Providing services to customers of the charging system | |||||
|
Nayax Capital Ltd. |
516269933 |
Israel |
Subsidiary |
Expected to concentrate Nayax Group’s future credit activity |
Has not yet commenced operations | |||||
|
Nayax Financial Services Ltd. |
1301087 |
UK |
Subsidiary |
Concentration of the processing activity in the UK |
In set up stage | |||||
|
Weezmo Technologies Ltd. |
515333185 |
Israel |
As of May 2021, the Company holds 100% of the shares of the related company |
Issue of interactive invoices and marketing |
Expansion of the solutions platform provided to retail customers. | |||||
|
Dually Ltd. |
513558726 |
Israel |
Subsidiary |
Distribution activity |
Distributing Company’s products | |||||
|
On Track Innovations Ltd. |
520042862 |
Israel |
First consolidated as of June 30, 2022 Subsidiary |
Design, marketing and sales of hardware solutions for unattended POSs |
Marketing and sales of own products | |||||
|
OTI America, Inc. |
13-4014031 |
USA |
Second-tier company |
Distribution activity |
Providing sales and marketing services. | |||||
|
OTI America sp. z.o.o. |
1999/019045/07 |
Poland |
Second-tier company |
Distribution activity |
Providing fuel products and management solutions | |||||
|
OTI PetroSmart Proprietary Limited |
5272895580 |
RSA |
Second-tier company |
Distribution activity |
Liquidated in 2022 |
F - 70
