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Pharmaceuticals Holdings Ltd.
Financial Statements
Pharmaceuticals Holdings Ltd.
Consolidated Interim Financial Statements as of June 30, 2016
| Page | |
| Condensed Consolidated Interim Financial Statements as of June 30, 2016 | |
| Condensed Consolidated Interim Statements of Financial Position | 3 |
| Condensed Consolidated Interim Statements of Operations | 4 |
| Condensed Consolidated Interim Statements of Changes in Equity | 5 |
| Condensed Consolidated Interim Statements of Cash Flows | 6 |
| Notes to the Condensed Consolidated Interim Financial Statements | 7 |
Pharmaceuticals Holdings Ltd.
Consolidated Interim Statements of Financial Position (unaudited)
| June 30 2016 | December 31 2015 | |||||||
| USD thousands | USD thousands | |||||||
| Assets | ||||||||
| Cash and cash equivalents | 3,933 | 10,558 | ||||||
| Short term deposits | 4,500 | - | ||||||
| Other receivables | 644 | 246 | ||||||
| Total current assets | 9,077 | 10,804 | ||||||
| Fixed assets, net | 11 | 8 | ||||||
| Total assets | 9,088 | 10,812 | ||||||
| Liabilities | ||||||||
| Accounts payable | 1,045 | 353 | ||||||
| Other payables | 785 | 704 | ||||||
| Derivative instruments | - | 141 | ||||||
| Total current liabilities | 1,830 | 1,198 | ||||||
| Non - current liabilities | ||||||||
| Post-employment benefit liabilities | 186 | 185 | ||||||
| Equity | ||||||||
| Share capital, no par value | - | - | ||||||
| Share premium | 23,052 | 22,159 | ||||||
| Receipts on account of warrants | 26 | 27 | ||||||
| Capital reserve for share-based payments | 324 | 536 | ||||||
| Capital reserve from transactions with related parties | 761 | 761 | ||||||
| Accumulated loss | (17,091 | ) | (14,054 | ) | ||||
| Total equity | 7,072 | 9,429 | ||||||
| Total liabilities and equity | 9,088 | 10,812 |
accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pharmaceuticals Holdings Ltd.
Consolidated Interim Statements of Operations (unaudited)
| For the six months ended June 30 | ||||||||
| 2016 | 2015 | |||||||
| USD thousand | USD thousand | |||||||
| Research and development expenses | 1,964 | 1,003 | ||||||
| General and administrative expenses | 1,194 | 624 | ||||||
| Operating loss | 3,158 | 1,627 | ||||||
| Finance expense | 21 | 55 | ||||||
| Finance income | (142 | ) | - | |||||
| Finance expense (income), net | (121 | ) | 55 | |||||
| Loss for the period | 3,037 | 1,682 | ||||||
| Loss per share data | ||||||||
| Basic and diluted loss per share - USD | 0.04 | 0.18 | ||||||
| Number of shares used in calculation | 78,519,168 | 9,338,280 |
accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pharmaceuticals Holdings Ltd.
Consolidated Interim Statements of Changes in equity (unaudited)
| Share capital | Share premium | Receipts on account of warrants | Capital reserve for share based payments | Capital reserve from transactions with related parties | Accumulated loss | Total | ||||||||||||||||||||||
| For the six months ended June 30, 2016: | ||||||||||||||||||||||||||||
| Balance at January 1, 2016 | - | 22,159 | 27 | 536 | 761 | (14,054 | ) | 9,429 | ||||||||||||||||||||
| Changes for the six month ended June 30, 2016: | ||||||||||||||||||||||||||||
| Exercise of warrants (Series A) | - | 313 | (1 | ) | - | - | - | 312 | ||||||||||||||||||||
| Share issuance deriving from a strategic cooperation agreement | - | 500 | - | (250 | ) | - | - | 250 | ||||||||||||||||||||
| Share based payments | - | 80 | - | 38 | - | - | 118 | |||||||||||||||||||||
| Loss for the period | - | - | - | - | - | (3,037 | ) | (3,037 | ) | |||||||||||||||||||
| Balance at June 30, 2016 | - | 23,052 | 26 | 324 | 761 | (17,091 | ) | 7,072 |
| Share capital | Share premium | Receipts on account of warrants | Capital reserve for share based payments | Capital reserve from transactions with related parties | Accumulated loss | Total | ||||||||||||||||||||||
| For the six months ended June 30, 2015: | ||||||||||||||||||||||||||||
| Balance at January 1, 2015 | - | 9,104 | 200 | 560 | 761 | (9,852 | ) | 773 | ||||||||||||||||||||
| Issuance of shares, net of issuance costs | - | 1,821 | - | - | - | - | 1,821 | |||||||||||||||||||||
| Exercise and expiration of warrants (series 1) | - | 201 | (200 | ) | - | - | - | 1 | ||||||||||||||||||||
| Share issuance deriving from a strategic cooperation agreement | - | 500 | - | (333 | ) | - | - | 167 | ||||||||||||||||||||
| Share based payments | - | - | - | 52 | - | - | 52 | |||||||||||||||||||||
| Loss for the period | - | - | - | - | - | (1,682 | ) | (1,682 | ) | |||||||||||||||||||
| Balance at June 30, 2015 | - | 11,626 | - | 279 | 761 | (11,534 | ) | 1,132 |
accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pharmaceuticals Holdings Ltd.
Consolidated Interim Statements of cash flows (unaudited)
| For the six months ended June 30 | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities: | ||||||||
| Loss for the period | (3,037 | ) | (1,682 | ) | ||||
| Adjustments: | ||||||||
| Depreciation | 1 | - | ||||||
| Finance expense (income), net | (121 | ) | 55 | |||||
| Share-based payments | 118 | 37 | ||||||
| Expenses in regard to a strategic cooperation agreement | 250 | 167 | ||||||
| (2,789 | ) | (1,423 | ) | |||||
| Changes in assets and liabilities: | ||||||||
| Changes in other receivables | (403 | ) | 123 | |||||
| Changes in accounts payables | 684 | (277 | ) | |||||
| Changes in other payables | 81 | 178 | ||||||
| Changes in post-employment benefit liabilities | - | 90 | ||||||
| 362 | 114 | |||||||
| Net cash used in operating activities | (2,427 | ) | (1,309 | ) | ||||
| Cash flows from investing activities: | ||||||||
| Increase in short term deposits | (4,500 | ) | - | |||||
| Acquisition of fixed assets | (4 | ) | (6 | ) | ||||
| Net cash used in investing activities | (4,504 | ) | (6 | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayment of loans from related parties | - | (294 | ) | |||||
| Proceeds from issuance of shares and ADSs | - | 1,929 | ||||||
| Share and ADS issuance expenses paid | - | (108 | ) | |||||
| Proceeds from issuance of warrants | - | 157 | ||||||
| Warrant issuance expenses paid | - | (5 | ) | |||||
| Proceeds from warrants exercised | 312 | 1 | ||||||
| Interest paid | (1 | ) | (4 | ) | ||||
| Net cash provided by financing activities | 311 | 1,676 | ||||||
| Net increase (decrease) in cash and cash equivalents | (6,620 | ) | 361 | |||||
| Cash and cash equivalents at the beginning of the period | 10,558 | 1,313 | ||||||
| Effect of translation adjustments on cash and cash equivalents | (5 | ) | (22 | ) | ||||
| Cash and cash equivalents at the end of the period | 3,933 | 1,652 |
accompanying notes are an integral part of these condensed consolidated interim financial statements.
Pharmaceuticals Holdings Ltd.
to Condensed Consolidated Interim Financial Statements as of June 30, 2016 (unaudited)
Pharmaceuticals Holdings Ltd. (hereinafter: the "Company") is an Israeli company, that was incorporated in Israel
as a private company in August 1968, and has been listed for trading on the Tel Aviv Stock Exchange since September 1978. In October
2012, the Company disposed of all of its previous operations, and in July, 2013, the Company acquired all of the shares of Kitov
Pharmaceuticals Ltd. (hereinafter: "Kitov") from its shareholders, in exchange for shares of the Company (hereinafter:
The Company's securities (American Depository Shares ("ADS") as well as
Series A warrants) were listed for trading on the NASDAQ in November 2015. Each ADS represents 20 ordinary shares with no par
value. Each warrant is exercisable into 1 ADS.
Company's address is One Azrieli Center, Round Tower, 23rd floor, 132 Menachem Begin Road, Tel Aviv 671101, Israel.
Company together with Kitov are referred to, in these financial statements, as the "Group".
of the date of the financial statements, the Group is engaged, through Kitov, in the development of combination drugs that treat
two clinical conditions simultaneously, pain caused by osteoarthritis and hypertension.
incorporation through June 30, 2016, the Group has incurred losses and negative cash flows from operations mainly attributed to
its development efforts and has an accumulated deficit of USD 17.0 million. The Company has financed its operations mainly through
private and public financing rounds. In November 2015, the Company raised USD 10.6 million net, and in July 2016 the Company raised
an additional USD 10.7 million net, which management believes will allow the Company to complete its current development plans.
The Company currently has no revenue and may require additional funding for future plans.
2 - Basis of Preparation
condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting
and do not include all of the information required for full annual financial statements. They should be read in conjunction
with the financial statements as at and for the year ended December 31, 2015 (hereinafter - "the annual financial
These condensed consolidated interim financial statements were approved by the Company's Board of Directors
Pharmaceuticals Holdings Ltd.
to Condensed Consolidated Interim Financial Statements as of June 30, 2016 (unaudited)
2 - Basis of Preparation (continued)
preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
3 - Significant Accounting Policies
accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied
by the Group in its audited annual financial statements.
4 - Share Capital and Share Premium
| For the six months ended | |||||||||
| June 30, 2016 | June 30, 2015 | ||||||||
| Number of shares | |||||||||
| Opening balance | 77,756 | 5,972 | |||||||
| Issuance of shares net of issuance costs | - | 6,388 | |||||||
| Share based payments | 509 | - | |||||||
| Issuance of shares deriving from a strategic cooperation agreement | 3,010 | 597 | |||||||
| Exercise of warrants | 1,214 | - | |||||||
| 82,489 | 12,957 |
Pharmaceuticals Holdings Ltd.
to Condensed Consolidated Interim Financial Statements as of June 30, 2016 (unaudited)
4 - Share Capital and Share Premium (continued)
5 - Transactions and Balances with Related Parties
| As of June 30 | As of December 31 | ||||||||
| 2016 | 2015 | ||||||||
| USD thousands | |||||||||
| Other payables | 136 | 549 | |||||||
| Post- employment benefit liabilities | 186 | 185 |
| For the six months ended June 30 | |||||||||
| 2016 | 2015 | ||||||||
| USD thousands | |||||||||
| Research and development expenses | 120 | 84 | |||||||
| General and administrative expenses | 213 | 297 |
6 - Subsequent Events
the public offering, the Company issued securities as follows: (i) 2,378,823 Class A units - comprised of 2,378,823 ADSs and 2,378,823
Series A warrants to purchase 2,378,823 ADSs, and (ii) 1,150,589 Class B units - comprised of 1,150,589 prefunded Series B warrants
to purchase 1,150,589 ADSs and 1,150,589 Series A warrants to purchase 1,150,589 ADSs.
public offering was completed at a price of USD 3.40 for a unit. Each Series A warrant is exercisable through November 25,
2020 for an exercise price of USD 3.78, as adjusted following the July 2016 offering. Each Series B warrant is
exercisable through July 5, 2026 for an exercise price of USD 0.01.
addition, the Company granted representatives of the placement agent warrants equal to 4% of the number of ADSs and the number
of ADSs underlying the Series B Warrants sold in the offering. The exercise price of such placement agent warrants is USD 4.08.