Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
UNDER
THE SECURITIES ACT OF 1933
(Exact Name of Registrant as Specified in its Charter)
(Translation of Registrant’s Name into English)
| Grand Duchy of Luxembourg (State or other Jurisdiction of Incorporation or Organization) | | | 7999 (Primary Standard Industrial Classification Code Number) | | | Not Applicable (I.R.S. Employer Identification Number) | |
5, RUE DE BONNEVOIE
L-1260 LUXEMBOURG, GRAND
DUCHY OF LUXEMBOURG
+352-2040119020
850 Library Avenue, Suite 204
Newark, DE 19711
302-738-6680
Joshua G. Kiernan Nathan Ajiashvili Latham & Watkins LLP 1271 Avenue of the Americas New York, New York 10020 Tel: (212) 906-1200 Fax: (212) 751-4864 | | Gil White Ron Ben-Menachem Joshua Ravitz Herzog Fox & Neeman 4 Weizmann Street Tel Aviv 6423904, Israel Tel: +972(3) 692-2020 Fax: +972(3) 696-6464 | | David J. Goldschmidt Yossi Vebman Skadden, Arps, Slate, Meagher & Flom LLP One Manhattan West New York, New York 10001-8602 Tel: (212) 735-3000 Fax: (212) 735-2000 | Sharon Rosen Alex Berman FISCHER (FBC & Co) 146 Menachem Begin Street Tel Aviv 6492103, Israel Tel: +972(3) 694-4111 Fax: +972(3) 609-1116 |
| ||||||||||||||||
Title of Each Class of Securities to be Registered | Amount to be Registered(1) | Proposed Maximum Offering Price Per Share(2) | Proposed Maximum Aggregate Offering Price(1)(2) | Amount of Registration Fee | ||||||||||||
Ordinary shares, no par value | 3,975,947 | $ | 40.41 | $ | 160,668,018 | $ | 17,528.88 |
(1) | Includes the aggregate offering price of additional ordinary shares that may be acquired by the underwriters if their option to buy additional shares is exercised in full. See “Underwriting.” |
(2) | Estimated solely for the purpose of computing the amount of the registration fee. In accordance with Rule 457(c) under the Securities Act of 1933, as amended, the maximum price per share and maximum aggregate offering price are based on the average of the $41.29 (high) and $39.52 (low) sale price of the registrant’s ordinary shares as reported on The Nasdaq Global Market on September 2, 2021, which date is within five business days prior to filing this Registration Statement. |
Per Share | Total | |
Public Offering Price | $ | $ |
Underwriting Discounts(1) | $ | $ |
Proceeds to the Selling Shareholders (before expenses) | $ | $ |
J.P. Morgan | Deutsche Bank Securities |
BofA Securities | Macquarie Capital | Truist Securities | Stifel |
1 | |
21 | |
52 | |
53 | |
54 | |
55 | |
73 | |
95 | |
101 | |
103 | |
108 | |
125 | |
126 | |
133 | |
141 | |
142 | |
142 | |
143 | |
145 | |
F-1 |
• | we have a concentrated customer base, and our failure to retain our contracts with our existing customers could have a significant adverse effect on our business; |
• | we are dependent on Pollard Banknote Limited (“Pollard”) with respect to our joint operation of the Michigan iLottery; |
• | we do not have a formal joint venture agreement or any other operating or shareholders’ agreement with Pollard with respect to NPI, our joint venture with Pollard, through which we conduct a substantial amount of our business; |
• | a reduction in discretionary consumer spending could have an adverse impact on our business; |
• | the growth of our business largely depends on our continued ability to procure new contracts; |
• | we incur significant costs related to the procurement of new contracts, which we may be unable to recover in a timely manner, or at all; |
• | intense competition exists in the iLottery industry, and we expect competition to continue to intensify; |
• | our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions; |
• | in addition to competition with other iLottery providers, we and our customers also compete with providers of other online offerings; |
• | the gaming and lottery industries are heavily regulated, and changes to the regulatory framework in the jurisdictions in which we operate could harm our existing operations; and |
• | while we have not experienced a material impact to date, the ongoing COVID-19 and similar health epidemics and contagious disease outbreaks could significantly disrupt our operations and adversely affect our business, results of operations, cash flows or financial condition. |
• | draw based games (“DBGs”), such as Powerball, in which players select numbers and the winning combination or ticket is determined by a scheduled draw; and |
• | instant tickets (“Instants”) in which players can instantly reveal a pre-determined result through which they can learn whether their ticket entitles them to a prize. |
• | long sale cycles and substantial upfront investment; |
• | long-term relationships with limited turnover; and |
• | growth alongside other forms of gambling. |
• | lottery plays a significant role in state budgets, which have been materially impacted by the COVID-19 crisis; |
• | public policy stakeholders generally view lottery games as a more socially acceptable form of gambling; |
• | lotteries, which effectively function as both regulator and operator, generally have more flexibility in their offerings compared to commercial casino operators; and |
• | lotteries are well-known, respected, long-established and generally accepted by local communities. |
Increase in NGR (1H 2021 vs 1H 2020)
Increase in Monthly Active Players (1H 2021 vs 1H 2020)
• | Marketing operations — we provide targeted marketing services and data analytics to our North American customers through the entire player life cycle, from digital acquisition and onboarding to game participation. |
• | Player operations — leveraging years of experience managing players on behalf of our customers, we provide to our North American customers various services designed to offer the best possible experience to iLottery players. |
• | Technology operations — these operations, which we provide to many of our customers, are meant to provide the full spectrum of monitoring and maintenance of the platforms we deploy for our customers and protect the integrity of our back-end iLottery software. |
• | Business operations — we facilitate payment processing services by third-party vendors and manage customer-facing personnel. |
• | expanding the penetration of our existing customer contracts; |
• | winning new turnkey contracts in the United States; |
• | growing our game studio customer base; |
• | expanding the scope of our existing customer contracts; and |
• | expanding our range of offerings and geographical presence. |
• | we have a concentrated customer base, and our failure to retain our existing contracts with our customers could have a significant adverse effect on our business; |
• | we are dependent on Pollard with respect to our joint operation of the Michigan iLottery; |
• | we do not have a formal joint venture agreement or any other operating or shareholders’ agreement with Pollard with respect to NPI, through which we conduct a substantial amount of our business; |
• | a reduction in discretionary consumer spending could have an adverse impact on our business; |
• | the growth of our business largely depends on our continued ability to procure new contracts; |
• | we incur significant costs related to the procurement of new contracts, which we may be unable to recover in a timely manner, or at all; |
• | intense competition exists in the iLottery industry, and we expect competition to continue to intensify; |
• | our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions; |
• | in addition to competition with other iLottery providers, we and our customers also compete with providers of other online offerings; and |
• | the gaming and lottery industries are heavily regulated, and changes to the regulatory framework in the jurisdictions in which we operate could harm our existing operations. |
• | not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes- Oxley Act of 2002 (the “Sarbanes-Oxley Act”); |
• | not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board (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); |
• | not being required to submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes;” |
• | not being 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; and |
• | the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; |
• | the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and |
• | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specific information, or current reports on Form 8-K, upon the occurrence of specified significant events. |
Recent Developments
• | Pollard signed a four-year extension of the MSL Agreement through July 2026. |
• | We launched Instant games with the Austrian Lotteries (Österreichische Lotterien) and signed contracts to offer Instant games with the Ukranian National Lottery and with Lottomatica in Italy. |
• | We introduced a linked multi-game progressive jackpot in New Hampshire with plans to introduce across other markets. |
• | We were issued supplier licenses in Virginia, West Virginia, Michigan and Tennessee as part of the WHG License (as defined below) granting an affiliate of William Hill, a subsidiary of Caesars Entertainment, Inc. (“Caesars”) and our largest shareholder, access to our NeoSphere platform. |
• | We appointed Lisbeth McNabb as a member of our board of directors and chairperson of its audit committee. |
• | On August 30, 2021, our board of directors allocated up to 135,000 restricted share units, or RSUs, for award to employees in amounts to be determined by management. The RSUs will be granted under the Company's 2020 Incentive Award Plan and will vest in four equal annual installments commencing on January 1, 2022. |
• | We obtained a pre-ruling from the Israeli Tax Authority regarding the transfer of certain intellectual property rights relating to the online lottery business of NeoGames S.A. to its wholly owned Israeli subsidiary, NeoGames Systems Ltd. (“NGS”). See “Material Tax Considerations – Tax Ruling of the Israeli Tax Authority.” |
• | The U.S. Department of Justice declined to appeal the decision of a U.S. federal court of appeals supporting a lower court decision that the U.S. federal Wire Act of 1961 was only applicable to sports betting and related activities. |
• | In conjunction with this offering, we expect to enter into a $100 million revolving credit facility with J.P. Morgan Securities LLC and Deutsche Bank Securities Inc., two of the underwriters of this offering. See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources." |
• | William Hill was acquired by Caesars in April 2021. |
Ordinary shares offered by the Selling Shareholders | 3,457,346 Ordinary Shares (3,975,947 Ordinary Shares if the underwriters exercise their option to purchase additional Ordinary Shares Selling Shareholders from the selling shareholders in full) |
Ordinary shares issued and outstanding | 25,520,666 Ordinary Shares |
Selling Shareholders | See “Principal and Selling Shareholders.” |
Use of proceeds | We will not receive any proceeds from the sale of the Ordinary Shares in this offering. See “Use of Proceeds.” |
Dividend policy | We do not anticipate paying any cash dividends on our Ordinary Shares in the foreseeable future. See “Dividend Policy.” |
Risk factors | See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our Ordinary Shares. |
Listing | Our Ordinary Shares are listed on The Nasdaq Global Market under the symbol “NGMS.” |
• | 1,182,566 Ordinary Shares issuable upon the exercise of share options outstanding as of August 14, 2021 at a weighted average exercise price of $2.98 per share; and |
• | 57,024 Ordinary Shares reserved for future issuance under our 2020 Incentive Award Plan, or the 2020 Plan, as of August 14, 2021, and Ordinary Shares that may become available pursuant to provisions in the 2020 Plan that automatically increase the share reserve under the 2020 Plan. |
• | no exercise of the outstanding options described above after August 14, 2021; and |
• | no exercise by the underwriters of their option to purchase additional Ordinary Shares from the selling shareholders in this offering. |
| Six Months Ended June 30, | Year Ended December 31, | ||||||||||||||||||
| 2021 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||
| Unaudited | Audited | ||||||||||||||||||
(in thousands) | | | | | | |||||||||||||||
Revenues | $ | 26,236 | $ | 22,071 | $ | 49,202 | $ | 33,062 | $ | 23,478 | ||||||||||
Distribution expenses | 5,086 | 2,863 | 6,685 | 4,252 | 4,519 | |||||||||||||||
Development expenses | 4,174 | 3,436 | 7,452 | 6,877 | 5,782 | |||||||||||||||
Selling and marketing expenses | 607 | 764 | 1,483 | 1,981 | 1,457 | |||||||||||||||
General and administrative expenses | 5,542 | 3,252 | 7,496 | 4,957 | 4,948 | |||||||||||||||
Initial public offering expenses | — | 1,089 | 2,796 | — | — | |||||||||||||||
Depreciation and amortization | 6,907 | 5,539 | 11,657 | 9,685 | 7,759 | |||||||||||||||
Profit (loss) from operations | 3,920 | 5,128 | 11,633 | 5,310 | (987 | ) | ||||||||||||||
Interest expense with respect to funding from related parties | 2,414 | 2,053 | 4,343 | 3,792 | 2,309 | |||||||||||||||
Finance income | — | (22 | ) | (21 | ) | (53 | ) | — | ||||||||||||
Finance expenses | 235 | 482 | 747 | 382 | 195 | |||||||||||||||
Profit (loss) before income taxes expense | 1,271 | 2,615 | 6,564 | 1,189 | (3,491 | ) | ||||||||||||||
Income taxes expense | (1,069 | ) | (426 | ) | (1,443 | ) | (1,243 | ) | (586 | ) | ||||||||||
Profit (loss) after income taxes expense | 202 | 2,189 | 5,121 | (54 | ) | (4,077 | ) | |||||||||||||
Company’s share in gains (losses) of NPI | 6,523 | (676 | ) | 1,393 | (3,924 | ) | (1,898 | ) | ||||||||||||
Net and total comprehensive income (loss) | $ | 6,725 | $ | 1,513 | $ | 6,514 | $ | (3,978 | ) | $ | (5,975 | ) |
| Six Months Ended June 30, | Year Ended December 31, | ||||||||||||||||||
| 2021 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||
| Unaudited | Audited | ||||||||||||||||||
(in thousands) | | | | | | |||||||||||||||
Net cash provided by operating activities | $ | 8,828 | $ | 8,819 | $ | 24,518 | $ | 15,040 | $ | 5,378 | ||||||||||
Net cash used in investing activities | (1,613 | ) | (7,418 | ) | (12,696 | ) | (17,424 | ) | (11,721 | ) | ||||||||||
Net cash provided by (used in) financing activities | (1,587 | ) | (702 | ) | 41,929 | 5,166 | 6,000 | |||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | 5,628 | $ | 699 | $ | 53,751 | $ | 2,782 | $ | (343 | ) |
| As of June 30, 2021 | As of December 31, 2020 | ||||||
| Unaudited | Audited | ||||||
(in thousands) | | | ||||||
Cash and cash equivalents | $ | 65,395 | $ | 59,767 | ||||
Total assets | 105,896 | 94,585 | ||||||
Total liabilities | 47,079 | 43,764 | ||||||
Total equity | 58,817 | 50,821 |
| Six Months Ended June 30, | Year Ended December 31, | ||||||||||||||||||
| 2021 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||
| (in millions, except for monthly active players) | |||||||||||||||||||
Network GGR(1) | $ | 411 | $ | 194 | $ | 482 | $ | 213 | $ | 153 | ||||||||||
Network NGR(2) | $ | 383 | $ | 181 | $ | 448 | $ | 203 | $ | 147 | ||||||||||
Monthly active players(3) | 636,119 | 394,117 | 437,524 | 277,005 | 207,349 |
(1) | We define “GGR” as gross sales less winnings paid to players. We measure Network GGR as the total GGR generated by Instants and DBGs on our platform. |
(2) | We define “NGR” as (i) in North America, gross sales less winnings paid to players and any promotion dollar incentives granted to players, and (ii) in Europe, gross sales less winnings paid to players, any gambling tax or duty paid on such sales and any promotion dollar incentives granted to players. We measure Network NGR as the total NGR generated by Instants and DBGs on our platform. |
(3) | We define an “active player” as a player who took at least one action on our platform in any given month that resulted in a financial transaction. We track the number of active players for each of the customers using our turnkey solutions. We define “monthly active players” for a given period as the average of the number of active players in each month during that period. |
• | recessions or other economic slowdowns; |
• | perceptions by potential players of weak or weakening economic conditions; |
• | tax increases, including on lottery winnings; |
• | significant declines in stock markets; |
• | decreased liquidity in certain financial markets; |
• | general tightening of credit; |
• | civil unrest, terrorist activities or other forms of socio-political turbulence; and |
• | pandemics, epidemics and the spread of contagious diseases. |
• | we may fail to anticipate and adapt to changes in customer expectations at the same rate as our competitors; |
• | customers who currently utilize platforms offered by our competitors may be satisfied with such solutions or may determine that it is too costly and/or time consuming to adopt our platform and solutions. Lotteries may face significant switching costs if their platforms have been integrated with those of a competitor, potentially reducing the likelihood of us being the successful tenderer; |
• | lotteries that we currently view as potential customers may decide to develop internally products and services which compete with our products and services; and |
• | new competitors, including large global corporations or large software vendors operating in adjacent industries, may enter our market. |
• | the timing with which we may realize the benefits of the commonly-required significant, upfront capital investments; |
• | the accuracy of our estimates of player preferences, and the fit of the new products and features to such preferences; |
• | the ability to adequately maintain our main technology systems, such as the NeoDraw platform; |
• | the quality of our products and services, including the possibility of software defects, which could result in claims against us or the inability to sell our products and services; |
• | the need to educate our sales, marketing and services personnel to work with the enhanced or new products and features, which may strain our resources and lengthen sales cycles; |
• | market acceptance of new product releases; and |
• | competitor product introductions or regulatory changes that render our products obsolete. |
• | variations in our operating results; |
• | actual or anticipated changes in the estimates of our operating results; |
• | changes in stock market analyst recommendations regarding our Ordinary Shares, other comparable companies or our industry generally; |
• | macro-economic conditions in the countries in which we do business; |
• | currency exchange fluctuations and the denominations in which we conduct business and hold our cash reserves; |
• | market conditions in our industry; |
• | actual or expected changes in our growth rates or our competitors’ growth rates; |
• | changes in regulation applicable to our industry; |
• | changes in the market valuation of similar companies; |
• | the trading volume of our shares on Nasdaq; |
• | sales of our Ordinary Shares by us or our shareholders, including the selling shareholders; and |
• | the adoption or modification of regulations, policies, procedures or programs applicable to our business. |
• | the judgment of the U.S. court is final and enforceable (exécutoire) in the United States; |
• | the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was in compliance both with Luxembourg private international law rules and with the applicable domestic U.S. federal or state jurisdictional rules); |
• | the U.S. court has applied to the dispute the substantive law that would have been applied by Luxembourg courts. Based on recent case law and legal doctrine, it is not certain that this condition would still be required for an exequatur to be granted by a Luxembourg court; |
• | the judgment was granted following proceedings where the counterparty had the opportunity to appear and, if it appeared, to present a defense, and the decision of the foreign court must not have been obtained by fraud, but in compliance with the rights of the defendant; |
• | the U.S. court has acted in accordance with its own procedural laws; and |
• | the decisions and the considerations of the U.S. court must not be contrary to Luxembourg international public policy rules, must not have been given in proceedings of a tax or criminal nature and must not have been rendered subsequent to an evasion of Luxembourg law (fraude à la loi). |
• | Under Luxembourg law, at least 5% of our net profits per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. The allocation to the legal reserve becomes compulsory again when the legal reserve no longer represents 10% of our issued share capital As of December 31, 2020 we had a legal reserve in the amount of $4 thousand. |
• | Under Luxembourg law, the amount of distributions paid to shareholders (including in the form of dividends, share premium reimbursements or capital surplus reimbursements) may not exceed the amount of profits at the end of the last financial year plus any profits carried forward and any amounts drawn from reserves that are available for that purpose, less any losses carried forward and sums to be placed in reserve in accordance with Luxembourg law or our articles of association. Furthermore, no distributions (including in the form of dividends, share premium reimbursements or capital surplus reimbursements) may be made if net assets were, at the end of the last financial year (or would become, following such a distribution), less than the amount of the subscribed share capital plus the non-distributable reserves. Distributions in the form of dividends may only be made out of net profits and profits carried forward, whereas distributions in the form of share premium reimbursements may only be made out of available share premium and distributions in the form of capital surplus reimbursements may only be made out of available capital surplus. |
As of June 30, 2021 | ||||
Actual | ||||
Unaudited (in thousands) | ||||
Cash and cash equivalents | $ | 65,395 | ||
Total debt and lease liabilities, including current portion | $ | 33,787 | ||
Equity: | ||||
Ordinary shares, no par value: 25,479,728 shares issued and outstanding, actual | 44 | |||
Share premium and capital reserves | 85,391 | |||
Accumulated losses | (26,618 | ) | ||
Total equity | 58,817 | |||
Total capitalization | $ | 92,604 |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||
2021 | 2020 | 2020 | 2019 | 2018 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Network GGR | $ | 411 | $ | 194 | $ | 482 | $ | 213 | $ | 153 |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||
2021 | 2020 | 2020 | 2019 | 2018 | ||||||||||||||||
(in millions) | ||||||||||||||||||||
Network NGR | $ | 383 | $ | 181 | $ | 448 | $ | 203 | $ | 147 |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||
2021 | 2020 | 2020 | 2019 | 2018 | ||||||||||||||||
Monthly active players | 636,119 | 394,117 | 437,524 | 277,005 | 207,349 |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||
2021 | 2020 | 2020 | 2019 | |||||||||||||
Unaudited | Audited | |||||||||||||||
(in thousands) | ||||||||||||||||
Net and total comprehensive income (loss) | $ | 6,725 | $ | 1,513 | $ | 6,514 | $ | (3,978 | ) | |||||||
Income taxes | 1,069 | 426 | 1,443 | 1,243 | ||||||||||||
Interest and finance-related expenses | 2,649 | 2,513 | 5,069 | 4,121 | ||||||||||||
EBIT | 10,443 | 4,452 | 13,026 | 1,386 | ||||||||||||
Depreciation and amortization | 6,907 | 5,539 | 11,657 | 9,685 | ||||||||||||
EBITDA | 17,350 | 9,991 | 24,683 | 11,071 | ||||||||||||
Initial public offering costs | - | 1,089 | 2,796 | — | ||||||||||||
Share based compensation | 540 | 523 | 969 | 615 | ||||||||||||
Company share of NPI depreciation and amortization(1) | 108 | 100 | 203 | 168 | ||||||||||||
Adjusted EBITDA | $ | 17,998 | $ | 11,703 | $ | 28,651 | $ | 11,854 |
(1) | Represents 50% of NPI’s depreciation and amortization (i) for the six months ended June 30, 2021 and 2020 of $215,000 and $199,000, respectively, and (ii) for the years ended December 31, 2020 and 2019 of $405,000 and $335,000, respectively. In accordance with IFRS, NeoGames’ share of NPI’s expense is not recorded in our consolidated statements of comprehensive income (loss), but is rather reflected in our consolidated financial statements in accordance with the equity method, as we share in 50% of the profit (loss) of NPI with certain adjustments. See Note 7A to our consolidated financial statements included elsewhere in this prospectus. |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||
2021 | 2020 | 2020 | 2019 | |||||||||||||
Unaudited | Audited | |||||||||||||||
(in thousands) | ||||||||||||||||
Royalties from turnkey contracts(1) | $ | 16,065 | $ | 14,430 | $ | 32,252 | $ | 17,240 | ||||||||
Royalties from games contracts | 979 | 800 | 2,006 | 2,189 | ||||||||||||
Use of IP rights | 3,864 | 3,094 | 6,697 | 5,662 | ||||||||||||
Development and other services – Aspire | 928 | 1,348 | 2,430 | 4,099 | ||||||||||||
Development and other services – NPI(2) | 3,724 | 1,744 | 4,404 | 2,914 | ||||||||||||
Development and other services – Michigan Joint Operation | 676 | 655 | 1,413 | 958 | ||||||||||||
Revenues | $ | 26,236 | $ | 22,071 | $ | 49,202 | $ | 33,062 | ||||||||
NeoGames’ NPI Revenues Interest(3) | $ | 16,754 | $ | 2,579 | $ | 9,535 | $ | 1,956 |
(1) | Includes NeoGames’ revenues from the Michigan Joint Operation and Sazka. |
(2) | Represents revenues recognized by NeoGames for services provided to NPI. Such amounts were also recognized as expenses by NPI. We share in 50% of the profit (loss) of NPI. |
(3) | Represents 50% of NPI’s revenues (i) in the six months ended June 30, 2021 and 2020 of $31.7 million and $4.9 million, respectively, plus an incremental $907 thousand and $135 thousand, respectively, of royalties from certain games as compensation for our subsequent development of such games and (ii) in the years ended December 31, 2020 and 2019 of $18.0 million and $3.7 million, respectively, plus an incremental $519 thousand and $86 thousand, respectively, of royalties from certain games as compensation for our subsequent development of such games. We refer to this, collectively, as our “NPI Revenues Interest” — however, in accordance with IFRS, our NPI Revenues Interest is not recorded as revenues in our consolidated statements of comprehensive income (loss), but is rather reflected in our consolidated financial statements in accordance with the equity method, as we share in 50% of the profit (loss) of NPI subject to certain adjustments (including the incremental royalties mentioned above). See Note 7A to our consolidated financial statements included elsewhere in this prospectus. |
| Six Months Ended June 30, | Year Ended December 31, | ||||||||||||||||||
| 2021 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||
| Unaudited | Audited | ||||||||||||||||||
Consolidated Statements (in thousands) of Operations Data | | | | | | |||||||||||||||
Revenues | $ | 26,236 | $ | 22,071 | $ | 49,202 | $ | 33,062 | $ | 23,478 | ||||||||||
Distribution expenses | 5,086 | 2,863 | 6,685 | 4,252 | 4,519 | |||||||||||||||
Development expenses | 4,174 | 3,436 | 7,452 | 6,877 | 5,782 | |||||||||||||||
Selling and marketing expenses | 607 | 764 | 1,483 | 1,981 | 1,457 | |||||||||||||||
General and administrative expenses | 5,542 | 3,252 | 7,496 | 4,957 | 4,948 | |||||||||||||||
Initial public offering expenses | — | 1,089 | 2,796 | — | — | |||||||||||||||
Depreciation and amortization | 6,907 | 5,539 | 11,657 | 9,685 | 7,759 | |||||||||||||||
Profit (loss) from operations | 3,920 | 5,128 | 11,633 | 5,310 | (987 | ) | ||||||||||||||
Interest expense with respect to funding from related parties | 2,414 | 2,053 | 4,343 | 3,792 | 2,309 | |||||||||||||||
Finance income | — | (22 | ) | (21 | ) | (53 | ) | — | ||||||||||||
Finance expenses | 235 | 482 | 747 | 382 | 195 | |||||||||||||||
Profit (loss) before income taxes expense | 1,271 | 2,615 | 6,564 | 1,189 | (3,491 | ) | ||||||||||||||
Income taxes expense | (1,069 | ) | (426 | ) | (1,443 | ) | (1,243 | ) | (586 | ) | ||||||||||
Profit (loss) after income taxes expense | 202 | 2,189 | 5,121 | (54 | ) | (4,077 | ) | |||||||||||||
Company’s share in gains (losses) of NPI | 6,523 | (676 | ) | 1,393 | (3,924 | ) | (1,898 | ) | ||||||||||||
Net and total comprehensive income (loss) | $ | 6,725 | $ | 1,513 | $ | 6,514 | $ | (3,978 | ) | $ | (5,975 | ) |
Six Months Ended June 30, | Year Ended December 31, | |||||||||||||||||||
2021 | 2020 | 2020 | 2019 | 2018 | ||||||||||||||||
Unaudited | Audited | |||||||||||||||||||
(as a % of revenues in absolute numbers) | ||||||||||||||||||||
Consolidated Statements of Operations Data: | ||||||||||||||||||||
Revenues | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||
Distribution expenses | 19.4 | 13 | 13.6 | 12.9 | 19.2 | |||||||||||||||
Development expenses | 15.9 | 15.6 | 15.1 | 20.8 | 24.6 | |||||||||||||||
Selling and marketing expenses | 2.3 | 3.5 | 3.0 | 6.0 | 6.2 | |||||||||||||||
General and administrative expenses | 21.1 | 14.7 | 15.2 | 15.0 | 21.1 | |||||||||||||||
Initial public offering expenses | 0.0 | 4.9 | 5.7 | 0.0 | 0.0 | |||||||||||||||
Depreciation and amortization | 26.3 | 25.1 | 23.7 | 29.3 | 33.0 | |||||||||||||||
Profit (loss) from operations | 14.9 | 23.2 | 23.6 | 16.0 | 4.2 | |||||||||||||||
Interest expense with respect to funding from related parties | 9.2 | 9.3 | 8.8 | 11.5 | 9.8 | |||||||||||||||
Finance income | 0.0 | 0.1 | 0.0 | 0.2 | 0.0 | |||||||||||||||
Finance expenses | 0.9 | 2.2 | 1.5 | 1.2 | 0.8 | |||||||||||||||
Profit (loss) before income taxes expense | 4.8 | 11.8 | 13.3 | 3.6 | 14.9 | |||||||||||||||
Income taxes expense | 4.1 | 1.9 | 2.9 | 3.8 | 2.5 | |||||||||||||||
Profit (loss) after income taxes expense | 0.8 | 9.9 | 10.4 | 0.2 | 17.4 | |||||||||||||||
Company’s share in gains (losses) of NPI | 24.9 | 3.1 | 2.8 | 11.9 | 8.1 | |||||||||||||||
Net and total comprehensive income (loss) | 25.6 | % | 6.9 | % | 13.2 | % | 12.0 | % | 25.4 | % |
Year Ended December 31, | ||||||||
2020 | 2019 | |||||||
Audited (in thousands) | ||||||||
Revenues | $ | 18,032 | $ | 3,740 | ||||
Distribution expenses | 16,116 | 10,480 | ||||||
Selling, general and marketing expenses | 776 | 1,067 | ||||||
Depreciation | 405 | 335 | ||||||
Net and total comprehensive income (loss) | $ | 735 | (8,142 | ) | ||||
Net and total comprehensive income (loss) 50% | 367 | (4,071 | ) | |||||
Adjustments | 1,026 | 147 | ||||||
Share in profits (losses) of NPI | 1,393 | (3,924 | ) |
| Six Months Ended June 30, | Year Ended December 31, | ||||||||||||||||||
| 2021 | 2020 | 2020 | 2019 | 2018 | |||||||||||||||
| Unaudited | Audited | ||||||||||||||||||
(in thousands) | | | | | | |||||||||||||||
Net cash provided by operating activities | $ | 8,828 | $ | 8,819 | $ | 24,518 | $ | 15,040 | $ | 5,378 | ||||||||||
Net cash used in investing activities | (1,613 | ) | (7,418 | ) | (12,696 | ) | (17,424 | ) | (11,721 | ) | ||||||||||
Net cash provided by (used in) financing activities | (1,587 | ) | (702 | ) | 41,929 | 5,166 | 6,000 | |||||||||||||
Net increase (decrease) in cash and cash equivalents | $ | 5,628 | $ | 699 | $ | 53,751 | $ | 2,782 | $ | (343 | ) |
As of December 31, 2020 | ||||||||||||||||
In 3 months | Between 3 months and 1 year | More than 1 year | Total | |||||||||||||
(in thousands) | ||||||||||||||||
Capital notes and accrued interest due to the Aspire Group | $ | — | $ | — | $ | 22,419 | $ | 22,419 | ||||||||
Loans from William Hill | — | 2,022 | 11,155 | 13,177 | ||||||||||||
Lease liabilities | — | 1,651 | 1,855 | 3,506 | ||||||||||||
Trade and other payables | 4,910 | — | — | 4,910 | ||||||||||||
Total | $ | 4,910 | $ | 3,673 | $ | 35,429 | $ | 44,012 |
As of June 30, 2021 | ||||||||||||||||
In 3 months | Between 3 months and 1 year | More than 1 year | Total | |||||||||||||
Unaudited (in thousands) | ||||||||||||||||
$ |
Capital notes and accrued interest due to the Aspire Group | $ | — | $ | 22,420 | — | $ | 22,420 | |||||||||
Loans from William Hill | — | — | 11,212 | 11,212 | ||||||||||||
Lease liabilities | — | 1,486 | 1,198 | 2,684 | ||||||||||||
Trade and other payables | 4,619 | — | — | 4,619 | ||||||||||||
Total | $ | 4,619 | $ | 23,906 | $ | 12,410 | $ | 40,935 |
• | royalties from licensing of technological platforms and provision of proprietary games content (which are recognized in the accounting periods in which the gaming transactions occur); |
• | fees from use of intellectual property rights (which are recognized over the useful periods of the intellectual property rights); and |
• | fees from development services (which are recognized in the accounting periods in which services are provided). |
(1) | As of March 31, 2021 |
• | use of complex official public procurement processes, requiring substantial commitments from participating vendors, such as performance bonds; |
• | inclusion of termination at will provisions in contracts; and |
• | requirement for specialized technology specifically for lottery that complies with lottery rules. |
• | draw based games (“DBGs”), such as Powerball, in which players select numbers and the winning combination or ticket is determined by a scheduled draw; and |
• | instant tickets (“Instants”) in which players can instantly reveal a pre-determined result through which they can learn whether their ticket entitles them to a prize. |
• | long sale cycles and substantial upfront investment; |
• | long-term relationships with limited turnover; and |
• | growth alongside other forms of gambling. |
• | the range of online games offered by the customer; |
• | the complexity of technological integration, which may include the integration of our technology with third-party systems for know-your-customer, point-of-sale, banking and payment applications; |
• | the required level of configuration and customization of our technology platforms to the specific requirements of the lottery and the relevant regulatory regime (e.g. lottery gameplay guidelines and taxation laws); |
• | the extent of regulatory requirements and other compliance guidelines within a particular jurisdiction; |
• | the amount required to be provided in a performance bond as a guarantee against the potential failure of the service provider to meet its contractual obligations; and |
• | the potential investment required for the deployment of hardware, networking and software equipment into local data centers, in order to comply with the most stringent regulatory requirements. |
• | Increased internet access — increased levels of internet access, improved internet infrastructure, greater confidence in the security of the internet for transacting, rapid growth in usage of internet- connected smartphones, tablets and other devices and product innovation by iLottery platform and service providers have provided the foundation on which the iLottery industry has been able to grow. |
• | Increased ownership of mobile devices — globally, the number of devices and connections is growing faster than the population, which is accelerating the average number of devices per household. |
• | Improved entertainment experience — advancements in technology have improved the ability of entertainment providers to provide a meaningful entertainment experience online or through mobile and handheld devices, making iLottery more attractive to players. Vendors have also been able to use digital and social media to enhance the user experience and as such vendors are able to access a broader group of end users (such as a younger demographic). |
• | Demand for instant access — as consumers spend more time on their smartphones with easy access to internet and cellular data, they seek instant access to their sources of entertainment. iLottery allows players to play games at any time and from anywhere in the lottery jurisdiction. This allows players to access a wide range of game options at any time, without having to be physically present in the retail environment. |
• | Demand for mobile channels — the traditional lottery market is maturing. Physical retail sales channels account for a lower proportion of shopping by a younger demographic compared to older generations, and as such, traditional lotteries have developed an aging customer base. iLottery, however, has introduced lottery style games with added entertainment value to the online domain, tapping into a new demographic of typically younger players more inclined to engage through the usage of mobile and other online channels. This broader appeal has expanded the total lottery market by attracting a new generation of players. |
Population | FY19 Retail Lottery Gross Sales | FY19 Retail Lottery Gross Sales Per Capita | iLottery | Offering | ||||||||||||||||
State | (in millions) | (in millions) | (in millions) | DBG | Instants | |||||||||||||||
Pennsylvania | 12.8 | $ | 4,503 | $ | 352 | X | X | |||||||||||||
Georgia | 10.6 | 4,455 | 420 | X | X | |||||||||||||||
Michigan | 10.0 | 3,884 | 389 | X | X | |||||||||||||||
Illinois | 12.7 | 2,975 | 235 | X | ||||||||||||||||
North Carolina | 10.5 | 2,860 | 273 | X | ||||||||||||||||
Virginia | 8.5 | 2,294 | 269 | X | X | |||||||||||||||
Kentucky | 4.5 | 1,130 | 253 | X | X | |||||||||||||||
New Hampshire | 1.4 | 384 | 283 | X | X | |||||||||||||||
Rhode Island | 1.1 | 263 | 249 | X | X | |||||||||||||||
New York(1) | 19.5 | 8,208 | 422 | |||||||||||||||||
California | 39.5 | 7,388 | 187 | |||||||||||||||||
Florida | 21.5 | 7,151 | 333 | |||||||||||||||||
Texas | 29.0 | 6,252 | 216 | |||||||||||||||||
Massachusetts | 6.9 | 5,492 | 797 | |||||||||||||||||
New Jersey | 8.9 | 3,549 | 400 | |||||||||||||||||
Ohio | 11.7 | 3,361 | 288 | |||||||||||||||||
Maryland | 6.0 | 2,197 | 363 | |||||||||||||||||
South Carolina | 5.1 | 1,981 | 385 | |||||||||||||||||
Tennessee | 6.8 | 1,690 | 247 | |||||||||||||||||
Missouri | 6.1 | 1,466 | 239 | |||||||||||||||||
Indiana | 6.7 | 1,348 | 200 | |||||||||||||||||
Connecticut | 3.6 | 1,334 | 374 | |||||||||||||||||
Arizona | 7.3 | 1,077 | 148 | |||||||||||||||||
Washington | 7.6 | 803 | 105 | |||||||||||||||||
Wisconsin | 5.8 | 713 | 122 | |||||||||||||||||
Colorado | 5.8 | 680 | 118 | |||||||||||||||||
Minnesota | 5.6 | 637 | 113 | |||||||||||||||||
Louisiana | 4.6 | 524 | 113 | |||||||||||||||||
Arkansas | 3.0 | 516 | 171 | |||||||||||||||||
Iowa | 3.2 | 391 | 124 | |||||||||||||||||
Oregon | 4.2 | 380 | 90 | |||||||||||||||||
Maine | 1.3 | 300 | 223 | |||||||||||||||||
Kansas | 2.9 | 295 | 101 | |||||||||||||||||
Idaho | 1.8 | 288 | 161 | |||||||||||||||||
Oklahoma | 4.0 | 242 | 61 | |||||||||||||||||
Washington, D.C. | 0.7 | 213 | 302 | |||||||||||||||||
West Virginia | 1.8 | 201 | 112 | |||||||||||||||||
Delaware | 1.0 | 196 | 202 | |||||||||||||||||
Nebraska | 1.9 | 192 | 99 | |||||||||||||||||
New Mexico | 2.1 | 144 | 68 | |||||||||||||||||
Vermont | 0.6 | 139 | 223 | |||||||||||||||||
South Dakota | 0.9 | 63 | 71 | |||||||||||||||||
Montana | 1.1 | 60 | 56 | |||||||||||||||||
Wyoming | 0.6 | 37 | 64 | |||||||||||||||||
North Dakota(1) | 0.8 | 35 | 46 | |||||||||||||||||
Mississippi | 3.0 | — | — |
(1) | New York and North Dakota offer subscription-based lottery. |
• | lottery plays a significant role in state budgets, which have been materially impacted by the COVID-19 crisis; |
• | public policy stakeholders generally view lottery games as a more socially acceptable form of gambling; |
• | lotteries, which effectively function as both regulator and operator, generally have more flexibility in their offerings compared to commercial casino operators; and |
• | lotteries are well-known, respected, long-established and generally accepted by local communities. |
• | draw based games (“DBGs”), such as Powerball, in which players select numbers and the winning combination or ticket is determined by a scheduled draw; and |
• | instant tickets (“Instants”) in which players can instantly reveal a pre-determined result through which they can learn whether their ticket entitles them to a prize. |
• | Greater flexibility for the lottery - NeoDraw can operate independently or in parallel with an existing retail central lottery system and is not constrained by limitations of traditional lottery systems. |
• | Quicker time to market - NeoDraw is fully-integrated with NeoSphere. This reduces the complexity, resources and time required to integrate with a third-party system to launch traditional games. |
• | Additional functionality - NeoDraw enables us and our lottery customers to introduce new innovations related to online purchase flows, shopping cart functionality and in-game features that are in some cases not available with legacy central lottery systems. |
• | Marketing operations - we provide targeted marketing services and data analytics to our North American customers through the entire player lifecycle, from digital acquisition and onboarding to game participation. Such operations include: |
• | implementation of promotional campaigns tailored to player segments; |
• | maximization of the return generated from a player; |
• | results-based analytics of player behavior; |
• | player-level segmentation-based evaluation of the player’s activity status, game orientation, deposit characteristics, reaction to previous promotional campaigns and account balance status; |
• | predictive analysis of the lifetime value of players acquired from different marketing and promotional campaigns; and |
• | information regarding the decision on which player acquisition strategies and marketing campaigns to focus and which to abandon. |
• | Player operations - leveraging years of experience managing players on behalf of our customers, we provide to our North American customers various services designed to offer the best possible services to iLottery players. Such operations include: |
• | a customer service center based in Lansing, Michigan, which services our North American customers; |
• | responsible gaming services to proactively detect and react to player gaming behaviors; |
• | compliance services including anti-money-laundering (“AML”) and know-your-customer solutions to meet the customer’s local requirements; and |
• | facilitating the flow of funds throughout the entire player lifecycle, from funding to cash-outs. |
• | Technology operations - these operations, which we provide to many of our customers, are meant to provide the full spectrum of monitoring and maintenance of the platforms we deploy for our customers and protect the integrity of our back-end iLottery software. Such operations include: |
• | the deployment of our technology platforms in the form of a SaaS offering; |
• | ongoing deployments of advanced versions of our software; |
• | handling of all reported production incidents; |
• | verification of technological defects, and potential escalation to the development team; and |
• | monitoring the network’s performance for degradation and potentially fraudulent activity. |
• | Business operations - we facilitate payment processing services by third-party vendors and manage customer-facing personnel. Such operations include: |
• | integrating third-party payment solutions into our platforms to allow for credit and debit card transactions and bank transfers; |
• | serving as merchant of record on behalf of our customers; |
• | recruiting, training and managing customer service representatives; and |
• | developing and managing the project plan required to deploy each solution. |
• | Entertainment value - the level of player interaction as part of the game, the complexity level of playing the game, the multimedia experience (design, animation and audio), and the duration of a game. |
• | Mathematics - controlling the risk level of the game and optimizing the game experience to the risk profile of iLottery players (given the target payout ratio). |
| | | | | | | | | iLottery Contract | | | | | |||
| | | Incumbent Retail Provider | | | Provider | | | Launch Year | | | iLottery Penetration from Instants(1) | | |||
State | | | Instant | | | DBG | | |||||||||
Illinois | | | SGMS | | | Intralot | | | Camelot | | | 2012 | | | N/R | |
Georgia | | | SGMS / IGT | | | IGT | | | IGT | | | 2012 | | | 2.3% | |
Michigan | | | SGMS / Pollard / IGT | | | IGT | | | NPI(3) | | | 2014 | | | 47.0% | |
Kentucky | | | SGMS / Pollard | | | IGT | | | IGT | | | 2016 | | | 4.2% | |
Pennsylvania | | | SGMS | | | SGMS | | | SGMS | | | 2018 | | | 22.8% | |
New Hampshire | | | SGMS | | | Intralot | | | NPI | | | 2018 | | | 23.0% | |
North Carolina | | | IGT | | | IGT | | | NPI | | | 2019 | | | N/R | |
Rhode Island | | | IGT | | | IGT | | | IGT | | | 2020 | | | 1.1% | |
Virginia(2) | | | IGT | | | IGT | | | NPI | | | 2020 | | | 22.9% | |
| | iLottery Instant Ticket | | Per Capita | ||||||||||||||||||
State | Launch Year | Gross Sales (in millions) | GGR (in millions) | Population (in millions) | Gross Sales | GGR | ||||||||||||||||
Michigan | 2014 | $ | 1,807 | $ | 219 | 10.0 | $ | 181 | $ | 22 | ||||||||||||
Pennsylvania | 2018 | $ | 731 | $ | 94 | 12.8 | $ | 57 | $ | 7 | ||||||||||||
New Hampshire | 2018 | $ | 81 | $ | 12 | 1.4 | $ | 60 | $ | 9 | ||||||||||||
Georgia | 2012 | $ | 81 | N/R | 10.5 | $ | 8 | N/R | ||||||||||||||
Kentucky | 2016 | $ | 33 | $ | 7 | 4.4 | $ | 7 | $ | 2 | ||||||||||||
Rhode Island | 2020 | $ | 1 | N/R | 1.1 | $ | 1 | N/R | ||||||||||||||
Illinois(1) | 2012 | N/R | N/R | 12.7 | N/R | N/R | ||||||||||||||||
North Carolina(1) | 2019 | N/R | N/R | 10.4 | N/R | N/R | ||||||||||||||||
Virginia | 2020 | $ | 267 | $ | 35 | 8.5 | $ | 31 | $ | 4 |
• | expanding the penetration of our existing customer contracts; |
• | winning new turnkey contracts in the United States; |
• | growing our game studio customer base; |
• | expanding the scope of our existing customer contracts; and |
• | expanding our range of offerings and geographical presence. |
$0 | $15 | $39 | $62 | $77 | $96 | $159 |
In the six months ended December 31, 2020, the VAL saw $281.3 million in iLottery gross sales, representing 19% of the VAL’s total gross sales during the period.
• | Advanced self-management module, which enables players to define their responsible gaming limits within a wide range of parameters; |
• | Operator-controlled module, which enables lottery customers to define and enforce policies and limitations on their players; and |
• | Application programming interface, which connects to government and other gaming databases to provide in-game alerts to remind players to play responsibly. |
Name | Age | Position | ||
Executive Officers | ||||
Moti Malul | 50 | Chief Executive Officer, Co-Managing Director and Director | ||
Raviv Adler | 47 | Chief Financial Officer | ||
Oded Gottfried | 51 | Chief Technology Officer | ||
Rinat Belfer | 41 | Chief Operations Officer | ||
Non-Executive Directors | ||||
Barak Matalon | 51 | Non-Executive Director | ||
Aharon Aran | 71 | Non-Executive Director | ||
Laurent Teitgen (1) | 42 | Non-Executive Director | ||
Lisbeth McNabb (1) | 61 | Non-Executive Director | ||
John E. Taylor, Jr. (1) | 55 | Non-Executive Director, Chairman |
(1) | Independent director in accordance with SEC regulations and Nasdaq rules requirements applicable to the Company. |
• | recommending the appointment of the independent auditor to the general meeting of shareholders; |
• | the appointment, compensation, retention and oversight of any accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit services; |
• | pre-approving the audit services and non-audit services to be provided by our independent auditor before the auditor is engaged to render such services; |
• | evaluating the independent auditor’s qualifications, performance and independence, and presenting its conclusions to our board of directors on at least an annual basis; |
• | reviewing and discussing with our board of directors and the independent auditor our annual audited financial statements and quarterly financial statements prior to the filing of the respective annual and quarterly reports; |
• | reviewing our compliance with laws and regulations, including major legal and regulatory initiatives and also reviewing any major litigation or investigations against us that may have a material impact on our financial statements; and |
• | approving or ratifying any related person transaction (as defined in our related person transaction policy) in accordance with our related person transaction policy. |
• | identifying, reviewing and approving corporate goals and objectives relevant to executive officer compensation; |
• | analyzing the possible outcomes of the variable remuneration components and how they may affect the remuneration of our executive officers; |
• | evaluating each executive officer’s performance in light of such goals and objectives and determining each executive officer’s compensation based on such evaluation; |
• | determining any long-term incentive component of each executive officer’s compensation in line with the remuneration policy and reviewing our executive officer compensation and benefits policies generally; |
• | periodically reviewing, in consultation with our Chief Executive Officer, our management succession planning; and |
• | reviewing and assessing risks arising from our compensation policies and practices for our employees and whether any such risks are reasonably likely to have a material adverse effect on us. |
• | drawing up selection criteria and appointment procedures for board members; |
• | reviewing and evaluating the composition, function and duties of our board of directors; |
• | recommending nominees for selection to our board of directors and its corresponding committees; |
• | making recommendations to our board of directors as to determinations of board member independence; |
• | leading our board of directors in a self-evaluation, at least annually, to determine whether it and its committees are functioning effectively; |
• | overseeing and recommending for adoption by the general meeting of shareholders the compensation for our board members; and |
• | developing and recommending to our board of directors our rules governing the board of directors and code of business conduct, reviewing and reassessing the adequacy of such rules and recommending any proposed changes to our board of directors. |
• | each person, or group of affiliated persons, known by us to beneficially own 5% or more of our outstanding Ordinary Shares; |
• | each of our executive officers and directors; |
• | all of our executive officers and directors as a group; and |
• | each selling shareholder. |
Shares beneficially owned after the offering | ||||||||||||||||||||||||
Shares beneficially owned prior to the offering | If underwriters’ option to purchase additional shares from the selling shareholders is not exercised | If underwriters’ option to purchase additional shares from the selling shareholders is exercised in full | ||||||||||||||||||||||
Name of Beneficial Owner | Shares | % | Shares | % | Shares | % | ||||||||||||||||||
5% or Greater Shareholders: | ||||||||||||||||||||||||
Caesars Entertainment, Inc.(1) | 6,127,257 | 24.0 | % | 3,063,628 | 12.0 | % | 2,545,027 | 10.0 | % | |||||||||||||||
Elyahu Azur(2) | 3,193,717 | 12.5 | % | 3,093,717 | 12.1 | % | 3,093,717 | 12.1 | % | |||||||||||||||
Pinhas Zahavi (3) | 3,193,717 | 12.5 | % | 3,000,000 | 11.8 | % | 3,000,000 | 11.8 | % | |||||||||||||||
Executive officers and directors | ||||||||||||||||||||||||
Moti Malul(4) | 282,323 | 1.1 | % | 282,323 | 1.1 | % | 282,323 | 1.1 | % | |||||||||||||||
Raviv Adler(5) | * | * | * | * | * | * | ||||||||||||||||||
Oded Gottfried(6) | 333,970 | 1.3 | % | 333,970 | 1.3 | % | 333,970 | 1.3 | % | |||||||||||||||
Rinat Belfer(7) | * | * | * | * | * | * | ||||||||||||||||||
Barak Matalon(8) | 5,109,948 | 20.0 | % | 5,109,948 | 20.0 | % | 5,109,948 | 20.0 | % | |||||||||||||||
Aharon Aran(9) | 1,277,486 | 5.0 | % | 1,177,486 | 4.6 | % | 1,177,486 | 4.6 | % | |||||||||||||||
Laurent Teitgen | * | * | * | * | * | * | ||||||||||||||||||
John E. Taylor, Jr.(10) | * | * | * | * | * | * | ||||||||||||||||||
Lisbeth McNabb | * | * | * | * | * | * | ||||||||||||||||||
All directors and executive officers as a group (9 persons)(11) | 7,127,835 | 27.5 | % | 7,027,835 | 27.1 | % | 7,027,835 | 27.1 | % |
• | except in the case of Ordinary Shares acquired either by us or by a person acting in his or her own name but on behalf of us for the distribution thereof to our staff or to the staff of a company with which we are in a control relationship, prior authorization by a simple majority vote must be obtained at an ordinary general meeting of shareholders, which authorization sets forth: |
• | the terms and conditions of the proposed repurchase and in particular the maximum number of Ordinary Shares to be repurchased; |
• | the duration of the period for which the authorization is given (which may not exceed five years); and |
• | in the case of repurchase for consideration, the minimum and maximum consideration per Ordinary Share; |
• | only fully paid-up Ordinary Shares may be repurchased; |
• | the repurchases may not have the effect of reducing net assets below the amount of the issued share capital plus reserves (which may not be distributed by law or under our articles of association); |
• | the voting and dividend rights attached to the repurchased shares will be suspended as long as the repurchased Ordinary Shares are held by us; and |
• | the repurchase offer must be made on the same terms and conditions to all the shareholders who are in the same position, except for repurchases which were unanimously decided by a general meeting at which all the shareholders were present or represented (and except in accordance with Article 430-15, 4° of the Luxembourg Company Law). |
Luxembourg: | Delaware: |
Luxembourg: | Delaware: |
Luxembourg: | Delaware: |
Luxembourg: | Delaware: |
Luxembourg: | Delaware: |
• | the shareholders at a general meeting have previously authorized our board of directors to acquire our Ordinary Shares. The general meeting shall determine the terms and conditions of the proposed repurchase and in particular the maximum number of Ordinary Shares to be acquired, the period for which the authorization is given (which may not exceed five years), and, in the case of repurchase for consideration, the maximum and minimum consideration, provided that the prior authorization shall not apply in the case of Ordinary Shares acquired by either us or by a person acting in its own name but on our behalf for the distribution thereof to our staff or to the staff of a company with which we are in a control relationship; |
Luxembourg: | Delaware: |
• | the acquisitions, including Ordinary Shares previously acquired by us and held by us and shares acquired by a person acting in his or her own name but on our behalf, may not have the effect of reducing the net assets below the amount of the issued share capital plus the reserves (which may not be distributed by law or under the articles of association); |
• | the Ordinary Shares repurchased are fully paid-up; and |
• | the acquisition offer must be made on the same terms and conditions to all the shareholders who are in the same position, except for acquisitions which were unanimously decided by a general meeting at which all the shareholders were present or represented (and except for acquisitions made on Nasdaq). |
Luxembourg: | Delaware: |
Luxembourg: | Delaware: |
Luxembourg: | Delaware: |
• | 1% of the number of our Ordinary Shares then outstanding, which will equal approximately 255,206 Ordinary Shares immediately after this offering; or |
• | the average weekly trading volume of our Ordinary Shares on Nasdaq during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale; |
• | the holder of Ordinary Shares receiving the dividends is either (i) a fully taxable Luxembourg resident collective entity, (ii) a collective entity resident in an EU Member State and falling within the scope of article 2 of the Council directive of November 30, 2011 (2011/96/EU) on the common system of taxation applicable in the case of parent companies and subsidiaries of different EU Member States, as amended (the “EU Parent-Subsidiary Directive”), (iii) the Luxembourg State, a Luxembourg municipality, an association of a Luxembourg municipality or an operation of Luxembourg public- law entity, (iv) a permanent establishment of an entity referred to at letters (i), (ii) or (iii) above, (v) a Swiss resident joint-stock company subject to corporate income tax in Switzerland without benefiting from any exemption, (vi) a joint-stock company or a cooperative company resident in an EEA country (other than an EU Member State) to the extent that such company is fully taxable and subject (in its country of residence) to a tax corresponding to Luxembourg Corporation Taxes, as well as a permanent establishment of such company, or (vii) a collective entity resident in a treaty country, to the extent that such entity is fully taxable and subject (in its country of residence) to a tax corresponding to Luxembourg Corporation Taxes, as well as a Luxembourg permanent establishment of such entity; and |
• | on the date on which the income is made available, the holder of Ordinary Shares holds or commits to hold directly (or even indirectly under certain conditions), for an uninterrupted period of at least twelve months, a participation of at least 10% in the share capital of the Company (or with an acquisition price of at least €1,200,000). |
(i) | Taxation of dividend income |
• | the holder of our Ordinary Shares receiving the dividends is either (i) a fully taxable Luxembourg resident collective entity, (ii) a Luxembourg permanent establishment of an EU resident collective entity falling within the scope of article 2 of the EU Parent-Subsidiary Directive, (iii) a Luxembourg permanent establishment of a joint-stock company that is resident in a jurisdiction with which Luxembourg has concluded a double tax treaty, or (iv) a Luxembourg permanent establishment of a joint-stock company or of a cooperative company which is a resident of an EEA Member State (other than an EU Member State); and |
• | on the date on which the income is made available, the holder of our Ordinary Shares holds or commits to hold directly (or even indirectly through certain entities) for an uninterrupted period of at least twelve months, a participation of at least 10% in the share capital of the Company (or with an acquisition price of at least €1,200,000). |
(ii) | Taxation of capital gains |
• | the holder of our Ordinary Shares realizing the capital gains is either (i) a fully taxable Luxembourg resident collective entity, (ii) a Luxembourg permanent establishment of an EU resident collective entity falling within the scope of article 2 of the EU Parent-Subsidiary Directive, (iii) a Luxembourg permanent establishment of a joint-stock company that is resident in a jurisdiction with which Luxembourg has concluded a double tax treaty, or (iv) a Luxembourg permanent establishment of a joint-stock company or of a cooperative company which is a resident of an EEA Member State (other than an EU Member State); and |
• | on the date on which the disposal takes place, the holder of our Ordinary Shares has held for an uninterrupted period of at least twelve months a participation of at least 10% in the share capital of the Company (or with an acquisition price of at least €6,000,000). |
Name | Number of Ordinary Shares | |||
J.P. Morgan Securities LLC | ||||
Deutsche Bank Securities Inc. | ||||
BofA Securities, Inc. | ||||
Macquarie Capital (USA) Inc. | ||||
Truist Securities, Inc. | ||||
Stifel, Nicolaus & Company, Incorporated | ||||
Total | 3,457,346 |
Without option to purchase additional Ordinary Shares exercise | With full option to purchase additional Ordinary Shares exercise | |||||||
Per Ordinary Share | $ | $ | ||||||
Total | $ | $ |
(a) | to any legal entity which is a qualified investor as defined in of the Prospectus Regulation; |
(b) | to fewer than 150 natural or legal persons (other than qualified investors as defined under the Prospectus Regulation), subject to obtaining the prior consent of the representative for any such offer; or |
(c) | in any other circumstances falling within Article 1(4) of the Prospectus Regulation, |
(a) | a corporation (which is not an accredited investor (as defined in Section 4A of the SFA)) the sole business of which is to hold investments and the entire share capital of which is owned by one or more individuals, each of whom is an accredited investor; or |
(b) | a trust (where the trustee is not an accredited investor) whose sole purpose is to hold investments and each beneficiary of the trust is an individual who is an accredited investor, securities (as defined in Section 239(1) of the SFA) of that corporation or the beneficiaries’ rights and interest (howsoever described) in that trust shall not be transferred within six months after that corporation or that trust has acquired the Ordinary Shares pursuant to an offer made under Section 275 of the SFA except: |
(i) | to an institutional investor or to a relevant person defined in Section 275(2) of the SFA, or to any person arising from an offer referred to in Section 275(1A) or Section 276(4)(i)(B) of the SFA; |
(ii) | where no consideration is or will be given for the transfer; |
(iii) | where the transfer is by operation of law; |
(iv) | as specified in Section 276(7) of the SFA; or |
(v) | as specified in Regulation 32 of the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations 2005 of Singapore. |
Expenses | Amount | |||
SEC registration fee | $ | 19,050 | ||
Financial Industry Regulatory Authority, Inc. ("FINRA") filing fee | 27,040 | |||
Legal fees and expenses | 600,000 | |||
Accounting fees and expenses | 40,000 | |||
Miscellaneous expenses, including printing and engraving expenses | 100,000 | |||
Total | $ | 786,090 |
• | the judgment of the U.S. court is final and enforceable (exécutoire) in the United States; |
• | the U.S. court had jurisdiction over the subject matter leading to the judgment (that is, its jurisdiction was in compliance both with Luxembourg private international law rules and with the applicable domestic U.S. federal or state jurisdictional rules); |
• | the U.S. court has applied to the dispute the substantive law that would have been applied by Luxembourg courts. Based on recent case law and legal doctrine, it is not certain that this condition would still be required for an exequatur to be granted by a Luxembourg court; |
• | the judgment was granted following proceedings where the counterparty had the opportunity to appear and, if it appeared, to present a defense, and the decision of the foreign court must not have been obtained by fraud, but in compliance with the rights of the defendant; |
• | the U.S. court has acted in accordance with its own procedural laws; and |
• | the decisions and the considerations of the U.S. court must not be contrary to Luxembourg international public policy rules, must not have been given in proceedings of a tax or criminal nature and must not have been rendered subsequent to an evasion of Luxembourg law (fraude à la loi). |
F - 1
Page | |
F-3 - F-4 | |
F-5 | |
F-6 - F-7 | |
F-8 - F-9 | |
F-10 - F-15 |
F - 2
Note | As of June 30, 2021 | As of December 31, 2020 | ||||||||||
Unaudited | Audited | |||||||||||
U.S. dollars (in thousands) | ||||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS | ||||||||||||
Cash and cash equivalent | 65,395 | 59,767 | ||||||||||
Designated cash | 6 | 2,917 | 0 | |||||||||
Restricted deposit | 12 | 12 | ||||||||||
Prepaid expenses and other receivables | 2,312 | 1,446 | ||||||||||
Due from Aspire Group | 3 | 787 | 56 | |||||||||
Due from the Michigan Joint Operation and NPI | 2,827 | 3,192 | ||||||||||
Trade receivables | 3,869 | 3,701 | ||||||||||
Total current assets | 78,119 | 68,174 | ||||||||||
NON-CURRENT ASSETS | ||||||||||||
Restricted deposit | 159 | 164 | ||||||||||
Restricted deposits - Joint Venture | 4 | 3,773 | 3,773 | |||||||||
Property and equipment | 1,308 | 1,301 | ||||||||||
Intangible assets | 19,875 | 17,835 | ||||||||||
Right-of-use assets | 2,389 | 3,127 | ||||||||||
Deferred taxes | 273 | 211 | ||||||||||
Total non-current assets | 27,777 | 26,411 | ||||||||||
TOTAL ASSETS | 105,896 | 94,585 |
Note | As of June 30, 2021 | As of December 31, 2020 | ||||||||||
Unaudited | Audited | |||||||||||
U.S. dollars (in thousands) | ||||||||||||
LIABILITIES AND EQUITY (DEFICIT) | ||||||||||||
CURRENT LIABILITIES | ||||||||||||
Trade and other payables | 4,619 | 4,910 | ||||||||||
Lease liabilities | 1,486 | 1,651 | ||||||||||
Capital notes, loans and accrued interest due to Aspire Group | 3 | 19,337 | 0 | |||||||||
Loans and other due to William Hill, net | 3 | 0 | 1,972 | |||||||||
Employees withholding payable | 6 | 2,917 | 0 | |||||||||
Employees' related payables and accruals | 4,241 | 3,562 | ||||||||||
Total current liabilities | 32,600 | 12,095 | ||||||||||
NON-CURRENT LIABILITIES | ||||||||||||
Capital notes, loans and accrued interest due to Aspire Group | 3 | 0 | 17,739 | |||||||||
Loans and other due to William Hill, net | 3 | 11,766 | 10,666 | |||||||||
Company share of Joint Venture net liabilities | 4 | 1,101 | 1,025 | |||||||||
Lease liabilities | 1,198 | 1,855 | ||||||||||
Accrued severance pay, net | 414 | 384 | ||||||||||
Total non-current liabilities | 14,479 | 31,669 | ||||||||||
EQUITY | ||||||||||||
Share capital | 44 | 44 | ||||||||||
Reserve with respect to transaction under common control | (8,467 | ) | (8,467 | ) | ||||||||
Reserve with respect to funding transactions with related parties | 20,072 | 20,072 | ||||||||||
Share premium | 70,450 | 68,608 | ||||||||||
Share based payments reserve | 3,336 | 3,907 | ||||||||||
Accumulated losses | (26,618 | ) | (33,343 | ) | ||||||||
Total equity | 58,817 | 50,821 | ||||||||||
TOTAL LIABILITIES AND EQUITY | 105,896 | 94,585 |
Six-month period ended June 30, | ||||||||||||
2021 | 2020 | |||||||||||
Note | Unaudited | |||||||||||
U.S. dollars (in thousands) | ||||||||||||
Revenues | 26,236 | 22,071 | ||||||||||
Distribution expenses | 5,086 | 2,863 | ||||||||||
Development expenses | 4,174 | 3,436 | ||||||||||
Selling and marketing expenses | 607 | 764 | ||||||||||
General and administrative expenses | 5,542 | 3,252 | ||||||||||
Initial public offering expenses | 1 | 0 | 1,089 | |||||||||
Depreciation and amortization | 6,907 | 5,539 | ||||||||||
22,316 | 16,943 | |||||||||||
Profit from operations | 3,920 | 5,128 | ||||||||||
Interest expenses with respect to funding from related parties | 3 | 2,414 | 2,053 | |||||||||
Finance income | 0 | (22 | ) | |||||||||
Finance expenses | 235 | 482 | ||||||||||
Profit before income taxes expenses | 1,271 | 2,615 | ||||||||||
Income taxes expenses | (1,069 | ) | (426 | ) | ||||||||
Profit after income taxes expenses | 202 | 2,189 | ||||||||||
The Company' share in profits (losses) of Joint Venture | 4 | 6,523 | (676 | ) | ||||||||
Net and total comprehensive income | $ | 6,725 | 1,513 | |||||||||
Net income per common share outstanding, basic ($) | 0.27 | 0.07 | ||||||||||
Net income per common share outstanding, diluted ($) | 0.25 | 0.06 | ||||||||||
Weighted average number of common shares outstanding, basic | 25,067,083 | 21,994,408 | ||||||||||
Weighted average number of common shares outstanding, diluted | 26,611,557 | 23,402,028 |
Six-month period ended June 30, 2021
Share capital | Share premium | Accumulated losses | Share based payments reserve | Reserve with respect to funding transactions with related parties | Reserve with respect to transaction under common control | Total equity (deficit) | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||
U.S. dollars (in thousands) | ||||||||||||||||||||||||||||
Balance as of January 1, 2021 (Audited) | 44* | 68,608 | (33,343 | ) | 3,907 | 20,072 | (8,467 | ) | 50,821 | |||||||||||||||||||
Changes in the period: | ||||||||||||||||||||||||||||
Comprehensive and net income for the period | 6,725 | 6,725 | ||||||||||||||||||||||||||
Exercise of employee options to ordinary shares | ** | 1,842 | (1,111 | ) | 731 | |||||||||||||||||||||||
Share based compensation | 540 | 540 | ||||||||||||||||||||||||||
Balance as of June 30, 2021 | 44* | 70,450 | (26,618 | ) | 3,336 | 20,072 | (8,467 | ) | 58,817 |
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT
Share capital | Share premium | Accumulated losses | Share-based payments reserve | Reserve with respect to funding transactions with related parties | Reserve with respect to transaction under common control | Total deficit | ||||||||||||||||||||||
Unaudited | ||||||||||||||||||||||||||||
U.S. dollars (in thousands) | ||||||||||||||||||||||||||||
Balance as of January 1, 2020 (Audited) | 21 | 22,788 | (39,857 | ) | 2,967 | 16,940 | (8,467 | ) | (5,608 | ) | ||||||||||||||||||
Changes in the period: | ||||||||||||||||||||||||||||
Comprehensive and net income for the period | 1,513 | 1,513 | ||||||||||||||||||||||||||
Benefit to the Company by certain of its equity holder with respect to funding transactions | 2,515 | 2,515 | ||||||||||||||||||||||||||
Exercise of employee options to ordinary shares | * | 2 | (* | ) | 2 | |||||||||||||||||||||||
Share based compensation | 523 | 523 | ||||||||||||||||||||||||||
Balance as of June 30, 2020 | 21 | 22,790 | (38,344 | ) | 3,490 | 19,455 | (8,467 | ) | (1,055 | ) |
Six-month period ended June 30, | ||||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
U.S. dollars (in thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net profit (loss) for the period | 6,725 | 1,513 | ||||||
Adjustments for: | ||||||||
Amortization and depreciation | 6,907 | 5,539 | ||||||
Income taxes expenses | 1,069 | 426 | ||||||
Income taxes paid | (346 | ) | (214 | ) | ||||
Interest expenses with respect to lease liability | 96 | 337 | ||||||
Interest expenses with respect to funding from related parties | 2,414 | 2,053 | ||||||
Interest paid | (820 | ) | (328 | ) | ||||
Other finance expenses, net | 235 | 460 | ||||||
Payments with respect to IP Option | 239 | 369 | ||||||
Share-based compensation | 540 | 523 | ||||||
The Company' share in profits (losses) of Joint Venture | (6,523 | ) | 676 | |||||
Decrease in trade receivables | 129 | 510 | ||||||
Decrease (increase) in prepaid expenses and other receivables | (866 | ) | 53 | |||||
Decrease (increase) in Aspire Group | (731 | ) | 211 | |||||
Increase (decrease) in amounts due from the Michigan Joint Operation and NPI | 365 | (3,098 | ) | |||||
Decrease in trade and other payables | (1,314 | ) | (193 | ) | ||||
Increase (decrease) in employees' related payables and accruals | 679 | (21 | ) | |||||
Accrued severance pay, net | 30 | 3 | ||||||
Total adjustment | 2,103 | 7,306 | ||||||
Net cash generated from operating activities | 8,828 | 8,819 |
NEOGAMES S.A.
INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six-month period ended June 30, | ||||||||||
2021 | 2020 | |||||||||
Unaudited | ||||||||||
U.S. dollars (in thousands) | ||||||||||
Cash flows from investing activities: | ||||||||||
Purchase of property and equipment | (316 | ) | (199 | ) | ||||||
Capitalized development costs | (7,901 | ) | (6,082 | ) | ||||||
Restricted deposit - Joint Venture | 0 | (1,182 | ) | |||||||
Changes in deposits | 5 | 136 | ||||||||
Proceeds from (funding to) the Joint Venture | 6,599 | (91 | ) | |||||||
Net cash used in investing activities | (1,613 | ) | (7,418 | ) | ||||||
Cash flows from Financing activities: | ||||||||||
Repayment of loan from William Hill | (1,500 | ) | 0 | |||||||
Repayments for lease liabilities | (818 | ) | (702 | ) | ||||||
Exercise of employee options | 731 | 0 | ||||||||
Net cash generated from (used in) financing activities | (1,587 | ) | (702 | ) | ||||||
Net increase in cash and cash equivalents | 5,628 | 699 | ||||||||
Cash and cash equivalents at the beginning of the period | 59,767 | 6,016 | ||||||||
Cash and cash equivalents at the end of the period | 65,395 | 6,715 |
A. | William Hill: |
As of June, 30, 2021 | As of December 31, 2020 | |||||||
Unaudited | Audited | |||||||
U.S. dollars (in thousands) | ||||||||
Loans and other due to WH, net: | ||||||||
Loan principals | 11,000 | 12,500 | ||||||
Discounts | (1,926 | ) | (2,492 | ) | ||||
Accrued interest | 212 | 677 | ||||||
Liability with respect to IP Option | 3,450 | 3,450 | ||||||
Receivables on IP Option | (970 | ) | (1,497 | ) | ||||
11,766 | 12,638 |
B. | Aspire Group: |
For the Six-month period ended June 30, | ||||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
U.S. dollars (in thousands) | ||||||||
Revenues generated from the Transition Services Agreement | 928 | 1,348 | ||||||
Expenses derived by the Cost Allocation Agreement: | ||||||||
Labor (included in general and administrative expenses) | 28 | 21 | ||||||
Right of use lease (included in depreciation and interest with respect to right of use) | 595 | 470 | ||||||
Other (included in general and administrative expenses) | 97 | 70 | ||||||
720 | 561 |
NOTE 3 - RELATED PARTIES (Cont.)
B. | Aspire Group (Cont.): |
Principal amount | Balance* | Contractual interest rate | Effective interest rate | |||||||||||||
U.S. dollars (in thousands) | % | |||||||||||||||
As of June 30, 2021 (Unaudited) | 21,838 | 19,337 | 1 | 20 | ||||||||||||
As of December 31, 2020 (Audited) | 21,838 | 17,739 | 1 | 20 |
C. | Consultancy Agreement: |
A. | JOINT VENTURE |
As of June, 30, 2021 | As of December 31, 2020 | |||||||
Unaudited | Audited | |||||||
U.S. dollars (in thousands) | ||||||||
Current assets | 20,025 | 11,388 | ||||||
Non-current assets | 1,419 | 1,597 | ||||||
Current liabilities | (20,851 | ) | (12,091 | ) | ||||
Non-current liabilities | (2,880 | ) | (2,910 | ) | ||||
Net assets (100%) | (2,287 | ) | (2,016 | ) | ||||
Net assets (50%) | (1,144 | ) | (1,008 | ) | ||||
Adjustments | 43 | (17 | ) | |||||
Company share of net assets (liabilities) (50%) | (1,101 | ) | (1,025 | ) |
NOTE 4 - INVESTMENT IN A JOINT VENTURE AND JOINT OPERATION (Cont.)
A. JOINT VENTURE (Cont.)
For the Six-month period ended June 30, | ||||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
U.S. dollars (in thousands) | ||||||||
Revenues | 31,695 | 4,888 | ||||||
Distribution expenses | 21,512 | 6,085 | ||||||
Selling, general and marketing expenses | 406 | 373 | ||||||
Depreciation and amortization | 313 | 307 | ||||||
Finance expenses | 45 | 11 | ||||||
Net and total profit (loss) (100%) | 9,419 | (1,888 | ) | |||||
Net and total profit (loss) (50%) | 4,710 | (944 | ) | |||||
Adjustments | 1,813 | 268 | ||||||
Share in profits (losses) of NPI | 6,523 | (676 | ) | |||||
Funding of (proceeds from) NPI | (6,599 | ) | 91 |
B. | MICHIGAN JOINT OPERATION |
For the Six-month period ended June 30, | ||||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
U.S. dollars (in thousands) | ||||||||
Revenues (100%) | 24,196 | 22,585 | ||||||
Total operating expenses (100%) | (13,585 | ) | (9,900 | ) |
For the Six-month period ended June 30, | ||||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
U.S. dollars (in thousands) | ||||||||
Turnkey contracts | 16,065 | 14,430 | ||||||
Games | 979 | 800 | ||||||
Total royalties | 17,044 | 15,230 | ||||||
Development and other services from Aspire (See also Note 3B) | 928 | 1,348 | ||||||
Development and other services from NPI (See also Note 4A) | 3,724 | 1,744 | ||||||
Development and other services from Michigan Joint Operation (See also Note 4B) | 676 | 655 | ||||||
Total Development and other services | 5,328 | 3,747 | ||||||
Use of IP rights (William Hill only, see also Note 3A) | 3,864 | 3,094 | ||||||
Total Revenues | 26,236 | 22,071 |
The Company generated revenues exceeding 10% of its consolidated revenues from four customers in the six-month period ended June 30, 2021 (of which two are a related party) and four customers in the six-month period ended June 30, 2020 (of which one is related parties, see Note 3). The Company generated 50% and 55% of the consolidated revenues in the six-month periods ended June 30, 2021 and 2020, respectively, from the Michigan Joint Operation and 12% and 10% of the consolidated revenues in the six-month periods ended June 30, 2021 and 2020 from Sazka.
As of June 30, 2021, and December 31, 2020, the Company had trade receivables outstanding, exceeding 10% of the Company’s consolidated trade receivables, from two customers. Sazka accounted 35% and 43% of the consolidated trade receivables outstanding as of June 30, 2021 and December 31, 2020, respectively, and William Hill accounted for 59% and 55% of the consolidated trade receivables outstanding as of June 30, 2021 and December 31, 2020.
Dividend Yield | 0 | % | ||
Expected volatility | 37.7 | % | ||
Risk free interest rate | 0.87 | % | ||
Expected life | 5.33 years | |||
Weighted average exercise price | $ | 57.56 | ||
Price per share | $ | 57.56 |
For the Six-month period ended June 30, | ||||||||
2021 | 2020 | |||||||
Unaudited | ||||||||
U.S. dollars (in thousands) | ||||||||
Basic and diluted earnings per share: | ||||||||
Net income attributable to equity holders of the company | 6,725 | 1,513 | ||||||
Weighted average number of issued ordinary shares | 25,067,083 | 21,994,408 | ||||||
Dilutive effect of share options | 1,544,474 | 1,407,620 | ||||||
Weighted average number of diluted ordinary shares | 26,611,557 | 23,402,028 | ||||||
Income (loss) per share, basic ($) | 0.27 | 0.07 | ||||||
Income (loss) per share, diluted ($) | 0.25 | 0.06 |
NOTE 8 - LEGAL PROCEEDINGS
Following Note 19 to the Annual Financial Statements, in June 2021, the U.S. Department of Justice (“DoJ”) decided to appeal the decision of the federal Court of Appeals for the First Circuit, permitting state-run lotteries and their suppliers to continue to sell lottery products online without the immediate threat of federal prosecution for such activities.
Page | |
F-18 | |
F-19 - F-20 | |
F-21 | |
F-22 | |
F-23 | |
F-24 - F-42 |
December 31, | ||||||||||||
2020 | 2019 | |||||||||||
Note | U.S. dollars (in thousands) | |||||||||||
ASSETS | ||||||||||||
CURRENT ASSETS | ||||||||||||
Cash and cash equivalents | 59,767 | 6,016 | ||||||||||
Restricted deposits | 12 | 138 | ||||||||||
Prepaid expenses and other receivables | 1,446 | 905 | ||||||||||
Aspire Group | 6 | 56 | 296 | |||||||||
Due from the Michigan Joint Operation and NPI | 7 | 3,192 | 250 | |||||||||
Trade receivables | 3,701 | 2,737 | ||||||||||
68,174 | 10,342 | |||||||||||
NON-CURRENT ASSETS | ||||||||||||
Restricted deposits | 164 | 150 | ||||||||||
Restricted deposits - Joint Venture | 7 | 3,773 | 2,000 | |||||||||
Company share of Joint Venture net assets | 7 | - | 603 | |||||||||
Property and equipment | 4 | 1,301 | 849 | |||||||||
Intangible assets | 5 | 17,835 | 14,413 | |||||||||
Right-of-use assets | 2 | 3,127 | 4,688 | |||||||||
Deferred taxes | 15 | 211 | 130 | |||||||||
26,411 | 22,833 | |||||||||||
TOTAL ASSETS | 94,585 | 33,175 |
December 31, | ||||||||||||
2020 | 2019 | |||||||||||
Note | U.S. dollars (in thousands) | |||||||||||
LIABILITIES AND EQUITY (DEFICIT) | ||||||||||||
CURRENT LIABILITIES | ||||||||||||
Trade and other payables | 8 | 4,910 | 1,855 | |||||||||
Lease liabilities | 2 | 1,651 | 1,455 | |||||||||
Loans and other due to William Hill, net | 6 | 1,972 | 14,245 | |||||||||
Employees' related payables and accruals | 3,562 | 2,583 | ||||||||||
12,095 | 20,138 | |||||||||||
NON-CURRENT LIABILITIES | ||||||||||||
Capital notes, loans and accrued interest due to Aspire Group | 6 | 17,739 | 14,987 | |||||||||
Loans and other due to William Hill, net | 6 | 10,666 | - | |||||||||
Company share of Joint Venture net liabilities | 7 | 1,025 | - | |||||||||
Lease liabilities | 2 | 1,855 | 3,382 | |||||||||
Accrued severance pay, net | 9 | 384 | 276 | |||||||||
31,669 | 18,645 | |||||||||||
EQUITY (DEFICIT) | ||||||||||||
Share capital | 44 | 21 | ||||||||||
Reserve with respect to transaction under common control | 2 | (8,467 | ) | (8,467 | ) | |||||||
Reserve with respect to funding transaction with related parties | 20,072 | 16,940 | ||||||||||
Share premium | 68,608 | 22,788 | ||||||||||
Share based payments reserve | 18 | 3,907 | 2,967 | |||||||||
Accumulated losses | (33,343 | ) | (39,857 | ) | ||||||||
50,821 | (5,608 | ) | ||||||||||
TOTAL LIABILITIES AND EQUITY (DEFICIT) | 94,585 | 33,175 |
For the year ended December 31, | ||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||
Note | U.S. dollars (in thousands) | |||||||||||||||
Revenues | 11 | 49,202 | 33,062 | 23,478 | ||||||||||||
Distribution expenses | 12 | 6,685 | 4,252 | 4,519 | ||||||||||||
Development expenses | 7,452 | 6,877 | 5,782 | |||||||||||||
Selling and marketing expenses | 1,483 | 1,981 | 1,457 | |||||||||||||
General and administrative expenses | 13 | 7,496 | 4,957 | 4,948 | ||||||||||||
Initial public offering expenses | 2,796 | - | - | |||||||||||||
Depreciation and amortization | 4,5 | 11,657 | 9,685 | 7,759 | ||||||||||||
37,569 | 27,752 | 24,465 | ||||||||||||||
Profit (loss) from operations | 11,633 | 5,310 | (987 | ) | ||||||||||||
Interest expenses with respect to funding from related parties | 6 | 4,343 | 3,792 | 2,309 | ||||||||||||
Finance income | 14 | (21 | ) | (53 | ) | - | ||||||||||
Finance expenses | 14 | 747 | 382 | 195 | ||||||||||||
Profit (loss) before income taxes expenses | 6,564 | 1,189 | (3,491 | ) | ||||||||||||
Income taxes expenses | 15 | (1,443 | ) | (1,243 | ) | (586 | ) | |||||||||
Profit (loss) after income taxes expenses | 5,121 | (54 | ) | (4,077 | ) | |||||||||||
The Company's share in gains (losses) of the Joint Venture | 7 | 1,393 | (3,924 | ) | (1,898 | ) | ||||||||||
Net and total comprehensive income (loss) | 6,514 | (3,978 | ) | (5,975 | ) | |||||||||||
Net income (loss) per common share outstanding, basic ($) | 0.29 | (0.18 | ) | (0.27 | ) | |||||||||||
Net income(loss) per common share outstanding, diluted ($) | 0.27 | (0.18 | ) | (0.27 | ) | |||||||||||
Weighted average number of common shares outstanding, basic | 17 | 22,329,281 | 21,983,757 | 21,983,757 | ||||||||||||
Weighted average number of common shares outstanding, diluted | 17 | 23,898,477 | 21,983,757 | 21,983,757 |
Share capital | Share premium | Accumulated gains (losses) | Share based payments reserve | Reserve with respect to funding transactions with related parties | Reserve with respect to transaction under common control | Total equity (deficit) | ||||||||||||||||||||||
U.S. dollars (in thousands) | ||||||||||||||||||||||||||||
Balance as of January 1, 2018 | 21 | 22,788 | (29,904 | ) | 2,352 | 16,940 | (8,467 | ) | 3,730 | |||||||||||||||||||
Changes in the year: | ||||||||||||||||||||||||||||
Total comprehensive loss for the year | (5,975 | ) | (5,975 | ) | ||||||||||||||||||||||||
Balance as of December 31, 2018 | 21 | 22,788 | (35,879 | ) | 2,352 | 16,940 | (8,467 | ) | (2,245 | ) | ||||||||||||||||||
Changes in the year: | ||||||||||||||||||||||||||||
Share based compensation | 615 | 615 | ||||||||||||||||||||||||||
Total comprehensive loss for the year | (3,978 | ) | (3,978 | ) | ||||||||||||||||||||||||
Balance as of December 31, 2019 | 21 | 22,788 | (39,857 | ) | 2,967 | 16,940 | (8,467 | ) | (5,608 | ) | ||||||||||||||||||
Changes in the year: | ||||||||||||||||||||||||||||
Share based compensation | 969 | 969 | ||||||||||||||||||||||||||
Benefit to the Company by an equity holder with respect to funding transactions | 3,132 | 3,132 | ||||||||||||||||||||||||||
Recapitalization of share capital | 23 | (23 | ) | — | ||||||||||||||||||||||||
Issuance of ordinary shares, net of issuance cost, in an initial public offering, | - | 45,810 | 45,810 | |||||||||||||||||||||||||
Exercise of employee options to ordinary shares | - | 33 | (29 | ) | 4 | |||||||||||||||||||||||
Total comprehensive income for the year | 6,514 | 6,514 | ||||||||||||||||||||||||||
Balance as of December 31, 2020 | 44 | * | 68,608 | (33,343 | ) | 3,907 | 20,072 | (8,467 | ) | 50,821 |
For the year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net profit (loss) for the period | 6,514 | (3,978 | ) | (5,975 | ) | |||||||
Adjustments for: | ||||||||||||
Amortization and depreciation | 11,657 | 9,685 | 7,759 | |||||||||
Income taxes expenses | 1,443 | 1,243 | 586 | |||||||||
Income taxes paid | (606 | ) | (461 | ) | (376 | ) | ||||||
Interest expenses with respect to lease liability | 672 | 366 | 0 | |||||||||
Interest expenses with respect to funding from related parties | 4,343 | 3,792 | 2,309 | |||||||||
Interest paid | (684 | ) | (645 | ) | (223 | ) | ||||||
Other finance expenses, net | 726 | 329 | 202 | |||||||||
Payments with respect to IP Option | 478 | 825 | 0 | |||||||||
Share based compensation | 969 | 615 | 0 | |||||||||
The Company share in losses (gains) of the Joint Venture | (1,393 | ) | 3,924 | 1,898 | ||||||||
Initial public offering expenses | 2,430 | 0 | 0 | |||||||||
Increase in trade receivables | (1,286 | ) | (304 | ) | (1,683 | ) | ||||||
Increase in prepaid expenses and other receivables | (541 | ) | (397 | ) | (136 | ) | ||||||
Decrease (Increase) in Aspire Group | 240 | (152 | ) | (42 | ) | |||||||
Decrease (increase) in amounts due from the Michigan Joint Operation and NPI | (2,942 | ) | (60 | ) | 498 | |||||||
Increase (decrease) in trade and other payables | 1,411 | (460 | ) | (68 | ) | |||||||
Increase in employees' related payables and accruals | 979 | 731 | 587 | |||||||||
Accrued severance pay, net | 108 | (13 | ) | 42 | ||||||||
18,004 | 19,018 | 11,353 | ||||||||||
Net cash generated from operating activities | 24,518 | 15,040 | 5,378 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchase of property and equipment | (928 | ) | (756 | ) | (392 | ) | ||||||
Capitalized development costs | (13,128 | ) | (11,454 | ) | (8,033 | ) | ||||||
Restricted deposits - Joint Venture | (1,773 | ) | (853 | ) | (1,147 | ) | ||||||
Net change in deposits | 112 | (147 | ) | 0 | ||||||||
Proceeds from (funding to) the Joint Venture | 3,021 | (4,214 | ) | (2,149 | ) | |||||||
Net cash used in investing activities | (12,696 | ) | (17,424 | ) | (11,721 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Loans from William Hill | 2,500 | 6,500 | 6,000 | |||||||||
Repayment of loan from William Hill | (2,500 | ) | 0 | 0 | ||||||||
Repayments for lease liabilities | (1,455 | ) | (1,334 | ) | 0 | |||||||
Exercise of employee options | 4 | 0 | 0 | |||||||||
Issuance of shares, net of issuance costs and other initial public offering expenses | 43,380 | 0 | 0 | |||||||||
Net cash generated from financing activities | 41,929 | 5,166 | 6,000 | |||||||||
Net increase (decrease) in cash and cash equivalents | 53,751 | 2,782 | (343 | ) | ||||||||
Cash and cash equivalents at the beginning of the year | 6,016 | 3,234 | 3,577 | |||||||||
Cash and cash equivalents at the end of the year | 59,767 | 6,016 | 3,234 |
A. | Accounting principles |
B. | Comparative information |
C. | Basis of consolidation |
D. | Foreign currency |
E. | Transaction under common control |
F. | Cash and cash equivalents |
G. | Financial instruments |
H. | Trade receivables |
I. | Investment in a joint operation |
J. | Investment in a joint venture |
K. | Employee benefits |
The Israeli subsidiary, NGS, has adopted the general authorization in accordance with Section 14 of the Severance Pay Law, 1963 (“Section 14”), according to which deposits to the pension funds and/or policies of insurance companies exempt the subsidiary from additional payments. However, the Company’s liabilities for severance pay, attributed to certain employees that are not subject to Section 14 are computed on the basis of the employee’s most recent salary as of the end of the period date, in accordance with the Severance Pay Law, and are partially covered by monthly deposits with insurance policies and/or other funds in favor of the employees and the remaining are accrued for in the consolidated financial statements.
L. | Provisions |
M. | Property and equipment |
% | |
Computers and computers equipment | 25-50 |
Office furniture and equipment | 7 |
Leasehold improvements | Over the shorter of the term of the lease or useful lives |
N. | Intangible assets |
• | The technical feasibility of completing the intangible asset so that it will be available for use or sale. |
• | The Company's intention to complete the intangible asset and use or sell it. |
• | The ability to use or sell the intangible asset. |
• | How the intangible asset will generate future economic benefits. |
• | The availability of adequate technical, financial and other resources to complete the intangible asset; and |
• | The ability to measure reliably the respective expenditure asset during its development. |
O. | Impairment of non-financial assets |
P. | Revenue recognition |
• | Royalties from licensing of technological platforms and provision of proprietary games content (which are recognized in the accounting periods in which the gaming transactions occur). |
• | Fees from access to intellectual property rights (which are recognized over the useful periods of the intellectual property rights). |
• | Fees from development services (which are recognized in the accounting periods in which services are provided). |
Q. | Reserve with respect to funding transactions with related parties |
R. | Share-based payment |
S. | Finance income and expenses |
T. | Income taxes |
• | The initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and |
• | Investments in subsidiaries and joint operations where the Company is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future. |
U. | Fair value measurement hierarchy |
V. | Earnings (loss) per share |
W. | Leases |
Computers and computers equipment | Office furniture and equipment | Leasehold improvements | Total | |||||||||||||
U.S. dollars (in thousands) | ||||||||||||||||
Cost: | ||||||||||||||||
Balance as of January 1, 2020 | 2,107 | 257 | 200 | 2,564 | ||||||||||||
Additions during the year | 373 | 364 | 191 | 928 | ||||||||||||
2,480 | 621 | 391 | 3,492 | |||||||||||||
Accumulated depreciation: | ||||||||||||||||
Balance as of January 1, 2020 | 1,536 | 36 | 143 | 1,715 | ||||||||||||
Additions during the year | 461 | 7 | 8 | 476 | ||||||||||||
1,997 | 43 | 151 | 2,191 | |||||||||||||
Net Book Value: | ||||||||||||||||
As of December 31, 2020 | 483 | 578 | 240 | 1,301 |
Computers and computers equipment | Office furniture and equipment | Leasehold improvements | Total | |||||||||||||
U.S. dollars (in thousands) | ||||||||||||||||
Cost: | ||||||||||||||||
Balance as of January 1, 2019 | 1,461 | 190 | 157 | 1,808 | ||||||||||||
Additions during the year | 646 | 67 | 43 | 756 | ||||||||||||
2,107 | 257 | 200 | 2,564 | |||||||||||||
Accumulated depreciation: | ||||||||||||||||
Balance as of January 1, 2019 | 1,115 | 32 | 137 | 1,284 | ||||||||||||
Additions during the year | 421 | 4 | 6 | 431 | ||||||||||||
1,536 | 36 | 143 | 1,715 | |||||||||||||
Net Book Value: | ||||||||||||||||
As of December 31, 2019 | 571 | 221 | 57 | 849 |
As of December 31, | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Cost: | ||||||||
Balance at beginning of the period | 45,070 | 33,616 | ||||||
Additions | 13,128 | 11,454 | ||||||
As of December 31, | 58,198 | 45,070 | ||||||
Accumulated amortization: | ||||||||
Balance at beginning of the period | 30,657 | 22,885 | ||||||
Amortization | 9,706 | 7,772 | ||||||
As of December 31, | 40,363 | 30,657 | ||||||
Net Book Value: | ||||||||
As of December 31, | 17,835 | 14,413 |
A. | WILLIAM HILL: |
A. | WILLIAM HILL (Cont.): |
As of December 31, | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Loan principals | 12,500 | 12,500 | ||||||
Discounts | (2,492 | ) | (465 | ) | ||||
Accrued interest | 677 | 421 | ||||||
Liability with respect to IP Option | 3,450 | 3,450 | ||||||
Receivables on IP Option | (1,497 | ) | (1,661 | ) | ||||
12,638 | 14,245 |
B. | ASPIRE GROUP: |
For the year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Revenues generated from the Transition Services Agreement | 2,430 | 4,099 | 3,421 | |||||||||
Expenses derived by the Cost Allocation Agreement: | ||||||||||||
Labor (included in general and administrative expenses) | 66 | 68 | 289 | |||||||||
Rent (included in depreciation and interest with respect to right of use) | 1,064 | 1,047 | 1,036 | |||||||||
Other (included in general and administrative expenses) | 160 | 177 | 232 | |||||||||
Total expenses | 1,290 | 1,292 | 1,557 |
As of December 31, | Principal amount | Balance* | Contractual interest rate | Effective interest rate | ||||||||||||
U.S. dollars (in thousands) | % | |||||||||||||||
2020 | 21,838 | 17,739 | 1 | 20 | ||||||||||||
2019 | 21,838 | 14,987 | 1 | 20 |
A. | JOINT VENTURE |
As of December 31, | |||||||||
2020 | 2019 | ||||||||
U.S. dollars (in thousands) | |||||||||
Current assets | 11,388 | 3,211 | |||||||
Non-current assets | 1,597 | 2,025 | |||||||
Current liabilities | (12,091 | ) | (3,214 | ) | |||||
Non-current liabilities | (2,910 | ) | (631 | ) | |||||
Net assets (liabilities) (100%) | (2,016 | ) | 1,391 | ||||||
Net assets (liabilities) (50%) | (1,008 | ) | 696 | ||||||
Adjustments | (17 | ) | (93 | ) | |||||
Company share of Joint Venture net assets (liabilities) | (1,025 | ) | 603 |
For the year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Revenues | 18,032 | 3,740 | 1,127 | |||||||||
Distribution expenses | 16,116 | 10,480 | 4,447 | |||||||||
Selling, general and marketing expenses | 776 | 1,067 | 293 | |||||||||
Depreciation | 405 | 335 | 224 | |||||||||
Net and total profit (loss) (100%) | 735 | (8,142 | ) | (3,837 | ) | |||||||
Net and total profit (loss) (50%) | 367 | (4,071 | ) | (1,919 | ) | |||||||
Adjustments | 1,026 | 147 | 21 | |||||||||
Share in profits (losses) of NPI | 1,393 | (3,924 | ) | (1,898 | ) | |||||||
Funding of (proceeds from) NPI | (3,021 | ) | 4,214 | 2,149 |
A. | JOINT VENTURE (Cont.) |
B. | MICHIGAN JOINT OPERATION |
For the year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Revenues (100%) | 49,779 | 24,665 | 20,675 | |||||||||
Total operating expenses (100%) | (22,021 | ) | (14,264 | ) | (13,361 | ) |
As of December 31, | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Trade payables | 1,693 | 561 | ||||||
Governmental authorities | 1,258 | 488 | ||||||
Accrued expenses | 1,959 | 806 | ||||||
4,910 | 1,855 |
As of December 31, | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Non- current | ||||||||
Accrued severance pay | 2,350 | 1,991 | ||||||
Less - funds | (1,966 | ) | (1,715 | ) | ||||
384 | 276 | |||||||
Current | ||||||||
Accrued vacation | 522 | 279 | ||||||
Accrued recuperation | 11 | 8 | ||||||
533 | 287 |
Dividend Yield | 0 | % | ||
Expected volatility | 31 | % | ||
Risk free interest rate | 2.48 | % | ||
Expected life | 2 years | |||
Weighted average exercise price | $ | 0.17 | ||
Price per share | $ | 0.52 | ||
Grant date fair value of each option | $ | 0.36 |
NOTE 10- SHARE BASED PAYMENTS (Cont.)
Dividend Yield | 0 | % | ||
Expected volatility | 29.67%-30.2 | % | ||
Risk free interest rate | 2.21%-2.28 | % | ||
Expected life | 5.5-7 years | |||
Weighted average exercise price | $ | 0.17 | ||
Price per share | $ | 0.52 | ||
Grant date weighted average fair value per option | $ | 0.38 |
Dividend Yield | 0 | % | ||
Expected volatility | 29.3%-29.86 | % | ||
Risk free interest rate | 1.8%-1.85 | % | ||
Expected life | 5.12-6 years | |||
Weighted average exercise price | $ | 0.21 | ||
Price per share | $ | 0.52 | ||
Grant date weighed average fair value of an option | $ | 0.34 |
Dividend Yield | 0 | % | ||
Expected volatility | 39.4%-37 | % | ||
Risk free interest rate | 0.35%-0.48 | % | ||
Expected life | 5.5-7 years | |||
Weighted average exercise price | $ | 0.17 | ||
Price per share | $ | 1.5 |
Dividend Yield | 0 | % | ||
Expected volatility | 39%-42 | % | ||
Risk free interest rate | 0.42%-0.64 | % | ||
Expected life | 5.13-7 years | |||
Weighted average exercise price | $ | 17 | ||
Price per share | $ | 17 |
2020 | 2019 | 2018 | ||||||||||||||||||||||
Weighted average exercise price ($) | Number | Weighted average exercise price ($) | Number | Weighted average exercise price ($) | Number | |||||||||||||||||||
Outstanding at January 1, | 1.48 | 1,632,220 | 1.56 | 1,113,218 | 1.56 | 1,118,077 | ||||||||||||||||||
Granted during the year | 9.92 | 111,129 | 1.40 | 524,867 | 0 | 0 | ||||||||||||||||||
Exercised during the year | 1.40 | (12,473 | ) | 0 | 0 | 0 | 0 | |||||||||||||||||
Forfeited during the year | 1.73 | (22,856 | ) | 1.81 | (5,865 | ) | 2.96 | (4,859 | ) | |||||||||||||||
Outstanding at December 31, | 2.02 | 1,708,020 | 1.48 | 1,632,220 | 1.56 | 1,113,218 | ||||||||||||||||||
Vested and exercisable at December 31, | 1.52 | 1,203,456 | 1.48 | 1,045,076 | 1.48 | 1,055,701 |
For the year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Turnkey contracts | 32,252 | 17,240 | 13,684 | |||||||||
Games | 2,006 | 2,189 | 2,098 | |||||||||
Total royalties | 34,258 | 19,429 | 15,782 | |||||||||
Development and other services from Aspire (See also Note 6B) | 2,430 | 4,099 | 3,421 | |||||||||
Development and other services from NPI (See also Note 7A) | 4,404 | 2,914 | 1,244 | |||||||||
Development and other services from Michigan Joint Operation (See also Note 7B) | 1,413 | 958 | 594 | |||||||||
Total Development and other services | 8,247 | 7,971 | 5,259 | |||||||||
Use of IP rights (William Hill only, see also Note 6A) | 6,697 | 5,662 | 2,437 | |||||||||
Total Revenues | 49,202 | 33,062 | 23,478 |
For the year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Labor and related | 1,335 | 998 | 1,023 | |||||||||
Call center | 728 | 781 | 641 | |||||||||
Processing fees | 3,962 | 2,207 | 2,421 | |||||||||
Other | 660 | 266 | 434 | |||||||||
6,685 | 4,252 | 4,519 |
For the year ended 31 December | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Labor and related | 3,109 | 2,048 | 1,490 | |||||||||
Labor and related from a Related Company | 42 | 46 | 266 | |||||||||
Professional fees | 1,983 | 1,114 | 798 | |||||||||
Rent and related from a Related Company | 168 | 96 | 1,036 | |||||||||
Municipality and maintenance from Related Company | 160 | 177 | 232 | |||||||||
Travelling | 63 | 292 | 259 | |||||||||
Office | 414 | 408 | 273 | |||||||||
Other | 1,557 | 776 | 594 | |||||||||
7,496 | 4,957 | 4,948 |
For the year ended 31 December | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
A. Finance income: | ||||||||||||
Currency exchange rate differences | 0 | 53 | 0 | |||||||||
Interest income | 21 | 0 | 0 | |||||||||
21 | 53 | 0 | ||||||||||
B. Finance expenses: | ||||||||||||
Currency Exchange rate differences | 197 | 0 | 134 | |||||||||
Interest expense with respect to lease liabilities | 461 | 366 | 0 | |||||||||
Bank charges | 89 | 16 | 61 | |||||||||
747 | 382 | 195 |
A. | Tax rates applicable to the Company companies and other related |
B. | Income taxes expenses included in the statements of comprehensive income (loss) |
For the year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Current taxes | 1,224 | 836 | 552 | |||||||||
Deferred taxes | 81 | 6 | 14 | |||||||||
Taxes with respect to previous years | 138 | 401 | 20 | |||||||||
1,443 | 1,243 | 586 |
A. | Credit risk |
A. | Credit risk (Cont.) |
B. | Currency risk |
C. | Sensitivity analysis to the currency risk |
D. | Liquidity risk |
The Company monitors its liquidity in order to ensure that sufficient liquid resources are available to allow it to meet its obligations.
As of December 31, 2020 | ||||||||||||||||
In 3 months | Between 3 months and 1 year | More than 1 year | Total | |||||||||||||
U.S. dollars (in thousands) | ||||||||||||||||
Capital notes and accrued interest due to Aspire Group | 22,419 | 22,419 | ||||||||||||||
Loans due to WH | 2,022 | 11,155 | 13,177 | |||||||||||||
Lease liabilities | 1,651 | 1,855 | 3,506 | |||||||||||||
Trade and other payables | 4,910 | 4,910 | ||||||||||||||
Total | 4,910 | �� | 3,673 | 35,429 | 44,012 |
As of December 31, 2019 | ||||||||||||||||
In 3 months | Between 3 months and 1 year | More than 1 year | Total | |||||||||||||
U.S. dollars (in thousands) | ||||||||||||||||
Capital notes and accrued interest due to Aspire Group | 22,419 | 22,419 | ||||||||||||||
Loans due to WH | 12,920 | 0 | 12,920 | |||||||||||||
Lease liabilities | 1,455 | 3,382 | 4,837 | |||||||||||||
Trade and other payables | 1,855 | 1,855 | ||||||||||||||
Total | 1,855 | 14,375 | 25,801 | 42,031 |
For the year ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Basic and diluted earnings per share: | ||||||||||||
Net income (loss) attributable to equity holders of the company | 6,514 | (3,978 | ) | (5,975 | ) | |||||||
Weighted average number of issued ordinary shares | 22,329,281 | 21,983,757 | 21,983,757 | |||||||||
Dilutive effect of share options | 1,569,196 | 0 | 0 | |||||||||
Weighted average number of diluted ordinary shares | 23,898,477 | 21,983,757 | 21,983,757 | |||||||||
Income (loss) per share, basic ($) | 0.29 | (0.18 | ) | (0.27 | ) | |||||||
Income (loss) per share, diluted ($) | 0.27 | (0.18 | ) | (0.27 | ) |
Reserve | Description and purpose | |
Share premium | Amount subscribed for share capital in excess of nominal value. | |
Share based payments reserve | Fair value of the vested employees' options to purchase Company shares. | |
Reserve with respect to transaction under common control | The reserve represents the difference between the fair value of the consideration and the book value of the intangible assets as was accounted for by the seller, with respect to acquisition under common control. | |
Reserve with respect to funding transactions from related parties | See Note 6 |
Page | |
F-45 | |
F-46 - F-47 | |
F-48 | |
F-49 | |
F-50 | |
F-51 - F-57 |
2020 | 2019 | ||||||||||
Note | U.S. dollars (in thousands) | ||||||||||
ASSETS | |||||||||||
CURRENT ASSETS | |||||||||||
Cash and Cash equivalents | 286 | - | |||||||||
Restricted cash | 3 | 5,656 | 2,148 | ||||||||
Trade receivables | 5,252 | 950 | |||||||||
Prepaid expenses | 194 | 113 | |||||||||
11,388 | 3,211 | ||||||||||
NON-CURRENT ASSETS | |||||||||||
Property and equipment, net | 4 | 1,205 | 1,417 | ||||||||
Right of use asset | 2 | 392 | 608 | ||||||||
1,597 | 2,025 | ||||||||||
TOTAL ASSETS | 12,985 | 5,236 |
BALANCE SHEETS AS OF DECEMBER 31
2020 | 2019 | ||||||||||
Note | U.S. dollars (in thousands) | ||||||||||
LIABILITIES AND EQUITY (DEFICIT) | |||||||||||
CURRENT LIABILITIES | |||||||||||
Trade payables and accrued expenses | 6 | 2,269 | 329 | ||||||||
Due to related companies | 5 | 3,088 | 239 | ||||||||
Deferred revenues | 566 | - | |||||||||
Lease liabilities | 2 | 147 | 211 | ||||||||
Due to lotteries | 3 | 5,656 | 2,148 | ||||||||
Accrued payroll and benefits | 365 | 287 | |||||||||
12,091 | 3,214 | ||||||||||
NON-CURRENT LIABILITIES | |||||||||||
Deferred revenues | 2,655 | 229 | |||||||||
Lease liabilities | 2 | 255 | 402 | ||||||||
2,910 | 631 | ||||||||||
EQUITY (DEFICIT) | |||||||||||
Accumulated contributions | 13,864 | 18,006 | |||||||||
Accumulated losses | (15,880 | ) | (16,615 | ) | |||||||
(2,016 | ) | 1,391 | |||||||||
TOTAL LIABILITIES AND MEMBERS' EQUITY (DEFICIT) | 12,985 | 5,236 |
NeoPollard Interactive LLC
For the year ended December 31, | |||||||||||
2020 | 2019 | ||||||||||
Note | U.S. dollars (in thousands) | ||||||||||
Revenues | 7 | 18,032 | 3,740 | ||||||||
Distribution expenses | 8 | 16,116 | 10,480 | ||||||||
Selling, general and administrative expenses | 9 | 776 | 1,067 | ||||||||
Depreciation | 4 | 405 | 335 | ||||||||
Net income (loss) and total comprehensive loss | 735 | (8,142 | ) |
Accumulated losses | Accumulated Contributions (distributions) | Total members' equity (deficit) | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Balance as of January 1, 2019 | (8,473 | ) | 9,563 | 1,090 | ||||||||
Comprehensive loss | (8,142 | ) | - | (8,142 | ) | |||||||
Contributions | - | 8,443 | 8,443 | |||||||||
Balance as of December 31, 2019 | (16,615 | ) | 18,006 | 1,391 | ||||||||
Comprehensive income | 735 | - | 735 | |||||||||
Distributions, net | - | (4,142 | ) | (4,142 | ) | |||||||
Balance as of December 31, 2020 | (15,880 | ) | 13,864 | (2,016 | ) |
For the year ended December 31, | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Cash flows from operating activities: | ||||||||
Net profit (loss) for the year | 735 | (8,142 | ) | |||||
Adjustments for: | ||||||||
Depreciation | 405 | 335 | ||||||
Increase in trade receivables | (4,302 | ) | (615 | ) | ||||
Decrease (increase) in prepaid expenses | (81 | ) | 25 | |||||
Increase (decrease) in deferred revenues | 2,992 | (265 | ) | |||||
Increase in due to related companies | 2,854 | 551 | ||||||
Increase in trade payables and accrued expenses | 1,940 | 193 | ||||||
Increase in due to lotteries | 3,508 | 1,833 | ||||||
Increase in accrued payroll and benefits | 78 | 132 | ||||||
7,394 | 2,189 | |||||||
Net cash generated from (used in) operating activities | 8,129 | (5,953 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (193 | ) | (657 | ) | ||||
Net cash used in investing activities | (193 | ) | (657 | ) | ||||
Cash flows from financing activities: | ||||||||
Members' contributions (distributions) | (4,142 | ) | 8,443 | |||||
Net cash generated from (used in) financing activities | (4,142 | ) | 8,443 | |||||
Net increase in cash and restricted cash | 3,794 | 1,833 | ||||||
Restricted cash at the beginning of the year | 2,148 | 315 | ||||||
Cash and restricted cash at the end of the year | 5,942 | 2,148 |
A. | Accounting principles |
B. | Functional currency |
NOTES TO THE FINANCIAL STATEMENTS
C. | Provisions |
D. | Property and equipment |
% | |
Computer equipment | 15-25 |
Leasehold improvements | Over the shorter of the term of the lease or useful lives |
E. | Revenue recognition |
Customers' relationships management ("CRM") services revenues are recognized in the accounting periods in which the services are provided.
F. | Income Taxes |
G. | Leases |
Computer equipment | Leasehold improvements | Total | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Cost: | ||||||||||||
Balance as of January 1, 2020 | 2,111 | 24 | 2,135 | |||||||||
Additions during the year | 191 | 2 | 193 | |||||||||
2,302 | 26 | 2,328 | ||||||||||
Accumulated depreciation: | ||||||||||||
Balance as of January 1, 2020 | (715 | ) | (3 | ) | (718 | ) | ||||||
Depreciation during the year | (403 | ) | (2 | ) | (405 | ) | ||||||
(1,118 | ) | (5 | ) | (1,123 | ) | |||||||
Net Book Value: | ||||||||||||
As of December 31, 2020 | 1,184 | 21 | 1,205 |
Computer equipment | Leasehold improvements | Total | ||||||||||
U.S. dollars (in thousands) | ||||||||||||
Cost: | ||||||||||||
Balance as of January 1, 2019 | 1,470 | 8 | 1,478 | |||||||||
Additions during the year | 641 | 16 | 657 | |||||||||
2,111 | 24 | 2,135 | ||||||||||
Accumulated depreciation: | ||||||||||||
Balance as of January 1, 2019 | (382 | ) | (1 | ) | (383 | ) | ||||||
Depreciation during the year | (333 | ) | (2 | ) | (335 | ) | ||||||
(715 | ) | (3 | ) | (718 | ) | |||||||
Net Book Value: | ||||||||||||
As of December 31, 2019 | 1,396 | 21 | 1,417 |
NOTE 5 - RELATED PARTY TRANSACTIONS
For the year ended December 31, | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Marketing and security services - Neogames | 419 | 228 | ||||||
Royalties - Neogames | 1,038 | 171 | ||||||
Technical support - Neogames | 4,533 | 2,885 | ||||||
Technical support - Pollard | 1,920 | 2,682 | ||||||
Labor and benefits - Neogames | 137 | 27 | ||||||
Labor and benefits - Pollard | 3,036 | 2,293 | ||||||
Other - Pollard | 40 | - | ||||||
Other - Neogames | 585 | 445 | ||||||
11,708 | 8,731 |
As of December 31, | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Trade payables | 1,890 | 293 | ||||||
Governmental authorities | 181 | - | ||||||
Accrued expenses | 198 | 36 | ||||||
2,269 | 329 |
For the year ended December 31, | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Royalties | 17,510 | 3,335 | ||||||
Set up fees | 242 | 125 | ||||||
CRM services | 280 | 280 | ||||||
18,032 | 3,740 |
NeoPollard Interactive LLC
For the year ended December 31, | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Labor and benefits | 3,173 | 2,320 | ||||||
Call center | 1,290 | 787 | ||||||
Processing fees | 2,076 | 540 | ||||||
3rd Party Content | 805 | - | ||||||
Technical support | 6,453 | 5,567 | ||||||
Other | 2,319 | 1,266 | ||||||
16,116 | 10,480 |
For the year ended 31 December | ||||||||
2020 | 2019 | |||||||
U.S. dollars (in thousands) | ||||||||
Labor and benefits | 419 | 228 | ||||||
Marketing | 103 | 547 | ||||||
Professional fees | 210 | 235 | ||||||
Travelling | 44 | 57 | ||||||
776 | 1,067 |
INFORMATION NOT REQUIRED IN THE PROSPECTUS
101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL tags are embedded within the Inline XBRL document |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104* | Cover Page Interactive Data File (as formatted as Inline XBRL and contained in Exhibit 101) |
NeoGames S.A. | ||||
By: | ||||
| Name: | Moti Malul | ||
Title: | Chief Executive Officer |
By: | /s/ Raviv Adler | |||
Name: | Raviv Adler | |||
Title: | Chief Financial Officer |
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Moti Malul and Raviv Adler and each of them, individually, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead in any and all capacities, in connection with this registration statement, including to sign in the name and on behalf of the undersigned, this registration statement and any and all amendments thereto, including post-effective amendments and registrations filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the U.S. Securities and Exchange Commission, granting unto such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or his substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons on September 7, 2021 in the capacities indicated:
Name | | Title |
/s/ Moti Malul | | Chief Executive Officer and Board Member (principal executive officer) |
Moti Malul | ||
/s/ Raviv Adler | | Chief Financial Officer (principal financial officer and principal accounting officer) |
Raviv Adler | ||
/s/ Barak Matalon | | Member of the Board |
Barak Matalon | ||
/s/ Aharon Aran | | Member of the Board |
Aharon Aran | ||
/s/ Laurent Teitgen | | Member of the Board |
Laurent Teitgen | ||
/s/ John E. Taylor | | Member of the Board |
John E. Taylor | ||
/s/ Lisbeth McNabb | Member of the Board | |
Lisbeth McNabb | ||
By: | /s/ Donald J. Puglisi | |||
Name: | Donald J. Puglisi | |||
Title: | Managing Director, Puglisi & Associates |