Maris Tech Ltd 6-K, filed Aug 23, 2022
Maris Tech Ltd. (MTEK)
About this 6-K
Maris Tech Ltd filed this 6-K on August 23, 2022.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549s
Form
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of August
Commission file number:
(Translation of registrant’s name into English)
2 Yitzhak Modai Street
Rehovot, Israel 7608804
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(1):_____
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulations S-T Rule 101(b)(7):_____
CONTENTS
This Report of Foreign Private Issuer on Form 6-K consists of the Registrant’s (i) Unaudited Condensed Consolidated Interim Financial Statements as of June 30, 2022, which is attached hereto as Exhibit 99.1; and (ii) Management’s Discussion and Analysis of Financial Condition and Results of Operations for the six months ended June 30, 2022, which is attached hereto as Exhibit 99.2.
This Report on Form 6-K (including exhibits thereto) is incorporated by reference into Form S-8 (File No. 333-262910) of the Company, filed with the SEC, to be a part thereof from the date on which this report is submitted, to the extent not superseded by documents or reports subsequently filed or furnished.
| Exhibit No. | ||
| 99.1 | Maris-Tech Ltd.’s Unaudited Condensed Interim Financial Statements as of June 30, 2022. | |
| 99.2 | Maris-Tech Ltd.’s Management’s Discussion and Analysis of Financial Condition and Results of Operations for the Six Months Ended June 30, 2022. | |
| 101.INS | Inline XBRL Instance 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 (formatted as Inline XBRL and contained in Exhibit 101). |
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Maris-Tech Ltd. | ||
| Date: August 23, 2022 | By: | /s/ Israel Bar |
| Israel Bar | ||
| Chief Executive Officer | ||
2
Exhibit 99.1
Maris-Tech Ltd.
Condensed
Interim Financial
Statements
As of June 30, 2022
(Unaudited)
Maris-Tech Ltd.
Condensed Interim Financial Statements as of June 30, 2022 (Unaudited)
Table of contents
F-1
Maris Tech Ltd.
Condensed Interim Balance Sheets
(Unaudited)
| June 30, 2022 | December 31, 2021 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term deposits | ||||||||
| Trade receivables | ||||||||
| Other receivables | ||||||||
| Inventories, net | ||||||||
| Total current assets | $ | $ | ||||||
| Non-current assets | ||||||||
| Restricted deposits | $ | $ | ||||||
| Deferred issuance costs | ||||||||
| Property, plant and equipment, net | ||||||||
| Severance pay deposits | ||||||||
| Operating lease right-of-use assets | ||||||||
| Total non-current assets | $ | $ | ||||||
| Total Assets | $ | $ | ||||||
The accompanying notes are an integral part of the condensed interim financial statements.
F-2
Maris Tech Ltd.
Condensed Interim Balance Sheets
(Unaudited)
| June 30, 2022 | December 31, 2021 | |||||||
| Liabilities and Equity (net of capital deficiency) | ||||||||
| Current Liabilities | ||||||||
| Short-term bank credit and current maturities of long-term bank loans | $ | $ | ||||||
| Trade payables | ||||||||
| Other current liabilities | ||||||||
| Short-term liabilities due to related party | ||||||||
| Total current liabilities | $ | $ | ||||||
| Long-Term Liabilities | ||||||||
| Long-term loans, net of current maturities | $ | $ | ||||||
| Long-term loans from related party | ||||||||
| Warrants to purchase ordinary shares | ||||||||
| Non-current operating lease liabilities | ||||||||
| Accrued severance pay | ||||||||
| Total long-term liabilities | $ | $ | ||||||
| Total Liabilities | $ | $ | ||||||
| Commitments and Contingencies | ||||||||
| Equity | ||||||||
| Shareholders’ equity (capital deficiency) | ||||||||
| Ordinary shares, par value: Authorized - | ||||||||
| Preferred shares, par value: Authorized - shares and | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Shareholders’ equity (capital deficiency) | ( | ) | ||||||
| Total Liabilities and Equity (net of capital deficiency) | $ | |||||||
The accompanying notes are an integral part of the condensed interim financial statements.
F-3
Maris Tech Ltd.
Condensed Interim Statements of Operations
(Unaudited)
| Six months ended | ||||||||
| June
30, 2022 | June
30, 2021 | |||||||
| Revenues | $ | $ | ||||||
| Cost of revenues | ||||||||
| Gross profit | ||||||||
| Operating expenses | ||||||||
| Research and development | ||||||||
| Sales and marketing | ||||||||
| General and administrative | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| Financial income (expenses), net | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| $ | ( | ) | $ | ( | ) | |||
| Weighted average number of ordinary shares used in computing loss per ordinary share | ||||||||
The accompanying notes are an integral part of the condensed interim financial statements.
F-4
Maris Tech Ltd.
Condensed Interim Statements of Changes in Shareholders’ Equity (Capital Deficiency)
(Unaudited)
| Number
of Shares issued | Number
of Preferred Shares issued | Share capital | Additional paid in capital | Accumulated deficit | Total Shareholders’ capital deficiency | |||||||||||||||||||
| Balance at January 1, 2022 | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Changes during the six months period ended June 30, 2022: | ||||||||||||||||||||||||
| Issuance of ordinary shares and warrants upon IPO | ||||||||||||||||||||||||
| Issuance costs | - | ( | ) | ( | ) | |||||||||||||||||||
| Conversion of preferred shares into ordinary shares | ( | ) | ||||||||||||||||||||||
| Reclassification of warrants to purchase ordinary shares from liability to equity | - | |||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2022 | $ | $ | ( | ) | $ | |||||||||||||||||||
| Balance at January 1, 2021 | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
| Changes during the six months period ended June 30, 2021: | ||||||||||||||||||||||||
| Issuance of Capital, net | - | |||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||
| Balance at June 30, 2021 | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||||
The accompanying notes are an integral part of the condensed interim financial statements.
F-5
Maris Tech Ltd.
Condensed Interim Statements of Cash Flows
(Unaudited)
| Six Months Ended | ||||||||
| June
30, 2022 | June
30, 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss from operations | $ | ( | ) | $ | ( | ) | ||
| Adjustments required to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Financial income | ( | ) | ||||||
| Share-based compensation | ||||||||
| Change in fair value of Warrants | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Increase in accrued severance pay | ||||||||
| Increase in trade receivables | ( | ) | ( | ) | ||||
| Decrease (increase) in other receivables | ( | ) | ||||||
| Increase in inventories | ( | ) | ( | ) | ||||
| Increase in trade payables | ||||||||
| Increase (decrease) in other current liabilities | ( | ) | ||||||
| Net cash used in operating activities | $ | ( | ) | $ | ( | ) | ||
| Cash flows from investing activities: | ||||||||
| Investment in short-term deposits | $ | ( | ) | $ | ||||
| Investment in severance funds | ( | ) | ( | ) | ||||
| Purchase of property, plant and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | $ | ( | ) | $ | ( | ) | ||
| Cash flows from financing activities: | ||||||||
| Repayment of short-term bank credit | $ | ( | ) | $ | ( | ) | ||
| loan received from controlling shareholders | ||||||||
| Issuance of shares and warrants | ||||||||
| Issuance costs paid | ( | ) | ( | ) | ||||
| Deferred issuance costs | ( | ) | ||||||
| Repayment of long-term bank loans | ( | ) | ( | ) | ||||
| Repayment of loan from related party | ( | ) | ||||||
| Net cash provided by financing activities | $ | $ | ||||||
| Increase in cash, cash equivalents and restricted cash | ||||||||
| Cash, cash equivalents and restricted cash at the beginning of the year | ||||||||
| Cash, cash equivalents and restricted deposits at the end of the period | $ | $ | ||||||
The accompanying notes are an integral part of the condensed interim financial statements.
F-6
Maris Tech Ltd.
Condensed Interim Statements of Cash Flows
(Unaudited)
| Cash paid during the period for: | ||||||||
| Interest paid | $ | $ | ||||||
| Supplemental disclosures of non-cash flow information | ||||||||
| Reclassification of warrants to purchase ordinary shares from liability to equity | $ | $ | ||||||
The below table reconciles cash, cash equivalents and restricted deposits as reported in the consolidated balance sheets to the total of the same amounts shown in the consolidated statements of cash flows:
| Six months ended | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted deposits | ||||||||
| Total | $ | $ | ||||||
The accompanying notes are an integral part of the condensed interim financial statements.
F-7
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 1 - General
| A. | Introduction |
Maris-Tech Ltd. (the “Company”) was incorporated in 2008 in Israel. The Company develops, designs and manufactures high-end digital video and audio products and solutions for the professional as well as the civilian and home security markets, which can be sold off the shelf or fully customized to meet customers’ requirements.
On February 4, 2022, the Company closed an initial public
offering (“IPO”). In connection with the IPO, the Company issued and sold
The company operates in Israel and sells to customers in other countries, including the United Kingdom and Switzerland.
| B. | Basis of Presentation |
The accompanying unaudited condensed interim financial statements and related disclosures have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these condensed interim financial statements should be read in conjunction with the Company’s audited financial statements and related notes for the year ended December 31, 2021. The condensed balance sheet as of December 31, 2021 is derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP.
In the opinion of management, all adjustments considered necessary for a fair statement, consisting of normal recurring adjustments, have been included. Operating results for the six-months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022.
Use of Estimates:
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the assets, liabilities, revenue, costs, expenses that are reported in the condensed interim financial statements and accompanying disclosures. These estimates are based on management’s best knowledge of current events, historical experience, actions that the Company may undertake in the future and on various other assumptions that are believed to be reasonable under the circumstances. As a result, actual results may be different from these estimates.
F-8
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 1 – General (Continued)
| C. | Liquidity and Capital Resources |
The Company has experienced net
losses and negative cash flows from operations since its inception and has relied on its ability to fund its operations primarily through
proceeds from sales of Ordinary Shares and warrants of the Company, loans from banks and long-term loans from shareholders. As of June
30, 2022 and December 31, 2021, the Company had working capital of $
On March 24, 2021, the Company
issued
On February 4, 2022, in connection with the IPO,
During February and May 2022, the
Company repaid its liabilities to banks and Yaad Consulting and Management Services (1995) Ltd. (“Yaad”) in the total amount
of approximately $
Therefore, based on management’s projections of the business results for the next twelve months, management concluded that the Company has sufficient liquidity to satisfy its obligations over the next twelve months. Accordingly, the financial statements have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
In connection with the outbreak of COVID-19, the Company has taken steps to protect its workforce in Israel. Such steps include remote work when possible, minimizing face-to-face meetings and utilizing video conference as much as possible, practicing social distancing at facilities and elimination of all international travel. The Company continues to comply with all local health directives.
F-9
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 1 – General (Continued)
Another impact of the COVID-19 pandemic has been on product delivery, where the lead time to procure component parts is longer and a shortage in supply of component parts has increased as the duration of the COVID-19 pandemic has continued. As long as the COVID-19 pandemic continues, the lead time to obtain component parts may be longer than normal and shortage in supply of component parts may continue or worsen. Therefore, the Company maintains a comprehensive network of world-wide suppliers.
Note 2 - Significant Accounting Policies
Except as described in Note 2E below, these interim unaudited condensed financial statements have been prepared according to the same accounting policies as those discussed in the Company’s audited financial statements and related notes for the year ended December 31, 2021.
| A. | Reverse share split |
On August 25, 2021, the Company’s shareholders approved an amendment to the Company’s Articles of Association giving effect to a 4:1 reverse share split. The number of authorized shares was affected by the reverse share split. References made to authorized shares, outstanding shares and per share amounts in the accompanying financial statements and applicable disclosures have been retroactively adjusted to reflect this reverse stock split.
| B. | Basic and diluted net loss per share |
Basic and diluted net loss per Ordinary Share is computed based on the weighted average number of Ordinary Shares outstanding during each year. Shares issuable, are considered outstanding Ordinary Shares including the preferred shares and included in the computation of basic net loss per Ordinary Share as of the date that all necessary conditions have been satisfied.
Warrants to purchase Ordinary Shares,
including warrants to purchase Ordinary Shares classified as liability and Ordinary Shares underlying outstanding options in the amount
of
| C. | Leases |
The Company determines whether an arrangement is a lease for accounting purposes at contract inception. Operating leases are recorded as right-of-use (“ROU”) assets, which are included in right-of-use assets, and lease liabilities, which are included in other payable and non-current operating lease liabilities on the consolidated balance sheets, respectively. As of June 30, 2022, the Company did not have any finance leases.
ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company’s leases do not provide an implicit rate; the Company uses an incremental borrowing rate for specific terms on a collateralized basis based on the information available on either the Accounting Standards Codification (“ASC”) Topic 842 “Leases” (“ASC 842”), transition date or commencement date as applicable in determining the present value of lease payments.
F-10
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 2 - Significant Accounting Policies (continued)
The ROU asset calculation includes lease payments to be made. The ROU asset and lease liability may include amounts attributed to options
to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for operating
leases is recognized on a straight-line basis over the lease term. In addition, the Company has elected the practical expedients related
to lease classification and hindsight.
The Company is a party to two lease agreements for its facilities until October 2024. The Company has the option to extend the agreements for additional periods until October 2027. In addition, the company also leases vehicles for its employees.
The Company’s lease expense was as follows:
| Six months ended | ||||||||
| June 30, | ||||||||
| 2022 | 2021 | |||||||
| Lease expense | $ | $ | ||||||
Cash flow and other information related to operating leases as follows:
| June 30, | ||||
| 2022 | ||||
| Cash paid for amounts included in the measurement of lease liabilities | $ | |||
| Right-of-use assets obtained in exchange for new operating lease liabilities | $ | |||
| Weighted-average remaining lease term — operating leases (years) | ||||
| Weighted-average discount rate — operating leases | % | |||
The following table sets forth a maturity analysis of the Company’s operating lease liabilities:
| 2022 | $ | |||
| 2023 | $ | |||
| 2024 | $ | |||
| 2025 | $ | |||
| 2026 | $ | |||
| 2027 | $ | |||
| Total undiscounted cash flows | $ | |||
| Less: imputed interest | $ | |||
| Present value of operating lease liabilities | $ |
F-11
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 2 - Significant Accounting Policies (continued)
| December 31, 2021 | ||||
| 2022 | $ | |||
| 2023 | $ | |||
| 2024 | $ | |||
| 2025 | $ | |||
| 2026 | $ | |||
| 2027 | $ | |||
| D. | Share based compensation |
The Company applies statement of ASC 718, “Share-based Payment.” ASC 718 requires awards classified as equity awards to be accounted for using the grant-date fair value method. The fair value of share-based payment transactions is recognized as expense over the requisite service period. Forfeitures are accounted for as they occur.
The Company measures the compensation cost related to the options awarded on the grant date and recognize the cost on a straight-line method over the requisite service period of the awards, including awards with graded vesting and no additional conditions for vesting other than service conditions.
Fair value of the equity instrument issued to a non-employee is measured as of the grant date. The fair value of the awards is recognized over the vesting period, which coincides with the period that the counter-party is providing services to the Company.
| E. | Recently issued accounting pronouncements |
As an emerging growth company, the Jumpstart Our Business Startup Act of 2012 (the “JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflect this election.
Accounting Pronouncements Adopted in 2022
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update leases “ASU 2016-02”
regarding FASB ASC 842. The new guidance requires lessees to recognize lease assets and lease liabilities for those leases classified
as operating leases under previous FASB guidance. The Company adopted ASC 842 on January 1, 2022, using a modified retrospective basis
and applied the practical expedients related to the transition. The adoption resulted in an increase of approximately $
F-12
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 2 - Significant Accounting Policies (continued)
Recently Issued Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which replaces the existing incurred loss impairment model with an expected credit loss model and requires a financial asset measured at amortized cost to be presented at the net amount expected to be collected. The guidance will be effective for fiscal years beginning on or after January 1, 2023, and interim periods therein. Early adoption is permitted. The Company is currently evaluating the effect that ASU 2016-13 will have on its financial statements and related disclosures.
Note 3 - Inventories, net
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Raw materials | $ | $ | ||||||
| Finished products | ||||||||
| $ | $ | |||||||
The inventory write-off for the period ended June 30, 2022 and June
30, 2021 was $
Note 4 - Other Current Liabilities
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Employees and related expenses | $ | $ | ||||||
| Provision for warranty | ||||||||
| Accrued expenses | ||||||||
| Current maturities of operating leases | ||||||||
| Government Authorities | ||||||||
| $ | $ | |||||||
Note 5 - Commitments and Contingencies
| A. | Liens |
The Company had recorded floating charges on all of its tangible assets in favor of banks. Upon the closing of the IPO, the Company repaid its liabilities to banks and released all the collaterals it provided to banks.
The Company’s long term restricted deposit
in the amount of $
F-13
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 5 - Commitments and Contingencies (continued)
| B. | Guarantees |
Certain shareholders of the Company
provided a guarantee to the Company’s lenders in the amount of $
Note 6 – Revenues
Disaggregation of revenue
The following table disaggregates the Company’s revenues based on the nature and characteristics of its contracts, for the six months ended June 30, 2022 and 2021:
| Six months ended | ||||||||
| June 30, 2022 | June 30, 2021 | |||||||
| Sales of products | $ | $ | ||||||
| Proof of concept and non-recurring engineering contracts | $ | |||||||
| $ | $ | |||||||
Note 7 – Warrants
The fair value of the warrants issued in March 2021, classified as a liability, as of December 31, 2021 was calculated by independent valuation expert using the Black–Scholes option price model based on the following assumptions:
| Merger and Acquisition (“M&A”) Scenario | IPO Scenario | |||||||
| Expected volatility (%) | ||||||||
| Risk-free interest rate (%) | ||||||||
| Expected Life (years) | ||||||||
| Value per share | ||||||||
| Exercise price (U.S. dollars per share) | ||||||||
In addition, based on management’s
expectations for the merger and acquisition scenario, the value was calculated by performing numerous iterations based on the latest transaction
with a probability assigned to this case of
The fair value of the warrants issued in March 2021, classified as a liability, as of February 4, 2022, was calculated using the Black–Scholes option price model based on the following assumptions:
| Expected volatility (%) | |
| Risk-free interest rate (%) | |
| Expected Life (years) | |
| Value per share | |
| Exercise price (U.S. dollars per share) |
F-14
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 7 – Warrants (continued)
The fair value of the warrants as of
February 4, 2022 was $
For information regarding the warrants issued in the IPO see Note 8.
Note 8 – Equity
| A. | IPO |
On February 4, 2022, the Company issued
and sold in connection with the closing of the IPO
Certain actions were completed in connection with the closing of the IPO, including:
| 1) | The |
| 2) | The Company’s warrants to purchase up to an aggregate of |
| 3) | The Company issued |
| 4) |
| 5) | The Company issued to its legal advisor for the IPO warrants to purchase up to |
F-15
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 8 – Equity (continued)
| 6) | The Company filed with the Israeli Companies Registrar an amendment to its Articles of Association to increase the authorized registered
share capital of the Company to |
| B. | Private Placement |
On
March 24, 2021, the Company entered into a share purchase agreement (the “March 2021 SPA”), pursuant to which the Company
issued an aggregate of
Each of the March 2021 Investors also received one warrant to purchase one Ordinary Share for each Preferred Share issued to such investor. Such warrants are exercisable pursuant to the following terms: (i) if an initial public offering of the Ordinary Shares is consummated by the Company during a period of fifteen months from the issuance date of the warrant, the warrants will be exercisable until March 24, 2026, at an exercise price of $6.1248 per Ordinary Share; or (ii) if no initial public offering of the Ordinary Shares is consummated by the Company during such fifteen month period, the warrants will be exercisable until September 24, 2023, at an exercise price of $7.9888 per Ordinary Share.
The
Preferred Shares qualify to be recognized within permanent equity. Therefore, the consideration in the amount of $
Issuance cost were allocated to profit or loss and equity based on the proportion of the allocated consideration described above.
Note 9 - Share base compensation
On June 27, 2021,
F-16
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 9 - Share base compensations (continued)
On February 4, 2022,
On February 4, 2022,
On February 4,2022,
On April 1, 2022,
F-17
Maris Tech Ltd.
Notes to Condensed Interim Financial Statements
(Unaudited)
Note 10 – Fair value of financial instruments
The Company’s financial instruments consist mainly of cash and cash equivalents, short-term deposit, accounts receivable, restricted deposits for employee benefits, accounts payable, warrants, short-term and long-term loans.
Fair value for the measurement of financial assets and liabilities is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The Company utilizes a valuation hierarchy for disclosure of the inputs for fair value measurement. This hierarchy prioritizes the inputs into three broad levels as follows:
| ● | Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. |
| ● | Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. |
| ● | Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date. |
By distinguishing between inputs that are observable in the market place, and therefore more objective, and those that are unobservable and therefore more subjective, the hierarchy is designed to indicate the relative reliability of the fair value measurements. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
The Company, in estimating fair value for financial instruments, determined that the carrying amounts of cash and cash equivalents, short-term deposit, trade receivables, short-term bank credit, trade payables, short term loans from shareholders are equivalent to, or approximate their fair value due to the short-term maturity of these instruments. The liabilities include long-term loans from shareholders that do not bear any interest, but taking into account the schedule of its maturities and its amount are approximate to their fair value.
Note 11 – Related party transactions
| June 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| Balances with related parties: | ||||||||
| Short-term liabilities due to shareholders | $ | $ | ||||||
| Long -term loans due to shareholders | $ | $ | ||||||
Note 12 – Other events occurred during the period
On June 1, 2022, the
Company announced that its board of directors has authorized a share repurchase plan (the “Repurchase Plan”) allowing the
Company to invest up to $
The Repurchase Plan authorizes the Company’s management to repurchase Ordinary Shares, from time to time, in open market transactions, and/or in privately negotiated transactions or in any other legally permissible ways, depending on market conditions, share price, trading volume and other factors. Such repurchases will be made in accordance with applicable U.S. securities laws and regulations, under the U.S. Securities Exchange Act of 1934, as amended, and applicable Israeli law, and are subject to the approval of the Israeli court, which is meant to ensure that the Company has enough resources for the Repurchase Plan without affecting its other on-going obligations and commitments. The Repurchase Plan does not obligate the Company to repurchase any specific number of the Ordinary Shares and may be suspended or terminated at any time at management’s discretion. As of June 30, 2022, no shares have been repurchased under the Repurchase Plan.
F-18
Exhibit 99.2
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
For the Six Months Ended June 30, 2022
Cautionary Note Regarding Forward-Looking Statements
Certain information included herein may be deemed to be “forward-looking statements”. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” “project” or other similar words, but are not the only way these statements are identified.
These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition, expected capital needs, and expenses, statements relating to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate.
Important factors that could cause actual results, developments, and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:
| ● | our planned level of revenues and capital expenditures; | |
| ● | our belief that our existing cash and cash equivalents as of June 30, 2022 together with the net proceeds from our initial public offering, or the IPO, which was completed on February 4, 2022, will be sufficient to fund our operations through the next twelve months; | |
| ● | our ability to market and sell our products; | |
| ● | our plans to continue to invest in research and development to develop technology for both existing and new products; | |
| ● | our plans to collaborate, or statements regarding the ongoing collaborations, with partner companies; | |
| ● | our ability to maintain our relationships with suppliers, manufacturers, and other partners; |
| ● | our ability to maintain or protect the validity of our European, U.S., and other patents and other intellectual property; | |
| ● | our ability to retain key executive members; | |
| ● | our ability to internally develop and protect new inventions and intellectual property; | |
| ● | our ability to expose and educate the industry about the use of our products; | |
| ● | our expectations regarding our tax classifications; |
1
| ● | how long we will qualify as an emerging growth company or a foreign private issuer; | |
| ● | interpretations of current laws and the passages of future laws; and | |
| ● | the impact of COVID-19 and resulting government actions on us, our manufacturers, suppliers, and facilities. |
The foregoing list is intended to identify only certain of the principal factors that could cause actual results to differ. For a more detailed description of the risks and uncertainties affecting our company, reference is made to our Annual Report on Form 20-F for the year ended December 31, 2021, or our Annual Report, which is on file with the Securities and Exchange Commission, or the SEC, and the other risk factors discussed from time to time by our company in reports filed or furnished to the SEC.
Except as otherwise required by law, we undertake no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
General
Introduction
Unless indicated otherwise by the context, all references in this report to “Maris-tech”, “Maris”, the “Company”, “we”, “us” or “our” are to Maris-tech Ltd. When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:
| ● | “dollars” or “$” means United States dollars; and | |
| ● | “NIS” means New Israeli Shekels. |
You should read the following discussion and analysis in conjunction with our unaudited consolidated financial statements for the six months ended June 30, 2022 and notes thereto, and together with our audited consolidated financial statements for the year ended December 31, 2021 and notes thereto filed with the SEC as part of our Annual Report.
Overview
We are a provider of remote video, audio, telemetry acquisition, distribution and sharing solutions and products, using high-end digital video, audio and wireless communication technologies. We design, develop, manufacture and commercially sell miniature intelligent video and audio surveillance and communication systems, which are offered as products and solutions for the professional as well as the civilian and home security markets. Our products and solutions are sold as off the shelf, standalone and ready to use products, or as customized components that meet our customers’ requirements and integrate into their systems and products. Our customers include companies operating in the drone, robotic, defense, homeland security, or HLS, intelligence gathering, autonomous vehicle and space markets.
On July 25, 2022, we announced the launch of our flagship product – the Jupiter-AI, a high-end multiple-stream video platform with edge artificial intelligence acceleration. We believe that the Jupiter-AI may have a significant positive influence on our future business and revenues.
2
Comparison of the period Ended June 30, 2022 and 2021
Results of Operations
The following table summarizes our results of operations for the periods presented.
| Period Ended June 30, | ||||||||
| U.S. dollars | 2022 | 2021 | ||||||
| Revenues | $ | 967,925 | $ | 1,329,525 | ||||
| Cost of revenues | $ | 651,149 | $ | 646,270 | ||||
| Gross profit | $ | 316,776 | $ | 683,255 | ||||
| Research and development expenses | $ | 650,404 | $ | 402,351 | ||||
| Sales and marketing | $ | 454,208 | $ | 100,511 | ||||
| General and administrative | $ | 1,502,406 | $ | 249,931 | ||||
| Loss from Operations | $ | (2,290,242 | ) | $ | (69,538 | ) | ||
| Financial income (expenses), net | $ | 16,542 | $ | (3,640 | ) | |||
| Net Loss | $ | (2,273,700 | ) | $ | (73,178 | ) | ||
Revenues
Our revenues for the period ended June 30, 2022 were $967,925, representing a decrease of $361,600, or 27%, compared to $1,329,525 for the period ended June 30, 2021. The decrease is due to orders with a later fulfillment date for which revenue has not been recognized. As of August 22, 2022, our backlog was approximately $1.55 million, of which most of the orders are expected to be delivered and be recognized as revenues by the end of fiscal year 2022 and the rest during fiscal year 2023.
Cost of Revenues
Our cost of revenues for the period ended June 30, 2022 was $651,149 representing an increase of $4,879 or 1%, compared to $646,270 for the period ended June 30, 2021. The increase was primarily due to increase in prototypes production cost.
Gross Profit
Our gross profit for the period ended June 30, 2022 was $316,776 representing a decrease of $366,479, or 53%, compared to $683,255 for the period ended June 30, 2021. The decrease was primarily due to the decrease in revenue and the direct effect of such decrease on our gross margin. According to our backlog and management estimations, we believe that our gross margin will increase substantially in the end of fiscal year 2022.
Research and Development Expenses
Our research and development expenses for the period ended June 30, 2022 were $650,404, representing an increase of $248,053, or 62%, compared to $402,351 for the period ended June 30, 2021. The increase was primarily due to an increase in salary expenses.
Sales and Marketing Expenses
Our sales and marketing expenses totaled $454,208 for the period June 30, 2022, an increase of $353,697, or 352% compared to $100,511 for the period ended June 30, 2021. The increase is mainly attributable to expenses related to the recruitment of senior key personnel in the United States and Israel, participation in exhibitions and other marketing-related expenses.
General and Administrative Expenses
Our general and administrative expenses totaled $1,502,406 for the period ended June 30, 2022, an increase of $1,252,475, compared to $249,931 for the period ended June 30, 2021. The increase is mainly attributable to the increase in expenses related to the recruitment of senior key personnel and professional services expenses in connection with the IPO.
3
Financial income (expenses), net
Financial income (expenses), net consist of bank fees and other transactional costs, interest income and expenses, exchange rate differences and the revaluation of outstanding warrants to purchase ordinary shares, no par value, or Ordinary Shares.
We recognized net financial income of $16,542 for the period ended June 30, 2022, compared to net financial expenses of $3,640 for the period ended June 30, 2021. The change was primarily attributable to exchange rate differences and deposits interest income.
Impact of COVID-19
Since the outbreak of the COVID-19 pandemic, We have followed guidance issued by the U.S. and Israeli governments and the other local governments in territories in which we operate to protect our employees. As such, we have implemented work from home where possible, minimized face-to-face meetings and utilized video conference as much as possible and adhered to social distancing rules at our facilities while eliminating of all international travel, which required us to use local representatives to handle presentations and demonstrations for oversees customers.
In addition, and most importantly, the electronics components shortage crisis, a unique result of the COVID-19 pandemic which affected our market segment, has increased the lead time to obtain and the purchase prices of the component parts required for certain of our products, which has also negatively impacted the delivery time of our products to customers and our revenues and profitability. As long as the COVID-19 pandemic continues, the components’ lead time may be longer than normal and shortage in components may continue or get worse. Therefore, the Company maintains a comprehensive network of world-wide suppliers. In order to mitigate such risks, in cases where certain components are purchased from single source manufacturers, the Company has adjusted and modified it designs based on different components from different suppliers, to allow for more versatility and flexibility. Our financial condition and results of operations were not negatively impacted by the COVID-19 pandemic in the period ended June 30, 2022.
We cannot predict the other future potential impacts of the COVID-19 pandemic on our business or operations, and there is no guarantee that any near-term trends in our results of operations will continue, particularly if the COVID-19 pandemic and the adverse consequences thereof return. Additional waves of infections, a continuation of the current environment, or any further adverse impacts caused by the COVID-19 pandemic could further impact employment rates and the economy, affecting our consumer base and divert consumers’ discretionary income to other uses, including for essential items. These events could impact our cash flows, results of operations and financial conditions.
Liquidity and Capital Resources
Overview
We have experienced net losses and negative cash flows from operations since our inception and we relied on our ability to fund our operations primarily through proceeds from sales of Ordinary Shares and warrants, loans from banks and long-term loans from shareholders.
As of June 30, 2022 and December 31, 2021, we had working capital of $12 million and a working capital deficit of $1 million, respectively, and an accumulated deficit of $6.8 million and $4.5 million, respectively, and negative cash flow from operating activity of $2.9 million and $0.8 million for the six months ended June 30, 2022 and 2021, respectively. We anticipate such losses will continue until our products reach commercial profitability.
On March 24, 2021, we entered into a share purchase agreement, which was amended and restated on April 27, 2021 and August 4, 2021, as amended and restated, the March 2021 SPA, pursuant to which we issued an aggregate of 489,812 preferred shares, no par value, or Preferred Shares, to certain investors, or the March 2021 Investors, in a private placement, or the March 2021 Private Placement, for aggregate gross proceeds of $1.5 million. These Preferred Shares were converted into an equal number of Ordinary Shares in connection with the closing of the IPO. The March 2021 Investors also received warrants to purchase up to an aggregate of 489,812 Ordinary Shares. Such warrants will be exercisable until March 24, 2026, at an exercise price of $6.1248 per Ordinary Share.
4
On February 4, 2022, we issued and sold in connection with the closing of the IPO (i) 3,690,477 units, each consisting of one Ordinary Shares, and one warrant to purchase one ordinary share, and (ii) 10,000 pre-funded units, each consisting of one pre-funded warrants to purchase one Ordinary Share and one warrant. The units were sold at an IPO price of $4.20 per unit and the pre-funded units were sold at an IPO price of $4.199 per pre-funded unit. The warrants have an exercise price of $5.25 per Ordinary Share and may be exercised until February 4, 2027 and the pre-funded warrants have an exercise price of $0.001 per Ordinary Share. In addition, the Company also issued and sold 65,247 Ordinary Shares at a price of $4.199, 478,324 pre-funded warrants at a price of $4.198 per pre-funded warrant and 543,571 warrants at a price of $0.001 per warrant pursuant to the partial exercise of the over-allotment option and issued 488,324 Ordinary Shares pursuant to the exercise of the 488,324 pre-funded warrants issued in the IPO at an exercise price of $0.001 per Ordinary Share. In connection with the IPO (including over-allotment and pre-funded warrant exercises), the Company issued and sold 4,244,048 Ordinary Shares and 4,244,048 Warrants and received aggregate gross proceeds of approximately $17.8 million, before deducting underwriting discounts and commissions and before offering expenses. The Ordinary Shares and warrants were approved for listing on the Nasdaq Capital Market and commenced trading under the symbol “MTEK” and “MTEKW”, respectively, on February 2, 2022.
During February and May 2022, we repaid our liabilities to banks and Yaad Consulting and Management Services (1995) Ltd., one of our minority shareholders, in the total amount of approximately $1.4 million and the personal guarantees securing certain of those loans were released. In addition, all the collateral we provided to the banks were also released.
As of June 30, 2022, we had $11,387,228 in cash and cash equivalents and short-term deposits.
Our backlog as of August 22, 2022 was approximately $1,557,000, of which most of it expected to be delivered and be recognized as revenues by the end of 2022 and the rest during 2023. Since January 1, 2022, our backlog increased significantly compared to previous years. We define backlog as the accumulation of all pending orders with a later fulfillment date for which revenue has not been recognized and we consider valid. Our order backlog is comprised of executed purchase orders from high rated leading customers in the defense industries, also referred to as “triple A customers”, customers with which we have had long-standing relationships and governmental agencies. The increase in backlog orders and sales is a result of the Company’s products reaching maturity and validation among our customers. Our management estimates that such sales will continue in the coming year. However, because revenue will not be recognized until we have fulfilled our obligations to a customer, there may be a significant amount of time between executing an agreement or purchase order with a customer and delivery of the product to the customer and revenue recognition. In addition, backlog is not necessarily indicative of future earnings (see “Risk Factors in our Annual Report — Risks Related to Our Business, Industry, Operations and Financial Condition — Amounts included in backlog may not result in actual revenue and are an uncertain indicator of our future earnings” in our Annual Report for further information).
Therefore, based on management’s projections of the business results for the next twelve months, management concluded that the Company has sufficient liquidity to satisfy its obligations over the next twelve months. Accordingly, our unaudited consolidated financial statements for the six months ended June 30, 2022 have been prepared on a basis that assumes the Company will continue as a going concern and which contemplates the realization of assets and satisfaction of liabilities and commitments in the ordinary course of business.
The table below summarizes our cash flows for the periods indicated.
| For the period Ended June 30, | ||||||||
| U.S. dollars | 2022 | 2021 | ||||||
| Net cash used in operating activities | $ | (2,949,778 | ) | $ | (757,716 | ) | ||
| Net cash used in investing activities | (11,086,918 | ) | (13,374 | ) | ||||
| Net cash provided by financing activities | 14,368,024 | 867,712 | ||||||
| Net increase in cash and cash equivalents | $ | 331,328 | $ | 96,622 | ||||
5
Operating Activities
Net cash used in operating activities was $2,949,778 during the period ended June 30, 2022, compared to net cash used in operating activities of $757,716 for the period ended June 30, 2021. The increase in net cash used in operating activities was primarily attributable to net loss for the period ended June 30, 2022, of $2,273,700, an increase of $576,823 in other receivables due to revenue recognition upon non-recurring engineering orders from customers and payment in advance for directors and officers insurance, an increase of $141,701 in inventory due to fulfillment of outstanding orders during the year, and increase in financial income attributed to exchange rate differences and deposits interest.
Investing Activities
Net cash used by investing activities was $11,086,918 for the period ended June 30, 2022, as compared to net cash used in investing activities of $13,374 for the period ended June 30, 2021. The increase is mainly attributable to investment in short term bank deposits and purchase of property, plant and equipment.
Financing Activities
Net cash provided by financing activities was $14,368,024 for the period ended June 30, 2022, as compared to net cash provided by financing activities of $867,712 for the period ended June 30, 2021. The increase is mainly attributable to the closing of the IPO and receiving gross proceeds of $17.8 million before issuance costs ($15.1 million net of issuance costs which include $1.35 million to the underwriter and an additional $1.35 million of other issuance costs).partially offset by repayment of long-term bank loans in the amount of $744,769 and repayment of loan from related party in the amount of $200,000.
Current Outlook
We have financed our operations to date primarily through proceeds from sales of Ordinary Shares, preferred shares, warrants and long-term loans from banks and shareholders. We have incurred losses and generated negative cash flows from operations since our inception.
As of June 30, 2022, our cash and cash equivalents and short-term deposits were $11,387,228. We expect that our existing cash and cash equivalents as of June 30, 2022, together with the short-term deposits will be sufficient to fund our current operations for the next twelve months.
6
In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our future capital requirements will depend on many factors, including:
| ● | the progress and costs of our research and development activities; |
| ● | the costs of manufacturing our products; |
| ● | the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights; |
| ● | the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and |
| ● | the magnitude of our general and administrative expenses. |
Critical Accounting Estimates
We describe our significant accounting policies more fully in Note 2 to our unaudited consolidated financial statements for the six months ended June 30, 2022. There have been no material changes to our critical accounting policies since we filed our Annual Report other than as described in Note 2 to our unaudited consolidated financial statements for the six months ended June 30, 2022.
The discussion and analysis of our financial condition and results of operations is based on our financial statements, which we prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses during the reporting periods. On an ongoing basis, we evaluate such estimates and judgments, including those described in greater detail below. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
7