TIDMSEFA
RNS Number : 6753D
Shefa Gems Ltd
30 June 2021
B"H
30 June 2021
Shefa Gems Ltd.
("Shefa Gems" or the "Company")
Full Year Results for the year ended 31 December 2020
Shefa Gems (LSE: SEFA), a company focused on advanced
exploration and development of multi-gemstone mines in Northern
Israel, is pleased to announce its end year results for the year
ended 31 December 2020.
2020 Highlights
Development Progress
-- Award of a Certificate of Discovery for the Kishon Mid Reach
(Zone 1+2) in Northern Israel, by the Commissioner of Mines at the
Ministry of Energy, Natural Resources Administration in Israel.
-- Timely completion of the processing of bulk samples from the
Kishon Mid-Reach Zone 2 and published a Summary of Pre-commercial
findings from the Kishon Mid-Reach (Zones 1 + 2).
-- Completed first bulk samples from exploration in Kishon Mid-Reach Zone 3.
-- Award ed a renewed Exploration Permit, covering a total of
173,635 Dunams (17,363 hectares) , by the Commissioner of Mines at
the Ministry of Energy, Natural Resources Administration in
Israel.
-- Commenced a target working plan for the prioritisation and
development of the most visible potential deposits without equity
dilution.
-- Awarded a renewed Prospecting Permit, covering a total of
312,500 Dunams (31,250 hectares) by the Commissioner of Mines at
the Ministry of Energy, Natural Resources Administration in
Israel.
-- Completed a bulk sample from exploration in the 'Bat Shlomo'
("BTS") location, showing good results.
-- Awarded a new Prospecting License, for the BTS location,
covering a total of 990 Dunams by the Commissioner of Mines at the
Ministry of Energy, Natural Resources Administration in Israel.
-- Promoting world recognition : The mineral inclusions
('Carmeltazite') in the company's exclusive Gemstone Carmel
Sapphire(TM), was chosen to be Mineral of the Year 2018 by the
IMA.
-- Published initial gemstone inventory, and commenced a
programme of gem visual testing, initial branding and marketing
strategy.
Corporate and Financial
-- Appointment of Ms. Tali Shalem, as Chief Executive Officer of
the company (the late founder, Mr Avi Taub's daughter) and
retirement of Vered Toledo the previous CEO.
-- Addition of Mr Zvi Nemeth and Mr Nathan Drukman to the board
and retirement of Mr Hanoch Erlich.
-- Raised GBP 902,000 in equity by conversion, mainly from new
shareholders to fund its development activities.
-- Completion of conversion to equity of all investment made by
June 2020, in a total amount of GBP1,424,000 (including the above
GBP 902,000 raised in H1 2020 and the amount raised in H2
2019).
-- A full debt repayment, of approximately US$650,000 in cash
and equity was received from major shareholder Shefa Yamin Ltd
-- Received a loan from one of the company's officers in the
total amount of of GBP192,000 and another loan from a shareholder
in the total amount of of GBP151,000 .
Post Period
-- Timely filed an initial application for mining rights for the
Kishon Mid-Reach, that will be examined for approval by the
Commissioner of Mines , only after the completion of the
construction planning procedures and the authorities and
landowner's approval for rezoning.
-- Carried out consultations in order to promote the regulatory
process and negotiated with service providers in accordance with
the guidelines of the certificate of discovery - showing new
information on the complexity and cost of the regulatory procedures
in relation to licensing of the commercial gem mining in the Kishon
area.
-- Prepared a target working plan for the development of the
primary deposits and other potential locations in the Prospecting
Permit area and the Exploration Permit area - showing several
potential projects, the actions that are still required in each of
the potential locations, and the costs that are still required
accordingly.
-- Commenced an internal strategic review of the company
business activities and mining assets value - following the reviews
on regulation and costs, and also re-examined the share trading
capacity when it is based solely on gemstone exploration activity
(pre-profitable mining).
-- In addition, the Company does not know, at this point, what
the effects of the Coronavirus will be on the time schedule for
advancing and assumes that there will be minor delays in the
scheduling, that are not within the Company's control.
-- Accordingly, The Company announced on 1 June 2021 that it had
entered into the Agreement with the Shany Group to distribute the
Company's current mining business to all of the Company's existing
shareholders via a dividend in specie, raise new funds for the
Company, change the Company's name, make certain changes to the
Board and change the Company's focus of activity to a cash shell
seeking an acquisition in the web technology and software space.
The Independent Directors consider that it is in the best interest
of the Company and Shareholders as a whole to proceed with the
Proposed Combined Transaction and recommend that Shareholders vote
in favour of the Resolution to be proposed at the Special General
Meeting (A full and detailed Circular for the general meeting
regarding the terms of the proposed transaction for the approval of
the shareholders, the schedule for execution, and the voting
options, will be published in the coming days.
Tali Shalem, CEO of Shefa Gems, said:
" Despite the Covid-19 crisis that is still in full swing, it
has been a very encouraging year as the Company has achieved
several key milestones . Nevertheless, having taken into account
the new data on the complexity of regulation and the high costs
still required for exploration, we understood that there was a need
to change the strategy, and as a result of lengthy negotiations,
which were carried out under a number of key objectives, including
both the benefits for the Company and its Shareholders, we believe
that the combined transaction we are asking shareholders to approve
(as will be outlined in more detail in the Circular of the SGM), is
the best way forward - including by, promoting profitability and
new opportunities in new rising sectors using the Israeli
innovation opportunities, closing burdensome liabilities, cutting
costs, and also preserving the shareholders' holdings in the gem
mining in Israel (the Company's original field of activity). -
- Ends -
Enquiries
Shefa Gems Ltd
Michael Rosenberg, OBE - Chairman
Tali Shalem - Chief Executive Officer +44 7785 727595
www.shefayamim.com +972 50 447 5770
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VSA Capital Limited - Financial
Adviser
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Andrew Raca +44 20 3005 5000
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SI Capital Limited - Broker and
Strategic Adviser
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+44 20 3871 4038 / +44
Nick Emerson and Jon Levinson 1483 413500
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Notes to Editors
About Shefa Gems Ltd
Shefa Gems Ltd (LSE: SEFA) is an explorer and developer of
precious gems deposits operating in Northern Israel. Exploration
activity is managed by professionally skilled and technically
competent personnel and is accompanied by an international team of
geological experts. All exploration activities are conducted under
international standards and the internationally recognized SAMREC
2016 Code.
The Company holds three permits, granted to it by the
Commissioner of Mines at the Ministry of Energy, Natural Resources
Administration, Israel, extend over an area of approximately
488,366 Dunams (48,836 hectares) that includes the Kishon River,
the volcanic bodies on Mount Carmel, the Zevulun and Yizre'el
valleys and their margins.
Shefa Gems has established a "Source to Sink" geological model
and the presence of a Target Mineral Assemblage of gemstones ("TMA
Suite") in both primary volcanic sources and in secondary alluvial
deposits lying within the Kishon catchment, on Mount Carmel and in
the Zevulun and Yizre'el valleys and their margins. The TMA suite
comprises Precious Stones (Diamond, rare natural moissanite,
sapphire, ruby, Carmel Sapphire(TM), garnet, hibonite, spinel,
ilmenite) and heavy minerals including zircon and rutile.
On March 2020, the Quarries and Mines Branch of the Ministry of
National Infrastructures of the State of Israel has awarded a
Certificate of Discovery to the Company covering the projected
gemstone mine development in the Kishon Mid Reach, Zones 1 and 2.
The Certificate of Discovery is the culmination of the Company's
successful exploration activities and market analysis; and signals
the beginning of the process towards future commercial mining. 20
years of exploration in the Kishon valley have brought the Company
one step closer in the establishing Israel's first and only future
precious gemstone mine, originally identified and progressed by the
founder of the company, the late and much missed Abraham (Avi)
Taub.
Alongside its exploration activities, the Company is developing
a "Mine to Market" strategy to promote unique jewellery collections
utilising Shefa Gems' suite of precious gemstones.
The Company upholds environmental values and protects the nature
in the areas where it operates, cooperating fully with all
authorities.
For further information please visit the website at
www.shefagems.com
Overview
Operational Review
Development Progress:
Award of Certificate of Discovery for the Kishon Mid Reach (Zone
1+2) Northern Israel
The Quarries and Mines Branch of the Ministry of Energy of the
State of Israel has awarded a Certificate of Discovery to the
Company covering the projected gemstone mine in the Kishon Mid
Reach, Zones 1 and 2.
The Certificate of Discovery, dated 17 March 2020, is the
culmination of the Company's successful exploration activities and
market analysis; and signals the beginning of the process towards
commercial mining in the first and only precious gemstone mine,
originally identified and progressed by the founder of the company,
the late and much missed Abraham (Avi) Taub.
The award of the Certificate of Discovery (No. 869D12) under
Article 39 of the Mines Ordinance enables and requires Shefa Gems
to proceed with mine planning procedures with the Israel Lands
Authority and other relevant planning institutions and to prepare a
mining plan that demonstrates its commercial feasibility.
An initial application for mining rights was filed by the
Company on April 2021 - and will be examined for approval by the
Commissioner of Mines , only after the completion of the
construction planning procedures and the authorities and
landowner's approval for rezoning.
Timely completion of the processing of bulk samples from the
Kishon Mid-Reach Zone 2 - and publication of Summary of
Pre-commercial findings from the Kishon Mid-Reach (Zone 1 + 2)
In H1 reports of 2019, the company undertook to complete the
processing of all bulk samples from the Kishon Mid-Reach Zone 2, by
August 2020 .
In July 2020, and despite the Covid's delays, the company
completed its processing and published a Summary of Pre-commercial
findings from the Kishon Mid-Reach (Zone 1 + 2) as follows: Zone 1:
9,778 carats recovered from a total of 14 bulk samples and 6,384
tons of palaeo gravels giving a raw sampling grade of 153 carats
per hundred tons. The largest gems recovered were: 33.3ct Carmel
sapphire(TM), 13.6ct Garnet, 5.7ct Sapphire, 6.2ct Spinel, 2.8ct
Hibonite and 1.7ct Ruby. Zone 2; 8,319 carats recovered from a
total of 30 bulk samples and 6,094 tons of palaeo gravels giving a
raw sampling grade of 136.5 carats per hundred tons. The largest
gems recovered were: 6.9ct Spinel, 5.72ct Sapphire, 5.26ct Carmel
Sapphire(TM) and a 4.1mm of Natural Moissanite, the largest natural
moissanite ever found.
Exploration in Zone 3 of the Kishon Mid-Reach
Following the excellent progress and encouraging results from
exploration campaigns in Zone 1 and Zone 2, another one of Shefa
Gems' goals is to expand its exploration efforts in Zone 3.
Implementing cost reduction goals, during January 2020, as part
of infrastructure work carried out by the Israeli Water Company
(Mekorot) in the Kishon Mid reach zone 3 area, approximately 1,500
tons of Gravel have been transported for treatment and analysis in
the Company's operational site in Akko.
Post Period - In August 2020 the company completed the
processing results for this first bulk sample from Zone 3, and a
total of 781.24 Carats of gemstones were recovered from 1,531
tonnes ('t') of basal gravels with an overall TMA recovered grade
of 51.03 carats per hundred tonnes ("cpht") at a bottom screen size
of 1mm.
The results from this first bulk sample of Zone 3, together with
the excellent grade achieved in Zone 1 and 2, further highlight the
potential of the Kishon Mid-Reach deposits.
The company will be preparing further resource delineation
drilling campaigns in the Kishon Mid-Reach Zone 3, as per the
development of regulation in Zone 1+2.
Renewal of Prospecting Permit and Exploration Permit
In addition to the Kishon Mid-Reach Certificate of Discovery for
Zone 1+2, the company has 2 additional permits: Prospecting permit
and Exploration permit.
These 2 permits extend over an area of approximately 488,113
Dunams (48,811 hectares) that includes the Kishon River, the
volcanic bodies on Mount Carmel, the Zevulun and Yizre'el valleys
and their margins - Tivon-Alonim Hills and Nazareth range.
On February 2020, the Commissioner of Mines at the Ministry of
Energy, Natural Resources Administration in Israel has renewed the
Company's Prospecting Permit, covering a total of 314,478 Dunams
(31,447 hectares). The permit provides the Company prospecting
rights for diamonds, gold and precious stones over the permitted
areas for a period of a year and entitles the Company to conduct
all required actions connected with prospecting for these
minerals.
On July 2020 the Commissioner of Mines at the Ministry of
Energy, Natural Resources Administration in Israel has renewed
exploration permit 869B11 for a further year. The renewed
exploration permit, 869B13, includes four volcanic bodies on Mount
Carmel; RMC (Rakefet Magmatic Complex), Muhraka, Har Alon and Beit
Oren, the eastern slope of Mt. Carmel, Zevulun and west Yizre'el
valleys, and part of the Kishon River. Exploration Permit 869B13
covers a total of 173,635 Dunams (17,363 hectares) and entitles the
Company to continue conducting geological exploration at the site
including further drilling and excavations.
The Kishon Mid Reach Zone 1 and 2 was extracted from this permit
after declared as Discovery (Certificate 869D12).
Post Period - On the Commissioner of Mines at the Ministry of
Energy, Natural Resources Administration in Israel has renewed the
Company's Prospecting Permit, covering a total of 312,500 Dunams
(31,250 hectares). The permit provides the Company prospecting
rights for diamonds, gold and precious stones over the permitted
areas for a period of a year and entitles the Company to conduct
all required actions connected with prospecting for these
minerals.
Following a prioritization report made by the company's
geologists in relation to the magmatic bodies on Mount Carmel, and
in accordance with the summary of data researched over the years in
this area, it was decided in November 2020 to perform a Bulk Sample
(BS-1260), which final results allowed the company to progress,
relatively quickly, to the regulatory status of a Prospecting
License for this project.
On 22th of February 2021 the company announced that it has been
granted its second Prospecting Licence (#1010C1), for one of the
company's primary exploration targets, the Bat Shlomo ('BTS')
Project, taking it towards a 'Certificate of discovery' and
potentially a mining licence.
The 'BTS' project is one of the company's primary exploration
targets (Magmatic Body) in the Carmel area, and is spread over an
area of 990 Dunams (99 Hectares) which were extracted from the
prospecting permit.
Promoting Marketing strategy
In February 2019, the company launched a preliminary Market Test
in order to obtain preliminary understanding of the market's
ability to accept the valuation of the Holy Land Gems, and in
particular for the new gems: the Carmel sapphire(TM) and the
Natural Moissanite. This preliminary Market Test was performed by
the 'Heaven on Earth' jewellery collection designed by the
international jewelry designer Mr. Yossi Harari and sold mainly at
his flagship store in Dallas USA. As of the date of this reports,
it can be said that the customer (the American at this test),
estimates the value of the gems from the Holy Land according to the
company's estimates and even more.
Notwithstanding the foregoing, and in relation to the
presentation of commercial profitability for the purpose of
complying with the terms of the license, and as part of the 'Mine
to Market' development strategy - the company needs to perform
additional actions for promoting the marketing targets.
The mineral inclusions ('Carmeltazite') in the company's
exclusive Gemstone Carmel sapphire(TM), was chosen to be Mineral of
the Year 2018 by the IMA
On February 2020, The International Mineralogical Association
("IMA") an international scientific group of 40 national societies
that recognizes new minerals and new mineral names, has chosen the
Shefa Gems' 'Carmeltazite' (the mineral inclusions in the company's
exclusive Gemstone 'Carmel Sapphire') as the Mineral of the Year
for 2018 ( https://www.shefagems.com/ima-mineral-of-the-year-2018
).
Carmeltazite is a complex oxide (ZrAl2Ti4O11) which forms
inclusions in blue corundum crystals - the exclusive 'Carmel
Sapphire' - found in Cretaceous pyroclastic rocks and associated
alluvial deposits at the Kishon Mid-Reach in northern Israel.
Gem Visual Testing - The company began in August 2020 to perform
testing and examination processes in order to test what are the
maximum visual qualities of each of the company's gem types. In
order to bring the natural visual qualities of the raw gem to a
state of perfect radiate luxury gem - the treatment on the gem
includes high-level polishing and in some cases soft heating in
favor of enhancing the natural color or transparency. The cost at
this stage of testing is negligible. The costs of the above
treatment at the commercial quantities stage will be calculated and
clarified after receiving the test results.
Initial Branding and Exposure - Significant exposure requires
significant expenses. Had it been made directly by the company - it
could have significantly impaired profitability. That is, the
company is interested that the significant marketing expenses will
be reduced from the jewelry margin and not from the gem direct
profits. This conclusion requires the company to consider options
for cooperation on a percentage basis or otherwise, with marketers,
manufacturers, and retailers. And/or with big international brands
that already have significant exposure and relevant audiences.
However and in order to reach those collaborations, we need to
perform initial branding and exposure, and building the brands
special "story". (ie graphics, copywriting, PR, registration, atc.)
The company is currently negotiating with companies that provide
the services required, and decisions will be made accordingly
regarding the date of implementation and the method of
financing.
Corporate Review
Appointment of new CEO
Following the sad passing of Avi Taub, the founder of Shefa
Gems, and with effect from 1st June 2020 the company appointed new
CEO - Ms Tali Shalem, the daughter of the late Avi Taub and her
appointment as CEO was approved by the Board of Shefa.
From 2008 until 2018 Tali served as second to Avi Taub and was
involved in all aspects of the business including legal and
regulatory procedures, finance and fund raising. Prior to that she
worked for many years at the family jewellery company with
experience in all stages of jewellery production sales and finance.
Since 2019 she has been the owner of a new marketing company who
had a website for the sale of gems and jewellery and worked with
suppliers from Tel Aviv and manufacturers from Israel and
Europe.
Board changes and 2020 AGM results
At the Annual General Meeting of the Company, held on August 5,
2020 all resolutions were duly passed, Including: The
re-appointment of Barzely & Co. as the Company's auditors and
to authorise the directors of the Company to determine their
remuneration. The amendment of section 41 in the Company's Articles
of Association (stating that: The Board of Directors of the Company
shall consist of not less than four Directors nor more than eight
Directors (including External Directors). To re-elect Mr. Michael
Rosenberg as an executive director of the Company. (Mr. Michael
Rosenberg also serves as the Chairman of the company). To re-elect
Mr. Yosef Itshak Taub as an executive director of the Company. (Mr.
Yosef Itshak Taub also serves as the Business Development Manager
of the company). To re-elect Mr. David Israel Nachshon as a
non-executive director of the Company. To re-elect Mr. Gershon
Fraenkel as a non-executive director of the Company. To re-elect
Mr. James Campbell as a non-executive and external (Independent)
director of the Company. To re-elect Mrs. Nathalie Schwarz as a
non-executive and external (Independent) director of the Company.
To confirm the appointment of Mr. Zvi Nemeth (ADV) as a
non-executive director of the Company (Instead of Mr. Ehrlich, who
did not renew his candidacy). To appoint Mr. Natan Drukman (ADV) as
a new executive director of the Company (Mr. Drukman also serves as
the company legal secretary).
Board review of the company's activities and an examination of
the possibilities for promoting profitability
During the second half of 2020, the company began conducting a
number of reviews:
a) Carried out consultations in order to promote the regulatory
process, and negotiated with service providers in accordance with
the guidelines of the certificate of discovery - showing new
information on the complexity and high costs of the regulatory
procedures in relation to licensing of the commercial gem mining in
the Kishon area.
b) Prepared a target working plan for the development of the
Primary Deposits and other potential locations in the Prospecting
Permit area and the Exploration Permit area - showing several
potential projects, the actions that are still required in each of
the potential locations, and the high costs (with low level of
certainty) that are still required accordingly.
c) Commenced an internal strategic review of the company
business activities and mining assets value - following the reviews
on regulation and costs, and also re-examined the share trading
capacity when it is based solely on gemstone exploration activity
(pre-profitable mining).
Following this review, it is now apparent that, due to recent
regulatory changes, the exploitation of these assets is likely to
take longer than previously anticipated and, in addition, may
require further funding. While in the longer term it is hoped that
the eventual value of the mining assets will prove to be
attractive, the present day value of these assets needs to be
impaired to reflect the current uncertainties on the timing of
eventual exploitation and, accordingly, it is proposed to impair
that value to a more adjusted level.
The Company also re-examined the share trading capacity when it
is based solely on gemstone exploration activity (pre-profitable
mining), both by observing the Company's stock trading in recent
years, and also by observing the stock trading of other exploration
companies in the world, It is clear from these examples that since
shefa is a relatively small exploration company and the time
expected before full mining can commence is now much longer than
anticipated it is not economic to continue to bear costs of being a
listed company and that any future funds raised on the basis of
these mining prospects, should be entirely focussed on the
development of these further mining opportunities.
Accordingly, it was first decided to transfer all the Company's
exploration and mining assets to the Company's fully owned (100%)
subsidiary, Shefa in Israel (G.M.) Ltd. (a private company
registered in Israel).
In addition, The Company announced on 1 June 2021 that it had
entered into the Agreement with the Shany Group to distribute the
Company's current mining business to all of the Company's existing
shareholders via a dividend in specie, raise new funds for the
Company, change the Company's name, make certain changes to the
Board and change the Company's focus of activity to a cash shell
seeking an acquisition in the web technology and software space.
The Independent Directors consider that it is in the best interest
of the Company and Shareholders as a whole to proceed with the
Proposed Combined Transaction and recommend that Shareholders vote
in favour of the Resolution to be proposed at the Special General
Meeting (A full and detailed Circular for the general meeting
regarding the terms of the proposed transaction for the approval of
the shareholders, the schedule for execution, and the voting
options, will be published in the coming days.
The Covid-19 Coronavirus Pandemic
During January 2020 the Covid-19 Coronavirus was released in
China and has since spread worldwide, including in Israel, leaving
chaos and uncertainty wherever it has touched civilization. The
scope pf economic activity has been sharply reduced, including in
Israel, and there exists a suspicion that there will be a global
recession as a result. As part of the coping mechanism and efforts
to restrain the virus from spreading, steps are being implemented,
including in Israel, that are drastically limiting mobility and
social gatherings.Preparations of the Company for further
expansions in the global economic environment as well as possible
implications for these developments on Group operations are not
under Company control, are uncertain and are based on information
presently available to the Company, that is based, inter alia, on
information in Israel and worldwide as well as on guidelines of the
relevant Authorities that could possibly change at any moment. As
long as the global crisis continues for a lengthy period of time,
this is likely to result in significant deterioration of the
operating results for the Company, including its financial ability
to cope with the situation
Effect of the Coronavirus on the Company
The Company's recent efforts revolve around prompting extensive
exploration work and working with the various Authorities in order
to advance the planning and regulation procedures that will enable
it to commence commercial mining. The Company does not know, at
this point, what the effects of the Coronavirus will be on the time
schedule for advancing and assumes that there will be minor delays
in the scheduling, that are not within the Company's control.
During the months of March until may 2020, the company's employees
were required to go on "unpaid leave" because the state demanded
the closure of all factories and offices (state quarantine). But
immediately when the quarantine was uplifted, all the company's
employees returned to work in full force. And that delay did not
have any significant effect on the company's schedule.
Concurrently, the Company does not know, if there will be
difficulties with mobilization of capital in accordance with the
current world economic situation or if the ability and timing of
the Company to raise additional capital will be impacted by these
unprecedented external factors.
Financial Review
In 2020 the Company recorded a comprehensive loss for the
period, of TNIS (in thousands) 3,988 (2019: TNIS 7,929) equating to
a loss per share of NIS 0.021 (2019: 0.049). The loss was
attributed to general and administrative expenses, and financing
expenses due to adjustment of the value of a financial liability at
fair value. As of December 31, 2020, the Company's cash and cash
equivalents stood at TNIS 483 (2019: TNIS 6).
General and administrative expenses
The decrease is mainly due to a decrease in marketing and
advertising expenses and expenses of professional advisers .
Financial expenses
Financing expenses increase due to adjustment of the value of a
financial liability at fair value.
Loan Conversions
On June 30, 2020 the Company issued 28,922,507 shares and
28,900,715 warrants to various investors following conversion of
loans in the amount of GBP GBP1,423,939. The shares were converted
at a price of 5 pence per share. The company allotted warrants at
an exercise price of 10 pence for a 24-month period .
The Company received from investors loans convertible to shares
in the amount of GBP GBP901,755 In the first half of 2020..
Completion and Receipt of Debt Settlement from the Company's
largest shareholder (hereinafter: 'TopCo')
On August 2020 (post period) the company received NIS330,000
(approx. US$100,000) in cash and 313,000 shares in its major
shareholder, 'Shefa Yamim Ltd.' ("TopCo"), at a share value of NIS
6 on the day of the settlement (approx. US$550,000) together in
settlement of debts owed to the Company in accordance with its
financial statements published on 30 April 2020. The settlement
reflects the full value of the original debt of NIS 2,200,000
(approx. US$650,000). Following the settlement, Shefa Gems will
hold approximately 2.9% of the issued capital of TopCo.
This settlement and its completion are in fulfilment of a court
order sanctioned by the Tel Aviv District Court, as part of a
capital reorganization of TopCo to create an investment vehicle
mainly engaged in the FinTech sector.
Amongst further details of this settlement, Shefa Gems has
agreed not to dispose of its shares in TopCo on the market for a
period of 6 months from 20 July 2020. The Company may, at its
discretion, sell the shares at any stage through a bilateral
transaction. The Company will decide how to proceed according to
the performance of TopCo's shares in the market and the financial
needs of Shefa Gems.
TopCo currently holds 68,004,420 shares in Shefa Gems,
representing approximately 33.8% of its issued share capital. As
previously announced, and as part of TopCo's capital
reorganization, provision has been made for all shareholders of
TopCo (who held shares on 26 July 2020 ("the record date"), to
elect to exchange 10% of their shareholding in TopCo into existing
shares held by TopCo in Shefa Gems (in the amount depending on the
percentage they held in TopCo on the record date). This election
has been made available to them by the Tel Aviv District Court
until 26 July 2021.
To the extent that TopCo shareholders elect to exchange their
TopCo shares for shares in Shefa Gems, this will reduce the
shareholding by TopCo in Shefa Gems. This process will not result
in the issue of any new shares by Shefa Gems.
Outlook
As stated, following the company's review, it was decided to
transfer all the Company's exploration and mining assets to the
Company's fully owned (100%) subsidiary, Shefa in Israel (G.M.)
Ltd. (a private company registered in Israel).
the Company also announced on 1 June 2021 that it had entered
into the Agreement with the Shany Group to distribute the Company's
current mining business to all of the Company's existing
shareholders via a dividend in specie, raise new funds for the
Company, change the Company's name, make certain changes to the
Board and change the Company's focus of activity to a cash shell
seeking an acquisition in the web technology and software
space.
In light of the decision to distribute the company's assets of
exploration and liabilities, and as stated by the auditors, the
Company did not implement IFRS 5 - non current assets held for sale
and discontinued operations. Accordingly we estimate that the value
of the exploration assets will be lower than the amounts presented
in the financial statements.
Regarding the continuation of the gem mining in Israel - all of
the exploration activity of the Subsidiary, in the relevant
exploration areas, will be carried out in accordance with the
relevant regulations, and the material is processed in the
operational complex and laboratories in the city of Akko by a
professional Israeli team with extensive experience, accompanied by
professional consultants with international expertise in the
field.
All business activities of the Subsidiary will be managed in
accordance with the Israeli Companies Law, and in accordance with
the rules of private corporate governance (including a management
hierarchy with a board of directors that will audit the
professional management team).
The professional management team will include the team that
managed the Company's exploration activities including, the CEO
(Tali Shalem), Business Development Manager (Yosef Taub),
Operations Manager (Menachem Taub), CFO (David Ben David), Chief
Geologist (Dr. Reli Weld), and the Certified Geological Adviser and
CP (James Campbell).
The Subsidiary intends to finance both the day-to-day activity
and the activity required in accordance with the work plans in the
Permits and Licenses in the following manner:
-- From the revenue that will come from the sale of the limited
quantity of gems in stock, as part of a strategic marketing plan
with the aim of exposing the gems to the market under a registered
brand.
-- From investments in sub-projects (such as the acquisition of
a percentage of future income in one of the potential deposits, in
accordance with and subject to the existence of economic
feasibility).
Although, as mentioned, the management team believes that the
prospects are positive, the staff is professional, and the work
plans are good - it should be clarified that the ability of the
management team of the Subsidiary to develop the projects into
active mines with commercial mining licenses, depends entirely on
the ability to fund the required activity, satisfy the Israeli
regulations, and also in the ability and desire of Company
executives to continue.
Having said that, the management team of the Subsidiary have
confirmed that as long as it will be possible, from an economic and
regulatory point of view, they will do their best to realize the
original vision of the late founder, Mr. Avi Taub, which included
to maximize all possible benefit to the Shareholders.
Following the Proposed Distribution of the subsidiary's shares
to the company shareholders, as outlined above, the Company will
remain listed as a cash shell on the Main Market of the London
Stock Exchange and will look to make an acquisition of a suitable
company in the web technology and software space. Should an
acquisition be completed it would constitute a reverse takeover
under the Listing Rules and the Company would apply for the
readmission of its shares to the Official List and the Main Market
of the London Stock Exchange.
Although the Company has currently not identified a suitable
acquisition target, the Proposed Directors will look for an
acquisition target in the web technology and software space. The
Company will particularly focus on the key areas of high growth
delivering digital services to consumers in areas such as leisure,
financials, e-commerce, gaming, as well as disruptive technologies
such as blockchain and crypto currencies. In addition, the Company
will also look at potential targets in the software space, the
areas of B2B software, Customer Relationship Management software
and corporate risk management software (presenting a good
opportunity for the Company to create shareholder value).
Should the Company identify a suitable target, it will, in
accordance with the Listing Rules, publish a prospectus containing
all information required for the approval of a reverse takeover. At
present, there can be no assurance that the Company will be able to
identify a suitable acquisition target or that it will be able to
complete any contemplated transaction and, as a consequence, the
Company's admission to the Standard Listing segment of the Official
List and trading on the London Stock Exchange's Main Market for
listed securities may be cancelled.
A full and detailed Circular for the general meeting regarding
the terms of the proposed transaction for the approval of the
shareholders, the schedule for execution, and the voting options,
will be published in the coming days.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
STATEMENTS OF FINANCIAL POSITION
NIS in thousands
December 31,
Note 2020 2019
----- ----------------- -------
ASSETS
Non-Current Assets:
Fixed assets, net 6 1,007 1,494
Right of use assets 15 1,645 1,751
Loans to parent company 7 - . - 1,116
Interested party - . - 77
Assets for exploration and evaluation
of precious stones 8 63,098 60,628
Total non-current assets 65,750 65,066
------------- -------
Current Assets:
Cash and cash equivalents 483 6
Marketable securities 926 - . -
Short-term deposit in bank 4 - . - 14
Trade receivables - . - 51
Other accounts receivable 5 220 145
Total current assets 1,629 216
------------- -------
Total Assets 67,379 65,282
============= =======
EQUITY AND LIABILITIES
Equity 17 55,609 56,422
------------- -------
Non-Current Liabilities:
Long-term loans from interested party
and others 14 433 - . -
Liability at fair value 13 6,187
Long-term leasehold liabilities 15 1,302 1,492
Liability for severance pay 3h 154 164
Options convertible to shares 16 6 1,120
------------- -------
Total Non-current Liabilities 8,082 2,776
------------- -------
Current Liabilities:
Short-term credit from bank and
others 9 1,789 762
Trade payables 10 681 1,071
Interested parties 11 88 211
Other accounts payable 12 670 1,114
Short-term liability at fair value 13 279 1,792
Loans convertible to shares 13 181 1,134
Total current liabilities 3,688 6,084
------------- -------
Total Equity and Liabilities 67,379 65,282
============= =======
The accompanying notes are an integral part of the financial
statements.
June 30, 2021
------------------ ------------------ ------------ ----------------
Date of Approval Michael Rosenberg Tali Shalem David Ben David
of the Financial Chairman of CEO CFO
Statements the Board of
Directors
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
NIS in thousands (except for income (loss) per share)
For the Year Ended December
31,
Note 2020 2019 2018
------ ---------- --------------- ------------
General and administrative
expenses 18 (1,915) (3,123) (3,410)
Amortization of assets for
exploration 8 - . - (2,409) - . -
---------- --------------- ------------
Operating loss (1,915) (5,532) (3,410)
Other income (expenses),
net 19 1,195 (1,023) - . -
---------- --------------- ------------
Loss prior to financing (720) (6,555) (3,410)
Financial expenses (4,382) (1,534) (218)
Financial income 1,114 160 9,637
---------- --------------- ------------
Financial income (expenses),
net 20 (3,268) (1,374) 9,419
---------- --------------- ------------
Profit (loss) for the year and
comprehensive profit (loss) for
the year (3,988) (7,929) 6,009
========== =============== ============
Basic and diluted income
(loss) per share (in NIS) 24 (0.021) (0.049) * 0.0431
========== =============== ============
* Subsequent to the split, an adjustment of the income (loss)
per share was performed.
The accompanying notes are an integral part of the financial
statements.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
STATEMENT OF CHANGES IN EQUITY
NIS in thousands
Capital
Capital Reserve from
Reserve Transactions Total Equity
Share Additional for with Accumulated Attributed to
Capital Paid-in Receivables Share- Shareholder Deficit Shareholders
Capital, in Regard Based
net to Shares Payments
--------- ------------ ------------ ---------- -------------- ------------- -------------------
Balance as of
January 1, 2018 13,905 93,742 - . - 5,583 6,312 (67,054) 52,488
- . -
Comprehensive
Income for the
year - . - - . - - . - - . - - . - 6,009 6,009
Issuance of
shares 319 595 - . - - . - - . - - . - 914
Share based
payment - . - - . - - . - 133 - . - - . - 133
Balance as of
December 31,
2018 14,224 94,337 - . - 5,716 6,312 (61,045) 59,544
- . -
Comprehensive
Loss for the
year - . - - . - - . - - . - - . - (7,929) (7,929)
Issuance of
shares 3,006 1,960 (205) - . - - . - - . - 4,761
Share based
payment - . - - . - - . - 46 - . - - . - 46
------------
Balance as of
December 31,
2019 17,230 96,297 (205) 5,762 6,312 (68,974) 56,422
- . -
Comprehensive
Loss for the
year - . - - . - - . - - . - - . - (3,988) (3,988)
Issuance of
shares ** 2,890 80 205 - . - - . - - . - 3,175
Balance as of
December 31,
2020 20,120 96,377 - . - 5,762 6,312 (72,962) 55,609
========= ============ ============ ========== ============== ============= ===================
* See Note 1d, 17f. -
.
** Net of fees in the amount of NIS 413 thousand. -
The accompanying notes are an integral part of the financial statements.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
STATEMENTS OF CASH FLOWS
NIS in thousands
For the Year Ended December 31,
20 20 20 19 201 8
-------- -------------- -------------
Cash flows from operating activities:
Profit (Loss) for the year (3,988) (7,929) 6,009
Appendix A - Adjustments required to reconcile profit (loss) for the
year to net cash used
in operating activities 767 5,209 (9,931)
Net cash used in operating activities (3,221) (2,720) (3,922)
-------- -------------- -------------
Cash flows from investing activities:
Purchase of fixed assets (8) (395) (391)
Consideration from sale of fixed assets 111 - . - 55
Deposits 14 (14) 173
Investment in exploration and evaluation assets (1,361) (2,161) (3,541)
Loan repaid (rendered) to the top-co 330 253 (84)
Net cash used in investing activities (914) (2,317) (3,788)
-------- -------------- -------------
Cash flows from financing activities:
Consideration received for issuance of share capital and options
(including additional capital),
net 205 3,575 908
Receipt (repayment) of credits from banks and others, net (130) 103 (2)
Receipt (repayment) of loans from interested parties, net 1,431 (674) (111)
Repayment of fund in regard to leasing (393) (299) - . -
Liabilities to shareholders - . - - . - 685
Receipt of loans convertible to shares 3,804 2,636 - . -
Repayment of long-term loans - . - - . - (25)
Interest paid (226) (334) (106)
Net cash provided by financing activities 4,691 5,007 1,349
-------- -------------- -------------
Linkage differences in regard to cash and cash equivalents (79) (173) 81
-------- -------------- -------------
Increase (decrease) in cash and cash equivalents 477 (203) (6,280)
Cash and cash equivalents at the beginning of the year 96 209 6,489
-------- -------------- -------------
Cash and cash equivalents at the end of the year 483 6 209
======== ============== =============
The accompanying notes are an integral part of the financial
statements.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
STATEMENTS OF CASH FLOWS
NIS in thousands
APPIX A For the Year Ended December 31,
Adjustments required to show the cash flows from current 2020 2019 2018
operations:
-------------- ------------- ----------------
Expenses (income) not involving cash flows:
Depreciation * 48 49 54
Capital gain (75)
Share based payment - . - 11 25
Capital mobilization fees - . - 414 - . -
Amortization of assets for exploration and evaluation of - . - 2,409 - . -
precious stones
Amortization of a loan to an interested party (1,091) 1,116 - . -
Finance expenses (income), net 3,268 1,374 (9,419)
-------------- ------------- ----------------
2,150 5,373 (9,340)
-------------- ------------- ----------------
Changes in asset and liability items:
Increase in clients 51 (51) - . -
Decrease (increase) in receivables (75) 376 (.169)
Increase (decrease) in trade payables (391) (374) 121
Decrease in liability to a shareholder (316) (296) (242)
Increase (decrease) in other accounts payable (422) 181 (301)
-------------- ------------- ----------------
(792) (164) (591)
-------------- ------------- ----------------
(1,766) 5,209 (9,931)
============== ============= ================
* Net of depreciation encumbered on the assets for exploration
and evaluation of precious stones.
APPIX B For the Year Ended December 31,
Significant non-cash flow operations: 2020 2019 2018
---------- ---------- ------------
Accounts payable in regard to assets for exploration and evaluation of
precious stones 248 785 428
========== ========== ============
Fixed assets in regard to assets for exploration and evaluation of
precious stones 411 464 - . -
========== ========== ============
Usage rights assets in regard to assets for exploration and evaluation
of precious stones 450 364 - . -
========== ========== ============
Loan for acquisition of fixed assets - . - - . - 124
========== ========== ============
Loans assigned to capital 3,381 1,017 - . -
========== ========== ============
Balance from a supplier assigned to capital - . - 60 223
========== ========== ============
The accompanying notes are an integral part of the financial
statements.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 1:- GENERAL
1. a. The reported entity -
SHEFA GEMS LTD. (Formerly: Shefa Yamim A.T.M. LTD. and hereinafter - "the Company") is an
Israeli company engaged in exploration for diamonds, precious stones and gold in Northern
Israel.
As of December 31, 2019 the controlling party of the Company was Nela Digital Ltd. (formly
"Shefa Yamim"), that owns 33.77%. During April 2020, as a result of the debt management by
Nela Digital Ltd., its holdings in the Company were transferred to a trustee who was appointed
by the Court. See also Note 7.
b. The Company engages in prospecting and exploration for diamonds, precious stones and gold
("precious stones") in Northern Israel, along the length of the Nahal Kishon riverbed in the
Zevulun Valley, in Emek Yizrael, on designated slopes of Mount Carmel, Ramot Menashe and Migdal
Ha-Emeq areas based on prospecting and exploration permits received from the Inspector of
Mines in the Office of National Infrastructure, Energy and Water Resources of the Government
of Israel, in accordance with the Mines Ordinance, over an inclusive area of approximately
488 dunam. (For detail in regard to the permits, see Note 8 - "exploration assets"..)
In November 2020 the board of directors decided to perform organizational changes within the
Company. In the framework of these changes, all the exploration and prospecting operations
for diamond deposits, precious stones and gold ("explorations") performed by the Company since
its establishment and until March 2021 would be transferred to the Subsidiary. Concurrently,
they decided to sign a Memorandum of Understanding with a third party. Subsequent to balance
sheet date, it was decided to approve the Company signing an agreement with this party for
exploration expenses of the Company. See item c. below.
Proximate to date of approval of the financial statements, the Subsidiary continues to conduct
prospecting and explorations in accordance with current valid permits.
In accordance with the Mining Ordinance, subsequent to exposure of the mine and quarry of
precious minerals, the Subsidiary will be required, inter alia, to pay royalties to the Israeli
Government, as outlined in the Mining Ordinance, at the rate of at least 5% of the value of
the mined minerals or their value while still unmined.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 1:- GENERAL (cont.)
c. Agreement between the Company and a third party for engagement in new operations -
In the framework of the Company's decision to transfer the exploration assets to the Subsidiary,
as abovementioned in 27a, a decision was reached upon signing the financial statements that
Company management would be permitted to sign an agreement with a third party who is unrelated
to the Company, subject to approval of the Company shareholders. Terms of the agreement (in
accordance with implementation procedures) are detailed below in summary (and will be detailed
at length by the Company in the framework of a call to a meeting of the shareholders that
is set to be published proximate to reporting the financial statements).
1. Distribution of the shares of the Subsidiary, directly to the Company shareholders, as a
dividend
in-kind.
2. Consolidation of the Company's share capital (authorized and issued) so that every 100 shares
of NIS 0.10 par value will be consolidated to one share (hereinafter - "the consolidated
share").
3. Increasing the Company's authorized share capital (subsequent to consolidation of the capital)
to 1,000,000,000 shares.
4. Allocation of shares to a third party, as consideration for an inclusive amount of 1,050,000
dollars, in accordance with a valuation of 0.0445 dollars per consolidated share. From the
abovementioned amount, the Subsidiary will receive a transfer in the amount of 700,000 dollars
against a payment of the open exploration liability amounts, and the balance of 150,000 dollars
will remain in the Company account for financing the stock market operations until a new
operation
is engaged.
5. Change in the makeup of the board of directors.
6. Change of the Company name to Alef Green Energy 1998 Limited.
7. Engagement of new operation for the Company, so that the terms determined will be in accordance
with the negotiations that will occur between the Company and the other companies engaged
in new energy operations that include all components.
According to initial estimates, management is in the opinion that the fair market value of
the exploration assets maybe materially lower than the current books value.
d. The Company's financial status
Since the operations of the Company are prospecting and exploration for gold, precious stones
and diamond deposits and the Company has not yet commenced commercial mining, therefore, the
Company does not as yet have any significant revenues. Financing of its operations has been
performed until now by infusions of capital and/ or by loans and convertible loans received
by the Company. Continued operation is contingent upon further similar infusions of capital.
As mentioned in note 1c, the company plans to enter into the energy field and to distribute
its exploration assets to its shareholders. As of the date of authorization of the financial
statements the company does not have any income and its plans and infusion of capital are
uncertain. These factors create significant doubts in regard to continued operation of the
Company as a "going concern".
These financial statements do not contain any adjustments for valuation of assets and liabilities
or their classification that would likely be necessary in the event that the Company is unable
to continue its operations as a "going concern."
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 1:- GENERAL (cont.)
e. Definitions -
In these financial statements:
International Financial Reporting Standards (IFRS) - Standards and interpretations adopted
by the International Accounting Standards Board (IASB) that include international financial
reporting standards (IFRS) and international accounting standards (IAS), and interpretations
of these Standards as determined by the International Financial Reporting Interpretations
Committee (IFRIC) or interpretations determined by the Standards Interpretation Committee
(SIC), respectively.
"The Company" - SHEFA GEMS LTD.
The parent company - Nela Digital Ltd. (formerly - Shefa Yamim Ltd.).
The subsidiary company - Shefa in Israel (G.M.) Ltd.
"Related Party" - As defined in IAS 24 and by the International Accounting Standards Board
(IASB).
"Interested Party" - as defined in the Securities Act - 1968, and its Amendments.
"101" - One Hundred One - Gold Holdings Ltd. - An interested party (hereinafter: "101").
"808" - Eight O Eight Global Corp. - An interested party (hereinafter: "808").
"Index" - The Consumer Price Index published by the Central Bureau of Statistics.
"Dollar" or $ - The U.S. dollar.
NOTE 2:- BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS
Declaration in regard to Implementation of International a.
Financial Reporting Standards (IFRS)
The Company's financial statements were prepared in accordance with International Financial
Reporting Standards (hereinafter - "IFRS") and related clarifications published by the International
Accounting Standards Board ("IASB").
The significant accounting principles detailed below were consistently implemented for all
reporting periods presented in these financial statements except for changes in the accounting
policies that derive from application of standards, amendments to standards and clarifications
that became effective at the date of the financial statements.
The financial statements were approved by the board of directors on April 27, 2021.
b. Functional Currency and Presentation Currency
The financial statements are presented in New Israel Shekels (NIS) that is the functional
currency of the Company, and are rounded to the nearest thousand. The Shekel is the
representative
currency of the main economic environment wherein the Company operates.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 2:- BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS
(cont.)
Basis for preparation of financial statements c.
These financial statements are prepared on the basis
of historical cost. The statement of comprehensive
income was included according to characteristics of
operations.
Value of non-cash assets and detail of share capital
measured on the basis of historical cost, were adjusted
to changes in the Consumer Price Index until December
31, 2003 since until that date the Israeli economy
was considered to be hyper-inflationary.
The operating turnover cycle d.
The ordinary operating turnover cycle for the Company
is one year. The assets and liabilities attributed
to this operation and that are intended to be realized
during this operating period are shown in the framework
of current assets and current liabilities.
e. Foreign currency and linkage basis
Transactions stated in foreign currency are translated into the functional currency of the
Company at dates of transactions, using the representative exchange rate. Financial assets
and liabilities designated in foreign currency at reported date have been included in the
financial statements according to the prevailing representative exchange rates as published
by the Bank of Israel at the balance sheet date. Non-monetary items designated in foreign
currency and measured at fair value are translated into the functional currency at the exchange
rate prevailing when the fair value was determined. Non-monetary items measured at cost are
translated into the effective exchange rate at transaction date for the non-monetary item.
Detail in regard to the Consumer Price Index and the exchange rate of the U.S. dollar and
the British pound:
December 31,
2020 2019 2018
------- --------- ----------
CPI in points (applicable) * 124.20 125.06 124.31
CPI in points (known) * 124.30 125.06 124.68
Exchange Rate of U.S. $ in NIS 3.215 3.456 3.748
Exchange Rate of British GBP in NIS 4.39 4.56 4.793
* Base Index 2002 = 100.
Year Ended December 31,
----------------------------
2020 2019 2018
--------- -------- -------
Change in CPI (applicable) (0.7%) 0.6% 0.80%
Change in CPI (known) (0.6%) 0.3% 1.20%
Change in rate of exchange- U.S. $ (7%) (7.8%) 8.10%
Change in rate of exchange- Brit. GBP (3.7%) (4.9%) 2.38%
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 2:- BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS
(cont.)
f. Critical accounting decisions
Implementation of accounting policies adopted by the Company requires Company management,
in certain instances, to implement broad accounting decisions (as opposed to accounting decisions
that related to determination of estimates and valuations as detailed in Section g. below).
These broad decisions relate mainly to adoption of the accounting principle most suitable
to the circumstances, or rendering of an acceptable interpretation under circumstances where
the accounting regulation does not render a full or clear response for the specific circumstances.
A critical accounting decision is such that the results may have a significant effect on the
financial situation and results of operations of the Company as reflected in the financial
statements and with other basic assumptions could lead to an accounting result significantly
different than the one presented therein. By its nature, an accounting decision as such is
partially subjective. Concurrently, by implementing a critical accounting decision, Company
management bases its conclusion on understanding of the accounting principles for implementation
of its operations and, where relevant, the Company consults with external experts in the relevant
field.
g. Essential estimates and uncertainties
Upon preparation of the financial statements, Company management is required to utilize estimates
or valuations in regard to transactions or matters that their final effect on the financial
statements cannot be accurately determined at the time. The main basis for determination of
the quantitative value of these estimates is assumptions adopted by Company management, taking
into account the circumstances for the estimate, as well as the best of knowledge available
at the time. It is natural, since these estimates and valuations are a result of decisions
during uncertainty, that during significant moments, changes in the basic assumptions derived
from changes that are not absolutely dependent on Company management, as well as additional
information at a future date that was unavailable to the Company management at the time when
the estimate was formulated, will result in changes in the quantitative value of the estimate.
Thus, this will also influence the financial position of the Company and the results of its
operations.
Therefore, though these estimates and valuations were concluded
using the best of knowledge available to management, based on past
experience and taking into account the singular circumstances, and,
where relevant, reliance on external consultants, the final
quantitative effect of transactions or circumstances requiring
estimate can only be clarified when these transactions or
circumstances reach their conclusions. Therefore, the actual
results, upon final clarification of the results for an event that
requires determination of estimates and valuations, may differ,
sometimes significantly, from estimates and valuations that were
determined initially and are updated over the period of the related
events.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 2:- BASIS FOR PREPARATION OF THE FINANCIAL STATEMENTS
(cont.)
g. Essential estimates and uncertainties (cont.)
The estimates and valuations that form the basis are examined currently and are updated as
a result of information gained by management or of an event that occurred subsequent to the
last date when the estimate was determined, and were not available at the previous period
when the estimate was determined or examined. Changes in accounting estimates are charged
to the period when the change occurs in the estimate, or also to subsequent periods following
the change, when it is apparent that the implications of the change will have an effect on
the present and future periods.
Following are areas where the valuation for the financial statements requires estimation and
valuation that, in the opinion of management, will have a very significant effect:
1) fair value of prospecting assets;
2) fair value of financial instruments;
3) fair value of Options.
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES
a. Cash and Cash Equivalents
Cash and cash equivalents include highly liquid investments that are immediately realizable.
This includes short-term bank deposits for immediate withdrawal and deposits with maturities
of three months or less that are not limited in any way and no charges are placed thereon.
Deposits that are limited or that their maturity dates are in excess of three months but not
in excess of one year are classified as deposits in the current assets section of the
statements
of financial position.
b. Fixed assets
Fixed assets are stated at cost net of accumulated depreciation and any losses in value that
may have occurred.
The cost includes acquisition cost of the fixed assets as well as all costs that can be attributed
directly to bringing the asset to its location and its current situation that are necessary
for operations, using the methodology intended by management.
Vehicles purchased under financial lease agreements are presented at cost computed by estimated
capitalization of the leasing costs in accordance with the leasing agreement.
Depreciation included in the statement of comprehensive income is calculated using the straight-line
method based on the estimated useful lives of the assets, at the following annual rates:
%
----------
Office furniture and equipment 6-15
Laboratory machinery and equipment 10-15
Leasehold improvements - Establishment of a laboratory 10
Vehicles 15
Computers 33
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (cont.)
b. Fixed assets (cont.)
Depreciation expenses for vehicles and laboratory equipment used during explorations are charged
to cost of assets for prospecting and valuation of precious stones. Profit or loss arising
from sale or decrement of a fixed asset item is determined as the difference between receipts
from its sale and its book value at decrement date, and is included in operations.
c. Assets for prospecting and valuation of precious stones
1. The Company has adopted the "Successful Efforts Method" in regard
to the accounting treatment
of expenses incurred in prospecting, mining and extraction of
precious stones. In accordance
with this Method:
a) Expenses for participation in
geologic tests and scans that
occur prior to the prospecting
and valuation stage and prior to
receiving a permit are charged
immediately to the statements
of comprehensive income when
incurred.
b) Investments in explorations for
precious stones during the
exploration and valuation
stages,
relating to areas that are as
yet unproven whether they will
indeed yield precious stones
or are unprofitable, are shown
in the statements of financial
position at cost, as exploration
and valuation assets that are
stated as tangible or intangible
assets in accordance with the
essence of the asset. These
investments include, inter alia,
costs incurred for performance
of geological research, drilling
costs, operations relating to
evaluation of technical ability
for commercial existence of
resources to be yielded as well
as general and administrative
costs of a headquarters (mainly
to a related company) related to
direct costs for prospecting
and valuation of assets.
c) Investments in prospecting for
precious stones that have an
existing technical plan and the
resource has a commercial
existence will be restated and
included as "investments in
precious
stone assets." Prior to their
restatement, these items will be
examined for decrease in value.
In the event that a loss has
been created, this will be
recognized and included in the
statements
of comprehensive income.
Investments in precious stone
assets are amortized in the
statements
of comprehensive income on the
basis of amounts extracted in
relation to total proven
reserves
for the precious stone assets,
as valuated by an external
assessor with expertise in this
area.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (cont.)
c. Assets for prospecting and evaluation of precious stones (cont.)
1. (cont.):
d) Prospecting and evaluation assets
will be examined for decrease in
value when events and occurrences
would lead one to believe that
their book value exceeds their
attributed realization value.
Such events and occurrences
include, inter alia: expiration of
prospecting rights in a specified
area or predictions that these
rights will expire in the near
future and renewal is not
foreseen;
prospecting for precious stones in
a specific area have not resulted
in proven commercial
quantities of reserves of precious
stones. In the event that there
are signs of an impairment
in value, as abovementioned, the
realization value for the asset is
estimated in accordance
with IAS 36 (see Section 3e).
2. "Investments in Precious Stone Assets" in the statements of financial information will include,
also, accumulated costs for development of infrastructures for the necessary bases in order
to yield resources. These costs are capitalized and can include headquarters costs that are
directly attributable to establishment of the assets and other direct overhead costs. They
are shown in the statements of financial information at cost and are amortized in the statements
of comprehensive income on the basis of quantity yielded in proportion to total proven reserves
as evaluated by an external expert assessor, as stated in 1c), abovementioned.
3. Investments in precious stone assets that have an existing technical plan are examined at
each reporting period for any signs of impairment. In the event that such signs exist, the
realization value is computed in accordance with IAS 36 (see Sect. 3e).
4. The Company will recognize the liability and, correspondingly,
the asset in regard to Company
obligation to disassemble, clear and rehabilitate the site where
the asset was established.
The liability is initially measured at its present value and the
expenses derived from its
increase are depreciated over a period of time in the statement
of comprehensive income. The
asset is initially measured at its present value and is
depreciated over a period of time
in the statement of comprehensive income in accordance with the
useful life of the removed
asset. Changes in timing and in the amount of the economic
resources that are necessary for
the removal of the liability as well as the change in the
capitalization rate are added to
or deducted from the asset during the current period
corresponding to a change in the liability.
Changes in the obligation to disassemble and clear items and
rehabilitation of the site where
they were established, except for changes deriving from timing,
are added to or deducted from
the asset cost during the period when incurred. The amount
deducted from the asset cost will
not exceed the book value of the asset and the balance, if any,
is immediately recognized
in the statements of comprehensive income.
The Company examines its projected obligations to rehabilitate
and renew excavation sites and includes a provision,
when necessary, in accordance with the current value
of projected costs.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (cont.)
d. Issue of a package of securities
When securities are issued as a package, the consideration received is allotted (prior to
issue expenses) to securities issued as a package in conjunction with the following order
of allocation: financial derivatives and other financial items that are presented at fair
value periodically. Subsequently, the fair value of the financial liabilities is determined,
with the allotted consideration for capital instruments determined as the remaining value.
Issue costs are allotted to each component in accordance with the ratio of amounts determined
for each component of the package.
e. Impairment in value of assets
At the close of every reporting period, the Company examines the book value of its tangible
assets to determine any signs of loss from impairment in value of these assets. In the event
that there are signs of impairment, the Company examines the realization value of the designated
asset in order to determine the loss from impairment, if any.
The realization value is the higher of fair value of the asset net of sale costs as compared
with its useful life that is determined by the present value of projected cash flows to be
realized from this asset using a rate prior to taxes that reflects the present book value
of the time span for the money and the specific risks for the asset that the estimated future
cash flows were not adjusted for in this regard.
In the event that the book value of the asset is greater than its realization value, a devaluation
of the asset has occurred in the amount of the difference between its book value and its realization
value. This amount is recognized immediately in the statements of comprehensive income.
Prior devaluation of an asset is nullified, partially or completely, only when changes in
the determinants of realization value of the asset have occurred. In the event of such an
occurrence, the book value of the asset is increased to the estimated current fair value,
but not in excess of the asset book value that would have existed had there not been devaluation
and subsequent to deduction of any relevant depreciation. Such nullification is recognized
immediately in the statements of comprehensive income.
f. Leases -
The Company decides whether a contract is a lease arrangement (or includes a lease arrangement)
upon signing the contract. The Company recognizes the asset right to usage on the one hand,
and the lease liability on the other hand in regard to every lease contract wherein it is
the lessee, except for short-term leases (for a period not in excess of twelve months) and
leases of low value assets. For these leases, the Company recognizes lease payments as an
operating expense on the straight-line basis of the lease period, unless there is an alternative
precedent basis that presents, in a more acceptable manner, the format of economic benefits
derived for the Company from its leased assets.
The leasing period is a unit that cannot be cancelled for which the lessee has the right to
utilize the leased asset in conjunction with:
Periods that are covered by an option to extend the lease if it is reasonably certain that
the lessee will exercise this option, as well as
Periods that are covered by an option to nullify the lease if it is reasonably certain that
the lessee will not exercise this option.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (cont.)
f. Leases (cont.)
In determining the lease period, the Company takes into account the extension options that,
at the time of the commencement of the lease, it is reasonably certain that they will be exercised
by the Company. The extension option's reasonability is examined by taking into account, inter
alia, lease payments during the extended period as compared with market prices, significant
renovations of the leased property performed by the Company that predictably will render to
it a significant economic benefit during the extended period, costs related to the end of
leasing (negotiations, vacating the existing asset and search for an alternative asset as
a replacement), importance of the asset for Company operations, location of the leased asset
and the availability of fitting alternatives.
The Company's liability is originally measured in accordance with the present value of the
lease payments that were not paid at the start of the lease. For computation, the Company
uses its additional rate of interest.
The lease payments included in measurement of the liability are composed as follows:
Fixed payments (including existing fixed payments), net of any leasing incentives;
Variable lease payments dependent on the Consumer Price Index, that are initially measured
by utilization of the applicable Index at the beginning date;
The leasing liability is presented in a separate section in current liabilities and non-current
liabilities in the statement of financial position. The leasing liability is measured subsequently
by increasing the book value in order to reflect interest on the leasing liability using the
effective interest method, and by decreasing the book value in order to reflect the lease
payments made.
The Company remeasures the leasing liability (against adjustment of the usage right for the
asset) when a change occurs in the future lease payments forecasted for payment in accordance
with guarantees for scrap value. In this instance, the lease liability is measured by capitalization
of the updated lease payments while utilizing the original capitalization rate (unless the
change in lease payments derives from a change in variable interest rates. In this instance,
there is utilization of an updated interest rate).
Cost of the usage right asset is composed of the original measured amount of the lease liability
and any lease payments paid at the beginning or beforehand. Subsequently, the usage right
asset is measured at cost net of accumulated depreciation and losses from decrements.
The usage right is shown in a separate section of the report of financial information. The
usage right asset is measured by cost and is depreciated by the straight-line method over
the shorter of the lease span or the useful life of the base asset.
The Company implements the principles of IAS 36, Decrement of Assets in order to Determine
if the Usage Right has been Changed and to Handle the Resulting Decrement Loss Identified.
g. Financial instruments
1. Non-derivative financial instruments
Non-derivative financial instruments comprise various accounts receivable, deposit, and cash
and cash equivalents.
Non-derivative financial instruments are recognized initially on the trade date at which the
Company becomes a party to the contractual provisions allowing the Company to receive the
financial instrument. Investments in these instruments are initially presented at their fair
value with the addition of transaction costs.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
g. Financial instruments (cont.)
The Company classifies its financial assets as loans and receivables. This classification
is determined in accordance with the purpose for holding the financial asset, when initial
recognition of the financial asset occurs.
2. Losses from impairment in value and write-off of non-derivative financial instruments
Financial instruments not classified at fair value through profit and loss are examined at
each reporting period as to whether there are signs of impairment in value. Impairment occurs
when there is objective evidence that as a result of a specific incident or occurrences,
occurring
subsequent to initial recognition date of the financial asset, a negative effect exists on
the projected cash flows for the investment in this asset.
In regard to financial assets that are included at amortized cost (mainly loans and
receivables),
the amount of impairment in value is the difference between the book value of the financial
asset and the present value of the estimated future cash flows projected to derive from the
asset, discounted at the original effective interest rate for the asset. This amount is charged
to the statement of comprehensive income.
In the event that during a parallel period to that when a loss was recorded for impairment
in value for a financial asset included at amortized cost there are indications that the amount
of the loss from impairment in value is less and is objectively related to an event occurring
subsequent to recognition of the impairment, then the prior impairment loss will be written
off, in part or completely, to profit and loss. The amount written off is limited so that
the book value of the investment in the financial asset at the time of write-off of the loss
from impairment in value does not exceed the amortized cost of the asset at the cancellation
date had there not been a prior recognition of impairment in value.
3. Non-derivative financial liabilities
The Company initially recognizes debt securities issued on the date that they originated.
All other financial liabilities (including financial liabilities designated at fair value
through profit and loss) are recognized initially on the trade date at which the Company becomes
a party to the contractual provisions of the instrument.
Financial liabilities are reduced when the obligation of the Company, as specified in the
agreement, expires or when it is discharged or written off.
Financial obligations are initially recognized in accordance with their fair value with the
addition of attributable transaction costs. Subsequent measurement of financial liabilities
is mainly on the basis of amortized cost using the effective interest method.
The Company has the following non-derivative financial liabilities: loans and credit from
banks and others, and trade and other payables.
Financial assets and liabilities are offset and the net amounts are presented in the statement
of financial position when the Company currently has a legally enforceable right to offset
the recognized amounts and intends either to settle on a net basis or to realize the asset
and settle the liability simultaneously.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (cont.)
h. Provisions
Provisions are recognized when the Company has a current obligation (legal or derived) as
a result of a past occurrence that can be reliably measured, that will in all probability
result in the Company being required to provide additional benefits in order to settle this
obligation. The amount recognized as a provision reflects the best estimate by management
of the amount that will be required to settle the obligation currently at financial statements
date, while taking into account the risks and uncertainties related to obligations. When provisions
are determined by capitalization of projected cash flows in order to settle the obligation,
the provision is the current value of the projected cash flows. Changes in the time value
are recognized in the statement of comprehensive income or loss. When the entire sum or a
portion thereof necessary for current settlement of the liability will likely be repaid by
a third party, the Company recognizes an asset for the return, up to the amount of the recognized
provision, only when there is actual certainty that the amount will be received and it can
be reliably estimated.
i. Liability in regard to employee benefits
The Company has several benefit plans for its employees:
1. Short-term employee benefits -
Short-term employee benefits include salaries, vacation days, recreation and employer deposits
to the National Insurance Institute that are recognized as expenses when rendered. A liability
for a cash bonus or a plan for participation in Company earnings is recognized when the Company
has a legal or derived responsibility for payment of the amount for services rendered in the
past by the employee and the amount can be reliably measured.
2. Benefits upon retirement -
These plans generally are funded by deposits to insurance companies and pension funds and
are classified as restricted deposit plans or as restricted benefit plans.
Some Company employees have restricted deposit plans, in accordance with Section 14 of the
Severance Pay Law, whereby the Company pays fixed amounts without bearing any legal or derived
responsibility to pay additional amounts thereto even if the fund did not accumulate enough
amounts to pay the entire benefit amount to the employee that relates to the services he rendered
during the current and prior periods. Deposits to the restricted plan are classified for benefits
or for compensation, and are recognized as an expense upon deposit to the plan concurrent
with receiving services from the employee and no additional provision is required in the financial
statements.
Concurrently, the Company operates a restricted benefit plan for severance pay as required
by the Severance Pay Law. In accordance with the Severance Pay Law, employees are entitled
to compensation upon retirement or upon termination of their employment.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (cont.)
i. Liability in regard to employee benefits (cont.)
The financial statements include a provision in the amount of the difference that the Company
would be required to pay in the event that the employees would be entitled to severance pay
at the date of statements of financial position. No actuarial computations of possible obligation
and actual value of deposits with the restricted benefit plan were made since, in the opinion
of Company management, such computation would not have a material effect on the Company's
financial statements.
j. Financial income and expenses
Financial income includes interest in regard to invested amounts, revenues from exchange rate
differences that are recognized in the statements of comprehensive income and revenues from
adjustments of fair value of liabilities. Interest income is recognized upon accumulation,
using the effective interest method.
Financial expenses include interest on loans received, finance expenses in regard to fair
value of liabilities and changes in the time estimates of provisions.
Gains and losses from exchange rate differences are reported net. Costs of credit are recognized
as an expense during the period of their inception, in accordance with the effective interest
methodology.
k. Deferred Taxes
The Company creates deferred taxes in regard to temporary differences of value for tax purposes
of assets and liabilities and their values in the financial statements. These deferred tax
balances (asset or liability) are computed according to the projected tax rates occurring
upon realization, based on tax rates and regulations in force or legislated fully at the date
of the statements of financial position. Deferred tax liabilities are recognized, generally,
for all temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
A deferred tax asset is recognized on the books for carryforward losses, tax benefits and
temporary differences that are deductible to the extent that it is probable that future taxable
profit will be available against which the temporary differences can be offset. Deferred tax
assets are reviewed at every reporting date and, in the event that the related tax benefits
will not be utilized, they are deducted.
In the absence of certainty regarding taxable income in the future, there was no recording
of a tax deferred asset in regard to carryforward losses on the Company books of account.
l. Statement of Cash Flows
The statement of cash flows from current operations is presented using the indirect method,
whereby interest amounts paid and received by the Company are included in the cash flows in
the framework of finance operations.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (cont.)
m. Gain (Loss) per Share
The Company computes the basic revenue or loss per share in regard to gain or loss that is
attributed to the Company shareholders by dividing the income or loss, attributable to ordinary
shareholders of the Company, by the weighted average of ordinary shares that exist in the
turnover during the reported period. The Company does not have any securities that are convertible
to shares that would have a potential effect on the diluted income per share.
n. Share Based Compensation
In share based compensation, transactions with
employees (including
officers and others who provide similar
services) that are cleared by
parent company capital instruments, the costed
benefit of capital instruments
granted is based on their fair value at grant
date. The costed fair
value upon granting of Options is measured on
the basis of the Black-Sholes
model. The abovementioned benefit is
attributed to expenses in the profit
and loss against a straight-line growth in
share capital, over the vesting
period of the capital instrument that was
granted, so that every sub-granting
is considered as a separate graded vesting. In
transactions involving
share based compensation with renderers of
services, the Company measures
the expense in accordance with the value of
the services received. In
share based compensation transactions cleared
by cash payment, the Company
measures the services acquired and the
liability that was created, in
accordance with the fair value of the
liability. Until the liability
is cleared, the Company remeasures the fair
value of the liability at
every reported period and upon clearance, so
that any changes in the
fair value are recognized in the statement of
comprehensive income for
the period.
o. Financial Instruments
Financial Assets
Financial assets are measured at fair value on their initial recognition date. In addition,
the transaction costs that are directly attributable to acquisition of the financial asset
are included, except where the financial asset is measured at fair value through profit and
loss, so that the transaction costs are charged to profit and loss.
The financial assets will be handled as follows:
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (cont.)
o. Financial Instruments (cont.)
-- Debit instruments will be classified and measured subsequent to initial recognition under
one of the following alternatives: depreciated cost, fair value through profit and loss or
fair value through other comprehensive income. Determination of the measurement model will
take into account the business model of the entity in regard to management of financial
assets
and in accordance with the characteristics of the projected cash flows that will be derived
from those financial assets.
-- A debit instrument that was measured by depreciated cost or by fair value through other
comprehensive
income may be designated for fair value through profit and loss, but only if the designation
will nullify lack of consistency in recognition and measurement that would be created if the
asset was measured by depreciated cost or by fair value through other comprehensive income.
-- As a rule, the financial instruments will be measured at fair value through profit and loss.
-- Upon initial recognition, one may designate financial instruments at fair value through
other
comprehensive income. Those instruments that will be designated in that manner, will not be
subject any longer to the test of impairment, and profit or loss in their regard will not
be transferred to profit or loss, including upon realization.
Embedded derivatives will not be separated from the existing contract found at the beginning
* ???? of the Standard. Alternatively, mixed contracts will be measured generally at depreciated
cost or at fair value, in accordance with the testers of the business model and the
projected
cash flows.
-- Debt instruments will be reclassified only when the entity changes its business model to
management
of financial assets.
-- Investments in capital instruments that do not have a quoted price on a functioning market,
including the derivatives of these instruments, will be measured at fair value. The
alternative
measurement according to cost under certain circumstances is hereby nullified. However, the
Standard declares that under certain circumstances the cost should be a proper measure of
the fair value.
Financial Liabilities
The Standard determines also the following procedures in regard to financial liabilities:
-- The change in fair value of financial liabilities that is intended, upon initial
recognition,
to be fair value through profit or loss, which is attributed to changes in the credit risk
of the liability, will be directly charged to other comprehensive income unless such
attribution
will create or increase lack of consistency - an accounting mismatch.
-- When a financial liability is paid or cleared, the amounts charged to other comprehensive
income will not be classified to profit or loss.
-- All the derivatives, whether they are assets or liabilities, will be measured at fair value
through profit or loss, including a derived financial instrument that constitutes a
liability
related to an unquoted capital instrument that we are unable to measure its fair value in
a reliable manner.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 3:- SIGNIFICANT ACCOUNTING POLICIES (cont.)
o. Financial Instruments (cont.)
Impairments
The new model for impairment is based on projected credit losses and will be implemented for
the debit instruments that are measured at depreciated cost or at fair value through other
comprehensive income, receivables in regard to leasing, contract assets that are recognized
according to IFRS 15 and written obligations for rendering loans and financial guarantee contracts.
The provision for impairment will be in regard to reasonable projected losses within the following
twelve months (the coming year), or reasonable failure to repay during the entire lifetime
of the financial instrument. Examination for the entire lifetime of the instrument is necessary
in the event that the credit risk for the asset rose significantly since the date of initial
recognition. An alternative approach will be enforced if the financial asset was created or
acquired when it was already credit impaired.
NOTE 4:- SHORT-TERM DEPOSIT IN BANK
As of December 31, 2019 the Company has a short-term deposit in NIS, bearing annual interest
at 1.73%.
NOTE 5:- OTHER ACCOUNTS RECEIVABLE
December 31,
--------------------
2020 2019
--------- ---------
Advances to suppliers and others 10 20
Prepaid expenses 210 125
220 145
========= =========
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 6:- FIXED ASSETS, NET
Machines Office Leasehold
and Furniture Improvements
Laboratory Vehicles and Computers - Laboratory Total
Equipment Equipment
------------ ----------- ----------- ------------ -------------- --------
Cost:
As of January 1,
2019 3,801 69 338 367 436 5,011
Additions 299 - . - - . - 6 - . - 305
As of December
31, 2019 4,100 69 338 373 436 5,316
Additions - . - - . - 2 6 - . - 8
Decrements (403) (21) - . - - . - - . - (424)
As of December
31, 2020 3,697 48 340 379 436 4,900
------------ ----------- ----------- ------------ -------------- --------
Accumulated
Depreciation:
As of January 1,
2019 2,215 42 319 355 344 3,275
Depreciation for
the year 487 8 7 7 38 547
As of December
31, 2019 2,702 50 326 362 382 3,822
Decrements (376) (12) - . - - . - - . - (388)
Depreciation for
the year 397 10 7 7 38 459
As of December
31, 2020 2,723 48 333 369 420 3,893
------------ ----------- ----------- ------------ -------------- --------
Depreciated Cost:
As of December
31, 2020 974 - . - 7 10 16 1,007
============ =========== =========== ============ ============== ========
As of December
31, 2019 1,398 19 12 11 54 1,494
============ =========== =========== ============ ============== ========
NOTE 7:- LOAN TO THE PARENT COMPANY
On August 11, 2020 the Company reached at an arrangement for settling the debt with Shefa
Yamim. Accordingly, Nela Digital Ltd. will pay the loan in consideration for NIS 330 thousand
in cash and 313 thousand shares of Nela Digital Ltd. at the price of NIS 6 per share (total
value of the shares is in the amount of approximately NIS 1,878 thousand).
Composition:
2020 2019
---------------- ---------------------------
Opening balance January 1 1,117 2,495
Loan amortization 1,091 (1,116)
Repayment in cash (330) (262)
Repayment with shares available for trade (1,878) -
Closing balance December 31 - . - 1,117
================ ===========================
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 8:- ASSETS FOR EXPLORATION AND EVALUATION
The Company is the first and only company in northern Israel that is engaged, since 1999,
in exploration (prospecting and exploring) related to precious stones (diamonds, gemstones
and gold).
The exploration operation performed by the Company is, actually, exploration and examination
of the primary deposit in targeted entities and performance of work plans that are managed
by a professional work team, expert and competent in the technical aspects necessary for
implementation
of exploration operations that include, inter alia: mapping, sampling, geophysical,
geochemical
and geological surveys, visual and mineral examination in the laboratory established in the
operating area of the Company in Akko of the various findings using the most advanced methods
known worldwide in order to assess the economic potential of the findings at each site. The
goal is to raise expectations and reduce the risk level, as well as to identify the exact
location where it will be possible to open a "mineralogical resource" and a commercial mine.
The Company's operating area is along the southern Akko industrial zone (Barbour Center) that
stretches over an area of approximately 6,000 sq. m. The Company's operations are concentrated
parallelly at the Primary Sources for mineral deposits at the Carmel mountain range and Ramot
Menashe stretching over the lower Galilee territory and at the Secondary deposits of alluvial
erosion areas.
The exploration procedures are in accordance with international specifications, as is
customary
in this field and, for this purpose, the Company is assisted with a wealth of progressive
methods engaged in worldwide by other exploratory companies.
The exploratory Company operations are accompanied by an international geological team who
are experts in their fields (hereinafter: "Company advisors from abroad"), who have proven
expertise in the fields of earth sciences, geology, geochemistry and geophysics, especially
within the field of dynamic special explorations wherein the Company operates - prospecting
for precious stones.
During November 2020 the Company directors decided to perform a reorganization so that every
exploration procedure, and exploration assets (see Note 1c) will be transferred to the
Subsidiary.
As of the date of approval of these financial statements, every exploratory operation is
actually
performed by the Subsidiary.
The Company presently holds the following Permits:
1. The Company holds Carmel Prospecting Permit 837A14, extending over an inclusive
area of 312,
dunam, that is valid until December 20, 2021.
2. In addition, the Company holds Prospecting License 869D12 for an area of 500 dunam
in an area
known as Zone 1 in the Kishon Mid Reach., rendered to the Company by the
Superintendent of
Mining during March 2020 in order to enable the Company to expedite the planning of
mining
procedures in accordance with the terms of the License, in order to receive a
Mining Permit
for this area. This License is not valid for more than three years (the period
intended for
license and planning procedures).
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 8:- ASSETS FOR EXPLORATION AND EVALUATION OF PRECIOUS STONES (cont.)
The Company presently holds the following Permits:
3. In February, 2021 the Company received an Exploration License
Number 1010C1 in regard to an inclusive area of 990 dunam in the
area known as "Solomon;s Daughter", that is valid until February
13, 2022.
4. During May 2021, the validity of an additional Exploration
Permit expired and the Company requested from the Mining Inspector
to renew it. As yet, the request has not been approved.
Gemological Valuation of the gemstones included in the Company's
TMA Suite:
On March 19, 2019, in order to receive an exploration
certificate, the Company published an initial valuation of the
gemstones included in the TMA Suite. This valuation was performed
by Dr. Gila Gavrielov, a gemologist. The valuation is for one carat
of polished gemstone not including the categories of Moissanite and
KIM's.
The quantity of gemstones in the Company's safes from
explorations performed in the Kishon Mid Reach zone 1 and 2 as of
December 31, 2020 is 17,465 carat.
During November 2020 the Company commenced polishing the
gemstones in order to examine their commercial value. This
procedure is not yet completed and, therefore, at this stage we
cannot value the balance of carats that is meant to remain
subsequent to the polishing or what will be their total commercial
value.
b. Composition:December 31,
2020 2019
---------- ----------
Purchase of exploration rights, fees and planning 5,357 5,142
Geologic research and laboratory maintenance ** 23,144 22,059
Drilling for exploratory purposes 5,690 5,655
Headquarters operations expenses directly attributable to the
asset (mainly to a related company)
** 25,583 24,641
Other expenses 5,733 5,540
Amortization of exploration assets * (2,409) (2,409)
---------- ----------
63,098 60,628
========== ==========
* During the prior year, the exploration areas were minimized.
The Company amortized the exploration assets in the amount of
expenses attributed in prior years to these areas.
** Includes share based compensation in the amount of
approximately NIS 1,111 thousand.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE SHORT - TERM CREDITS FROM BANK AND OTHERS
9:-
December 31,
-----------------------------------------------
a. Composition: 2020 2019
----------- ---------------------
Overdraft - . - 211
Short-term bank
credit 176 96
Current maturities
of loan from
interested party 62
Loans from
interested party
(1.) 500 131
Loan from 586 - . -
shareholders (2.)
Current maturities
of leases 465 324
----------- -------------------------
1,789 762
=========== =========================
Classification to
liabilities of the (1,003) - . -
realization group
that is categorized
as held for sale
=========== ============
Balance of credit from 768 - . -
a bank and from
others
=========== ============
1. A loan in the amount of NIS 145 thousand bearing interest per annum of 10%.
A loan in the amount of NIS 355 thousand bearing interest per annum of 5%.
2. As of the date of signing the financial statements, terms of the shareholders'
loan have not
as yet been finalized in regard to repayment dates and terms for each loan.
b. As of December 31, 2020 and 2019, the Company has a fixed bank credit framework of approximately
NIS 200 thousand and NIS 250 thousand, respectively. The overdraft account is guaranteed by
the personal credit of an interested party.
NOTE 10:- TRADE PAYABLES
December 31,
-----------------------
2020 2019
--------- -----------
Checks payable 520 340
Open balances 161 731
681 1,071
========= ===========
NOTE 11:- INTERESTED PARTIES
December 31,
-----------------------------
Interested party: 2020 2019
-------- --------------------
Current debt 88 211
======== ====================
Agreements with interested parties see Note 22.
NOTE 12:- OTHER ACCOUNTS PAYABLE
December 31,
----------------------
2020 2019
--------- -----------
Salaries and related items 288 617
Accrued expenses 382 497
670 1,114
========= ===========
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 13:- LOANS CONVERTIBLE TO SHARES
a. During November 2018 until June 2019, the Company received convertible loans from investors
in the amount of approximately GBP 251 thousand. According to the agreements, the Company
obligated to allocate to the lenders a number of shares at the price of 5 pence until December
31, 2019 and, in addition, to allocate one Option per share at the exercise price of 10 pence
for a 24 month period.
Concurrently, the Company received from an investor a loan convertible to shares in the amount
of approximately GBP 78 thousand. According to the agreement, the Company obligated to allocate
to the lender shares at the price of 4 pence until December 31, 2019 and. in addition, to
allocate one Option per share at the exercise price of 8 pence for a 24 month period.
On December 31, 2019 the Company signed an agreement with the lenders . Accordingly, the shares
allocation date was extended until June 2020.
Upon receiving the loans, the Company recorded an entry in the amount of approximately NIS
627 thousand (GBP 133 thousand) as a loan at fair value and an amount of NIS 924 thousand
(GBP 196 thousand) was recorded as a loan at amortized cost.
During October 2019 the Company received two additional convertible loans in the amount of
NIS 742 thousand (GBP 164 thousand). In accordance with the loan agreement, the Company obligated
to allocate to the lenders, in the event that they choose until March 31, 2021, an amount
of shares at the price of 5 pence per share and to allocate one Option per share at the exercise
price of 10 pence for a 24 month period.
In addition, the Company obligated to double the yield on the allocated shares at the end
of the 24 months from allocation date. If the yield will not be doubled, then the Company
will grant additional shares until the promised yield is attained.
Upon receiving the loans, the Company recorded an entry in the amount of approximately NIS
728 thousand (GBP 161 thousand) as a loan at fair value and an amount of NIS 14 thousand (GBP
3 thousand) as a loan at amortized cost.
All the loans bear 5% interest per annum.
During November 2018 until June 2019, the Company received convertible loans from investors
via loan agreements in the amount of approximately GBP 253 thousand. The Company obligated
to allocate to the lenders, until June 30, 2019, shares at 5 pence per share as well as one
Option per share at an exercise price of 10 pence for a 24 month period.
On June 30, 2019 the loans were converted to shares and Options in the amounts of NIS 1,017
thousand and NIS 149 thousand, respectively. See Note 17e.
b. During the first half of 2020, the Company mobilized convertible loans in the amount of NIS
3,426 thousand (GBP 774,810) that bear 5% interest per annum. The shares will be allocated
at the rate of 5 pence per share and for every share allocated there will be one Option allocated
at the exercise price of 10 pence for a period of 24 months. In addition, the Company obligated
that at the end of 24 months from the allocation date, it will double the yield on the shares.
In the event that the yield will not be doubled, the Company will allocate additional shares
in order to attain the promised yield. Most of the loans were converted to shares on June
30, 2020.
During the first half of 2020, the Company mobilized convertible loans in the amount of NIS
571 thousand (GBP 126,945), bearing 5% interest per annum. The shares were allocated at the
price of 5 pence per share with every share receiving an additional Option at the exercise
price of 10 pence for 24 months. On the date of receiving the loans, an amount of GBP 11,525
was recorded as a loan at fair value and an amount of GBP 115,420 was recorded as a loan at
amortized cost. Most of the loans were converted to shares on June 30, 2020.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 13:- LOANS CONVERTIBLE TO SHARES (cont.)
b. (cont.)
On June 30, 2020 the Company issued 28,922,507 shares and Options to various investors in
consideration for convertible loans in the amount of NIS 3,381 thousand. The shares were allocated
at a price of 4-5 pence per share and an Option was allocated per share at the exercise price
of 8-10 pence over 24 months.
As of December 31, 2020 the value of the Options allocated in the framework of this issuance
was NIS 6 thousand.
c.
Activity: Loans at Amortized Cost Loans and liability at Fair
Value
------------------------------- ------------------------------------
2020 2019 2020 2019
----------------- -----------------
Opening Balance 1,134 772 1,792 -
Additional
convertible
loans 3,824 1,550 173 1,122
Classification
from amortized
cost to fair
value - . - (232) - . - 232
Loans converted
to shares (3,381) (1,166) - . - -
Financing
(income)
expenses (1,396) 210 4,501 438
---------------- ------------- ----------------- -----------------
Closing balance
at Dec. 31, 181 1,134 6,466 1,792
================ ============= ================= =================
NOTE 14:- LONG-TERM LOANS FROM INTERESTED PARTY AND OTHERS
Composition: December 31,
------------------------------
2020 2019
-------------- --------------
Loan from interested party (1) 496 -
Net of current maturities (63) -
-------------- --------------
433 -
============== ==============
(1)
(1) A loan in NIS bearing annual interest of 4.6%.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 1 5 :- FINANCIAL LEASE
The Company has several leasing agreements that include leasings of a building and vehicles,
that are utilized for current operations. Building lease agreements are for a period of 3
to 7 years while vehicle lease agreements are for a period not in excess of three years. The
building lease includes extension options.
The Company's policy is to extend the initial lease period for the building over a period
that is not less than 3 years. The Company examines the probability of exercise or
non-exercise
of the option in view of the business requirements and the lease agreement.
In addition, the vehicle lease agreements are for a period up to three years without option
periods for extensions during the leasing.
a. Composition:
1. Rights of Building Vehicles Total
use assets:
------------------ ----------- ---------------------
Opening balance
Jan.1, 2020 1,568 183 1,751
Additions during the
year - . - 344 344
Depreciation (261) (189) (450)
------------------ ----------- ---------------------
Closing balance Dec.
31. 2020 1,307 338 1,645
================== =========== =====================
Rights of use assets: Building Vehicles Total
------------------ ----------- ------------
Opening balance Jan.1, 2019 - . - - . - - . -
Additions during the year 1,829 286 2,115
Depreciation (261) (103) (364)
------------------ ----------- ------------
Closing balance Dec. 31. 2019 1,568 183 1,751
================== =========== ============
December 31,
-------------------------------------
2. Liability in regard to leasing: 2020 2019
------------------- ----------------
Liability 1,767 1,816
Net of current maturities (465) (324)
1,302 1,492
=================== ================
b. Amount of the liability was computed by capitalization of the leasehold payments for the payments
period at an annual interest rate of 8%. The amounts are linked to the Consumer Price Index.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 16:- OPTIONS CONVERTIBLE TO SHARES
a. On December 18, 2017, the Company completed its Initial Public Offering (IPO)
on the London
Stock Exchange in the framework of which convertible loans (see Note 13) were
converted to
39,734,610 shares and an amount of 65,893,310 non-marketable Options. In
accordance with the
valuation of an independent external assessor, the Options have no fair value
as of December
31, 2020 and they have a value as of December 31, 2019 of approximately NIS
370 thousand.
During July 2019 a six month extension was granted for every Options series.
As of December
17, 2019 an amount of 24,804,020 Options expired that had been rendered for an
exercise period
of 18 months (subsequent to the extension rendered as abovementioned).
On October 31, 2018 the Company issued 3,006,250 shares and allotted 3,006,250
non-marketable
Options in their regard. In accordance with the valuation of an independent
external assessor,
it was determined that the Options for shares that had been rendered, as of
December 31, 2020
had no fair value and as of December 31, 2019 the fair value was approximately
NIS 3 thousand.
On May 13, 2019 the Company issued 25 million shares and Options to various
investors in consideration
for GBP 1 million. The shares were allocated at a price of 4 pence per share,
and to each
share one Option was allocated at the exercise price of 8 pence for 24 months
(see Note 17d).
In accordance with the valuation of an external assessor, the Options had a
zero value fair
value at allocation date. As of December 31, 2019, the valuation is
approximately NIS 655
thousand.
On June 30, 2019 the Company issued 5,061,055 shares and Options to various
investors in consideration
for convertible loans in the amount of NIS 1,166 thousand, allocated at a
price of 5 pence
per share. To each share one Option was allocated at an exercise price of 10
pence for 24
months. In accordance with the valuation of an independent external assessor,
as of December
31, 2020 the Options had zero fair value while as of December 31, 2019 the
fair value of the
Options per shares that were rendered is in the amount of approximately NIS 92
thousand.
On June 30, 2020 the Company issued 28,900,715 shares and Options to various
investors as
a consideration for convertible loans in the amount of GBP 1,385 thousand. The
shares were
allocated at a price of 4-5 pence per share, and for each share an Option was
issued at an
exercise price of 8-10 pence for 24 months. As of December 31, 2020 the value
of the allocated
Options in the framework of the issuance was in the amount of approximately
NIS 5 thousand.
b. Parameters used in the fair value valuation:
December 31, 2020 December 31, 2019
Projected fluctuations (in percentages) 28 - 51 67 - 79
Life of the Option (in 0.36 - 1.5 0.5 - 1.5
years)
Rate of non-risk (0.10) - (0.15) 0.58 - 0.69
interest (in
percentages)
Market price (in GBP) 0.2 0.043
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 16:- OPTIONS CONVERTIBLE TO SHARES
(cont.)
c. Composition of existing Options Value of Options
Number of Options (NIS in Thousands)
---------------------------------- ----------------------------------
31.12.2020 31.12.2019 31.12.2020 31.12.2019
---------------- ---------------- ---------------- ----------------
Options
allocated
Dec.
18, 2017
* 20,544,650 41,089,290 - . - 370
Options
allocated
Oct.
31, 2018 3,006,250 3,006,250 - . - 3
Options
allocated
May
13, 2019 25,000,000 25,000,000 - . - 655
Options
allocated
June
30, 2019 5,061,055 5,061,055 - . - 92
Options
allocated
June
30, 2020 28,900,715 - . - 6 - . -
---------------- ---------------- ---------------- ----------------
82,512,670 74,156,595 6 1,120
================ ================ ================ ================
* During 2020 and 2019, an amount of 23,550,890 and 24,804,020 Options,
respectively, expired.
d. Fair value hierarchy -
Measurement of fair value of financial instruments is performed using a fair
value hierarchy
that reflects the data that was used in performance of a measurement of fair
value. The hierarchy
of fair value is based on the following three levels:
Level 1 - Quoted prices (unadjusted) on the
active markets for identical assets
or liabilities.
Level 2 - Data that are not price quotes
included in Level 1 abovementioned,
that may be seen directly
(that is, price quotes) or indirectly
(that is, derivatives of price
quotes).
Level 3 - Data in regard to an asset or
liability that are not based on
market information that may
be seen (unseen data).
As of December 31, 2020 and 2019, the liability in regard to allocation
agreements and the
liability in regard to the Options were measured using a valuation technique
based on Level
2 while basing itself on visual market data.
NOTE SHARE CAPITAL December 31, 2020 December 31, 2019
17:-
Number of Number of
Ordinary Shares Ordinary Shares
-------------------------------- --------------------------------
a. Composition :
Issued and Issued and
Authorized Outstanding Authorized Outstanding
---------------- -------------- ---------------- --------------
Ordinary shares of NIS 0.1
par value 1,000,000,000 201,299,072 1,000,000,000 172,306,565
================ ==============
b. On December 18, 2017 the Company completed its IPO on the London Stock Exchange in the
framework
of which 45,174,560 Ordinary Company shares were registered for trade as follows:
397,346,100 shares were allocated as a result of loan conversions to shares.
32,085,060 shares were allocated to an interested party in the framework of a debt
conversion.
20,223,000 shares were allocated in consideration for payment of debts to issuance
advisors.
2,090,900 shares were allocated to subscribers on the issuance date.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 17:- SHARE CAPITAL (cont.)
429,431,700 shares were allocated at a 15% discount from the basic
issuance price - GBP 1.10.
The inclusive amount attributed to capital in accordance with the
basic price per share is
NIS 18,857 thousand (net of issuance expenses and fees in the amount
of approximately NIS
4,470 thousand).
During 2018 the Company issued 3,194,950 shares to various
investors.
The number of shares were adjusted in accordance with the split. See
c below.
c. On April 9, 2019 the Company performed a stock split of 1:10 so
that each shareholder received
9 additional shares for every share that he held beforehand.
d. On May 13, 2019 the Company issued 25,000,000 additional shares
and Options to various investors
for a consideration of GBP 1 million. The shares were allocated at
the price of 4 pence per
share, and each share received an allocation of one Option at the
exercise price of 8 pence
for 24 months.
e. On June 30, 2019 the Company issued 5,061,055 shares and Options
to various investors as a
consideration for convertible loans in the amount of NIS 1,116
thousand. The shares were allocated
at the price of 5 pence per share, with an Option added at the
exercise price of 10 pence
for 24 months.
f. On June 30, 2020 the Company issued 28,922,507 shares to various
investors in consideration
for convertible loans in the amount of NIS 3,381 thousands. The
shares were allocated at a
price of 4-5 pence per share.
g. The shares render to their owners the right to vote and to
participate in meetings of the
shareholders, the right to receive revenues and to participate in
surplus assets upon dissolution
of the Company.
h. In regard to agreements with interested parties - see Note 22a.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 18:- GENERAL AND ADMINISTRATIVE EXPENSES
Year Ended December 31,
-------------------------------------------------------
2020 2019 2018
--------------------- ----------------- -------------
Salaries expense to an interested party (see
Note 22a) 683 - . - - . -
Professional consultation 322 707 735
Salaries to directors 280 612 367
Fees 230 255 246
Other 151 173 197
Management fees and participation in expenses
to an interested party (see Note 22a1, 23a)
* 90 670 763
Office maintenance and office expenses 60 58 23
Depreciation 48 49 54
Office services to an interested party (see Notes
22a2, 23a) 32 67 - . -
Advertising and marketing 18 402 669
Travel abroad 1 130 356
1,915 3,123 3,410
===================== ================= =============
* Includes share based compensation - . - 11 25
===================== ================= =============
NOTE 19:- OTHER INCOME (EXPENSES), NET
Year Ended December 31,
--------------------------------------------
2020 2019 2018
----------- ------------------ -----------
Revenues from sale of jewelry 33 254 - . -
Expenses for jewelry production (3) (161) - . -
Capital gain from sale of fixed assets 75 - . - - . -
----------- ------------------ -----------
105 93 - . -
----------- ------------------ -----------
Income (expenses) regarding bad debt from
loan of the parent company 1,090 (1,116) - . -
----------- ------------------ -----------
1,195 (1,023) - . -
=========== ================== ===========
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 20:- FINANCING EXPENSES (INCOME), NET
Year Ended December 31,
2020 2019 2018
--------------- -------------- -------------
Finance expenses -
Adjustment of the value of a financial liability and
loans according to fair value, net 3,105 1,067 - . -
Exchange rate differentials 119 235 - . -
Finance expense in regard to leasing 156 159 - . -
Interest on loans from interested and related parties 20 16 3
Other expenses 30 57 177
Interest to a company that is an interested party - . - - . - 38
Revaluation of shares available for 952 - . - - . -
trade
--------------- -------------- -------------
4,382 1,534 218
--------------- -------------- -------------
Finance income -
Interest income from the parent company - . - (69)
Adjustment of financial liability in regard to Options
according to fair value (1,114) (160) (9,487)
Exchange rate differentials - . - - . - (81)
--------------- ------------- ---------------
(1,114) (160) (9,637)
--------------- ------------- ---------------
3,268 1,374 (9,419)
=============== ============= ===============
NOTE 21:- TAXES ON INCOME
a. Data in regard to the tax environment wherein the Company operates:
Tax rates
Corporate tax rate in Israel for 2018 and thereafter is 23%.
b. The Company received final assessments from the Income Tax
Authorities through 2014.
c. The Company has a carryforward loss for tax purposes as of December
31, 2020 in the amount
of approximately NIS 83 million. The tax benefit in this regard will
be included in the financial
statements at the time when realization is expected. Currently
utilization of loss is not
anticipated
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 22:- TRANSACTIONS WITH INTERESTED AND RELATED PARTIES
a. Transactions with
interested parties:
Year Ended December 31,
---------------------------------------------------------
2020 2019 2018
----------------------- ----------- -------------------
Charged to
statements of
comprehensive
income (loss):
Management fees
and participation
expenses paid to
"101" 90 670 763
======================= =========== ===================
Fees for office
services paid to
"808" 31 67 - . -
======================= =========== ===================
Finance expenses
paid to "101" - . - - . - 38
======================= =========== ===================
Interest income
received from the
parent company - . - - . - 69
======================= =========== ===================
Salaries to
interested parties 683 - . - - . -
======================= =========== ===================
Finance expenses
to shareholders 18 8 3
======================= =========== ===================
Charged to the
statements of
financial
position:
Capitalized
management fees
and participation
in expenses to
"101" 270 799 841
======================= =========== ===================
b. Balances of interested and related parties:
December 31,
---------------------------------------------------
2020 2019
-------------------- --------------------------------------
In the framework of current assets:
Marketable securities 926 - . -
==================== ======================================
In the framework of long-term
assets:
Interested parties - . - 77
==================== ======================================
Loan to the parent company - . - 2,233
====================
In the framework of short-term
liabilities:
Interested parties 88 211
==================== ======================================
Loan from interested parties 1,147 - . -
==================== ======================================
In the framework of non-current
liabilities:
Loan from interested parties 433 - . -
==================== ======================================
c. Commitments:
See Note 24a.
d. Guarantees for the Company from interested parties:
See Note 24b.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 23:- COMMITMENTS, GUARANTEES AND LIENS
a. Commitments with interested parties:
1. Commitment regarding "101":
Since 1999, when the Company was established, it has been managed by 101 Gold Holdings
(hereinafter
- "101"), an interested company, that, at balance sheet date, holds 2.73% of the
Company shares
and 3.90% fully diluted shares, in the framework of management agreements.
On January 1, 2020 a new agreement was signed between the Company and "101", whereby
"101"
provided office services to the Company in return for an amount of approximately NIS 60
thousand
with the addition of VAT, in accordance with the law. (This amount does not include
refund
of expenses related to travel abroad for the purpose of mobilizing investors.)
This agreement supersedes any previous agreement between the companies. The agreement
is
for a three month period with an option for extension for an additional three months.
The
Company did extend the agreement in accordance with the option, until June 30, 2020. On
that
date, the agreement expired and the parties chose not to renew it.
2. Commitments regarding "808":
On January 1, 2005 the Company signed an agreement with "808",
an interested party, whereby "808" will assist in finding potential
investors. In addition, "808" will provide collection services
regarding the investment money of investors that were found by
"808"for a consideration of 2% of the total gross investment by
each such investor in the Company.
In addition, "808" will provide office services to the Company
representatives in the United States for a fixed monthly retainer
in the amount of $ 770. The Company and "808" agreed that the
agreement will be valid until December 31, 2015. Each party has
the right to bring the agreement to an early termination upon
written notification six months in advance. The agreement was
extended until December 31, 2020 under the same terms.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 23:- COMMITMENTS, GUARANTEES AND LIENS (cont.)
a. Commitments with interested parties (cont.):
3. Commitment regarding Kibbutz
Yagur (related to the Distal
area according to the Company's
geological model):
On August 13, 2000 the Company signed a Memorandum with Kibbutz
Yagur (hereinafter - "The
Kibbutz"). In accordance with the Memorandum, the Company has the
right to dig and drill on
land that the Kibbutz is leasing from the Israel Lands Authority,
in accordance with the utilization
permission that will be rendered by the Kibbutz and in the
framework of the operations permitted
to be performed by the Company, as per the Permits issued to it. In
the event that mineral
deposits will be found, then the Company will be permitted to dig
and operate a mine in the
area, in consideration for annual usage fees in the amount of U.S.
$ 2,000 + VAT (hereinafter
- "the service fees"). The service fees will be paid to the Kibbutz
until the end of the permitted
usage period rendered by the Kibbutz or until the period contracted
by the parties in a leasing
or purchase agreement, as detailed below. The Memorandum does not
have a time limit.
This liability was transferred to the Subsidiary together with the
other liabilities of the
Company that are related to exploration and prospecting assets and
operations.
4. Chairman of the Board of Directors
On April 28, 2019 the Company signed an agreement with Mr. Michael
Rosenberg, chairman of
the Board of Directors, whereby the Company obligates to render over a
two year period an
amount of 1 million convertible Options at a price of nine pence. This
agreement has not as
yet been approved by the Board of Directors and, therefore, a liability
was not recorded in
this regard.
b. Guarantees and Liens:
The Company gave to a third party a guarantee through a bank in
the amount of approximately
NIS 7 thousand.
c. Information in Regard to Exploration and Prospecting Permits:
In November 2020, the Company board of directors decided to reorganize
so that all exploration
and prospecting, as defined above, will be transferred to a Subsidiary
that is, as of the
date of the financial statements, 100% owned by the Company. The
detailed information below
relates to the assets transferred, as abovementioned, during March 2021
to ownership of the
Subsidiary.
The Company received exploration and prospecting permits from the
Mining Inspector at the
Government of Israel National Infrastructures Ministry. These
exploration permits grant exclusive
rights to perform geological explorations in specific areas of northern
Israel. Prospecting
and discovery of minerals in Israel is subject to the statutes detailed
in the Mining Ordinance
and Mining Amendments added thereto as well as the Mining Regulations
subsequently appended.
Since commencement of the Company's operations in January 1999, the
Company has acquired all
necessary permits and licenses and maintains its schedule of operations
determined in accordance
with these licenses by the Mining Inspector at the National
Infrastructures Ministry.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 23:- COMMITMENTS, GUARANTEES AND LIENS (cont.)
c. Information in Regard to Exploration and Prospecting Permits (cont.):
Prospecting permit:
A prospecting permit grants to its holder the right to enter any area included in the permit,
in order to verify the presence or absence of minerals in the area and to dig up to two meters
and tunnel up to a depth of ten meters. A prospecting permit holder is not allowed to drill
or perform any other actions that have the intent or directly result in removal of minerals,
unless other special terms were designated by the Inspector. The prospecting permit is also
limited in regard to the exploration area and to the minerals that may be prospected. The
permit does not grant exclusive rights to its holder in regard to area and to minerals that
are permitted to be prospected. The prospecting permit is for an initial twelve month period
and may then be renewed for an unlimited amount of months, subject to terms and conditions
to be determined.
Exploration permit:
An exploration permit grants exclusive rights to its holder for exploring in the area designated
in the permit. An exploration permit may cover an area up to 500 sq. km. and is valid for
a two-year period. The holder of an exploration permit is required to employ expert geologists
and other trained individuals who are approved by the Inspector and have been hired to explore
in accordance with the general guidelines published periodically by the Inspector. In addition,
these individuals explore the rocks, minerals, quarries, ground and water supply in the area
in accordance with the Inspector's opinion and they furnish reports, maps or other information
as requested by the relevant Authorities, who then renew and extend the validity of the permit.
The Inspector has the right to nullify an exploration permit, completely or partially, without
any compensation to the holder of the permit, in the event that the Inspector determines that
the holder of the exploration permit is not conducting a survey of the area with proper expertise,
as required by the Ordinance and instructions of the Inspector.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 23:- COMMITMENTS, GUARANTEES AND LIENS (cont.)
c. Information in Regard to Exploration and Prospecting Permits (cont.):
Prospecting License:
Subject to the limitations designated in the Ordinance and in the event that the
prospecting
that is conducted in accordance with the prospecting permit is completed
satisfactorily, the
holder of a prospecting permit may request a "prospecting license" for certain
areas that
he chooses from those areas designated in the prospecting permit. The Inspector
may choose
to grant a prospecting license to an individual, subject, inter alia, to the fact
that this
person holds an exploration permit or a prospecting permit for the area that he
requested
and that this individual presented sufficient proofs that the minerals for which
he wants
to explore do indeed exist in the requested license area.
In the event that the prospecting is for non-precious quarries, the prospecting
license area
will not exceed 1% of the prospecting permit area granted to the holder. In the
event that
the prospecting is for precious stones, then the prospecting license area will not
exceed
0.5% of the prospecting permit area. (Precious stones are defined in the Ordinance
as including
gems, as well as diamonds, precious metals and metal ores.) In the event that the
requestor
does not hold a prospecting permit, then the area requested will not exceed 50
hectares (0.5
sq. km) for exploration of non-precious minerals; and will not exceed 20 hectares
(0.2 sq.
km.) if the individual wishes to explore for precious minerals in the determined
area.
A prospecting license is granted for a period of from one up to five years.
However, in the
event that the license is granted for a period of less than one year, then the
Inspector may
decide to renew the license for a period of up to five years.
A prospecting license grants to its holder the exclusive right to explore the
designated area
and for this purpose, he is permitted, inter alia, to dig, drill or perform other
work required
to determine whether the area contains "sufficient quantities" of minerals for
which the license
was granted (that would enable continued operations on a commercial level) and to
establish
and maintain machinery and equipment and pave roads necessary for performance of
the exploration.
The holder of a prospecting license is required to operate efficiently and with
proper expertise.
Failure to conform to these requirements can result in nullification of the
license. Transfer
to a third party of the license or any other right granted therein is subject to
obtainment
of written consent from the Inspector.
Discovery Certificate:
Subject to the limitations determined in the Ordinance, and if the feasibility
examination
has been completed to the satisfaction of the Inspector, the bearer of a
Prospecting License
will have the exclusive right to request a "Discovery Certificate" for parts of
the area that
are marked in the Prospecting License or for the complete area.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 23:- COMMITMENTS, GUARANTEES AND LIENS (cont.)
c. Information in Regard to Exploration and Prospecting Permits (cont.):
As long as the individual has a Discovery Certificate for quarries, he will have the right
to obtain a mining right or a contract for digging that is conditioned in the Discovery Certificate
and by the limits of the issues mentioned in the Ordinance.
Subject to those limitations, and the mining right or the mining contract rendered by the
Inspector and subject to the orders stated in the Mining Ordinance, bearer of the Certificate
receives a period of one year from the date the Certificate is rendered to request a mining
right or a contract to mine in regard to the quarry or quarries that are mentioned in the
Discovery Certificate and in regard to the area so as not to violate the maximum fixed rates
that are determined by those rights.
The request for mining is a formality, mainly since the owner of the Discovery Certificate
is required to perform all the planning for mining in conjunction with all the relevant Authorities,
and the Certificate is renewed accordingly.
NOTE 24:- EARNINGS (LOSS) PER SHARE
Year Ended December 31,
--------------------------------------------------------
2020 2019 2018
----------------- ----------------- ------------------
Comprehensive earnings (loss) for
the year (NIS in thousands) (3,988) (7,929) 6,009
================= ================= ==================
Weighted number of Ordinary shares 186,767,818 160,769,606 *142,245,510
================= ================= ==================
Basic and diluted earnings (loss)
per share (in NIS) (0.021) (0.049) *0.0431
================= ================= ==================
* Updated in accordance with the split.
NOTE 25:- FINANCIAL INSTRUMENTS
a. Financial risk management
1) General
The Company is exposed to the following main risks arising from use of financial
instruments:
-- Credit risk
-- Liquidity risk
-- Market risk
In this Note, we will render information in regard to Company exposure for each
of the risks
abovementioned, as well as Company goals, policies and procedures regarding
gauging and management
of these risks. Additional quantitative disclosure is included throughout these
financial
statements.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 25:- FINANCIAL INSTRUMENTS (cont.)
a. Financial risk management (cont.)
2) Framework for risk management
Company policy for risk management was formulated in order to identify and analyze the risks
confronting the Company, to determine sufficient limitations to the risks, control while
supervising
the risks and compliance with limitations. The policies and methods for risk management are
surveyed currently in order to reflect changes in the market conditions and the Company
operations.
The Company utilizes training and management procedures in order to develop a control environment
that is efficient, wherein all employees understand their roles and responsibilities.
3) Credit risk
Credit risks arise from cash and cash equivalents, deposits in banks and receivable balances
that are as yet unpaid. Company balances of cash and cash equivalents are deposited in a bank.
The Company considers credit risks for unpaid receivable balances to be insignificant.
4) Liquidity risk
Liquidity risk is the danger that the Company will not be able to pay its obligations related
to its financial liabilities that are cleared by cash payments or payment of another financial
asset. The Company's approach to management of its liquidity risks is to assure, as much as
possible, the necessary liquidity to meet its obligations on time, under ordinary terms and
when pressured, without encountering undesired losses or damage to its reputation.
Hitherto, Company financing has been maintained by issuance of share capital, receiving of
loans and use of credit from interested parties (management fees have been paid in accordance
with the Company's abilities).
5) Market risks
Market risks include the risk that changes in market prices, such as the exchange rates of
foreign currencies, the Consumer Price Index, interest rates, and prices of capital instruments
will have an effect on the value of Company holdings of financial instruments. The intent
of market risk management is to manage and supervise exposure to market risks in the framework
of accepted parameters, while maximizing yields.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 25:- FINANCIAL INSTRUMENTS (cont.)
a. Financial risk management (cont.)
5) Market risks (cont.)
The Company is exposed to the following risks:
Exchange rate risks:
Part of the Company's liabilities and mobilizations of capital is measured in dollars and
pounds sterling. Therefore, the Company is exposed to changes in the exchange rates of the
U.S. dollar and the British pound sterling. The Company has not utilized any protective measures
against this exposure.
Risks of falling market prices for diamonds, gold and precious stones:
The Company is exposed to changes in market prices for diamonds, gold and precious stones.
Despite the fact that the Company is still in the pre-production stage for the minerals, significant
changes in the future market prices can and may have an effect on the preparation to repay
investments in exploration and mining.
b. Interest rate risks
Exposures to interest rate risks and average weighted interest rates for financial assets
and liabilities are detailed as follows:
NIS Foreign
Currency
------------------------------------------------------------------------------------- ---------------
Linked to
the CPI Fixed Variable Interest Non- Fixed Non-
Interest Interest Interest Interest Total
--------------- --------------- ------------------------ --------------- --------------- --------------- -------------
NIS in thousands
31.12.2020
Financial Assets:
Cash and cash
equivalents 15 468 483
--------------- --------------- --------------- --------------- ---------------
Receivables 220 220
--------------- --------------- --------------- --------------- ---------------
Shares available
for trade 926 926
--------------- --------------- --------------- --------------- ---------------
Financial
Liabilities:
Short-term credit from banks and others 410 737 1,147
--------------- --------------- --------------- --------------- ---------------
Related parties 586 586
--------------- --------------- --------------- --------------- ---------------
Shareholders' loans 211 211
--------------- --------------- --------------- --------------- ---------------
Trade and other accounts payable 1,219 311 1,530
--------------- --------------- --------------- --------------- ---------------
Liability at fair value 6,475 6,475
--------------- --------------- --------------- --------------- ---------------
Loans convertible to shares 181 181
--------------- --------------- --------------- --------------- ---------------
Financial leasing 1,195 1,195
--------------- --------------- --------------- --------------- ---------------
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 25:- FINANCIAL INSTRUMENTS (cont.)
b. Interest rate risks (cont.)
NIS Foreign
Currency
---------------------------------------------------------------------------- ---------------
Linked to
the CPI Fixed Variable Interest Non- Fixed Non-
Interest Interest Interest Interest Total
--------------- --------------- ------------------------ --------------- --------------- --------------- -----------
NIS in thousands
31.12.2019
Financial Assets:
Cash and cash
equivalents 6 6
--------------- --------------- --------------- --------------- ---------------
Short-term bank
deposit 14 14
--------------- --------------- --------------- --------------- ---------------
Receivables 128 128
--------------- --------------- --------------- --------------- ---------------
Interested party 77 77
--------------- --------------- --------------- --------------- ---------------
Parent company 1,116 1,116
--------------- --------------- --------------- --------------- ---------------
Financial
Liabilities:
Short-term credit from banks and
others 95 211 131 438
--------------- --------------- --------------- --------------- ---------------
Loans from shareholders 211 211
--------------- --------------- --------------- --------------- ---------------
Trade and other accounts payable 535 646 1,181
--------------- --------------- --------------- --------------- ---------------
Liability at fair value 1,792 1,792
--------------- --------------- --------------- --------------- ---------------
Loans convertible
to shares 1,134 1,134
--------------- --------------- --------------- --------------- ---------------
Financial leasing 1,492 1,492
--------------- --------------- --------------- --------------- ---------------
c. Analysis of sensitivity
1) As of December 31, 2020 and 2019, the Company has net liabilities with variable
interest rates
in the amounts of NIS 175 thousand and NIS 211 thousand, respectively.
An increase in the market annual interest rate of 50% for the year ended
December 31, 2020
is likely to increase interest expense in the amount of approximately NIS 4
thousand; to decrease
net profit and shareholders' equity in the amounts of approximately NIS 4
thousand. A decrease
in the market interest rate of 50% would decrease the interest and increase net
profit and
shareholders' equity by identical amounts. This analysis was performed assuming
that there
will not be any changes in other factors.
2) A stronger New Israel Shekel (NIS) against the U.S. dollar would increase
(decrease) the shareholders'
equity and net income or loss as follows. This analysis was performed assuming
that all other
variables, especially interest rates, will remain fixed.
5% Increase in 5% Decrease in
Date Exchange Rate Exchange Rate
December 31, 2020 (391) 391
December 31, 2019 (185) 185
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 25:- FINANCIAL INSTRUMENTS (cont.)
d. Fair value
Book value of financial assets and liabilities, including cash and
cash equivalents, other
receivables, deposits, bank short-term credits, loans and
overdrafts, trade payable and other
payables is proximate to or equivalent to their fair value.
e. Liquidity risk
The Company has liabilities bearing interest at variable rates and
is, therefore, exposed
to changes in the market interest rate. See Section c.1 above.
Changes in the liabilities resulting from financing operations
f.
Receipts
on
Bank Loans from Options Loans at Fair Account of
and Interested Converted Value and Financial Loan Shares Total Flow
Other Parties to Shares Shareholders' Leasing From a Other from
Credits Loans Supplier Finan-cing
--------------
Balance 1.1.2019 (332) (674) (564) (772) - . - (134) (21,969) 386
Consideration from issue of shares and
Options (including additional paid-in
capital), net (566) (3,009) (3,575)
Loans from banks and others (103) (103)
Receipt of shareholders' loans, net (2,636) (2,636)
Repayment of long-term loans 674 299 973
Interest paid 334 334
Cash from financing activities (435) - . - (1,130) (2,636) 299 (124) (3,009) 334 (5,007)
Issue expenses attributable to P&L (723)
Issue expenses paid with
convertible shares (36) 36
Loans converted to Options and shares (149) 1,166 (1,017)
Classification of amortized cost to fair value 232
(232)
Financial leasing in accordance with IFRS 16 (2) (2,115)
Finance expense to interested party
Finance expense for convertible loans (210) 124
Debit balance converted to shares (60)
Supplier in regard to fixed assets
Balance as of 31.12.2019 (437) - . - (1,279) (2,926)) (1,816) - . - (26,742)
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 25:- FINANCIAL INSTRUMENTS (cont.)
f.
Bank Loans from Options Loans at Fair Receipts
and Interested Parties Converted Value and Financial on Total Flow
Other to Shares Shareholders' Leasing Account of Other from
Credits Loans Shares Finan-cing
Balance 1.1.2020 (437) - (1,120) (2,926) (1,816) (26,742) -
Consideration from
issue of shares and
Options (including
additional paid-in
capital), net (205) (205)
Loans from banks and
others -
Receipt of interested
parties loans, net (1,431) (1,431)
Receipt of shareholders'
loans, net (3,804) (3,804)
Repayment of long-term
loans 130 393 523
Interest paid 226 226
Cash from financing
activities 130 (1,431) - (3,804) 393 (205) 226 (4,691)
Issue expenses
attributable to P&L
Issue expenses paid with
convertible loans (116)
Loans converted to
Options and shares 3,381
Classification of
amortized cost to fair
value
Financial leasing in
accordance with IFRS 16 (344)
Adjustment of fair value
of options 1,114
Finance expense for
convertible loans (3,182)
Debit balance converted
to shares
Supplier in regard to fixed assets
Balance as of
31.12.2020 (307) (1,431) (6) (6,647) (1,767) (26,947)
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 26:- OTHER SIGNIFICANT EVENTS
Corona pandemic -
During January 2020 the Covid-19 Coronavirus was released in China and has since spread worldwide,
including in Israel, leaving chaos and uncertainty wherever it has touched civilization. The
scope of economic activity has been sharply reduced, including in Israel, and a suspicion
exists that there will be a global recession as a result. As part of the coping mechanism
and efforts to restrain the virus from spreading, steps were implemented, including in Israel,
that drastically limited mobility and social gatherings.
Preparations of the Company for further expansions in the global economic environment as well
as possible implications for these developments on Group operations are not under Company
control, are uncertain and are based on information presently available to the Company, that
is based, inter alia, on information in Israel and worldwide as well as on guidelines of the
relevant Authorities that could possibly change at any moment. As long as the global crisis
continues for a lengthy period of time, this is likely to result in significant deterioration
of the operating results for the Company, including its financial ability to cope with the
situation.
Effect of the Coronavirus on the Company:
On March 17, 2020 the Company received a Discovery Certificate from the Ministry of Energy
in Israel.
The Company's recent efforts revolve around working with the various Authorities in order
to advance the planning and regulation procedures that will enable it to receive a Mining
Permit. The Company does not know, at this point, what the effects of the Coronavirus will
be on the time schedule for advancing and receiving the necessary Permits in order to obtain
the Mining Permit and assumes that there will be minor delays in the scheduling, that are
not within the Company's control.
Concurrently, the Company estimates that there will be difficulties with mobilization of capital
in accordance with the current world economic situation.
The ability and timing of the Company to raise additional capital will inevitably be impacted
by these unprecedented external factors.
SHEFA GEMS LTD. (Formerly Shefa Yamim A.T.M. LTD.)
NOTES TO THE FINANCIAL STATEMENTS
NIS in thousands
NOTE 27:- EVENTS SUBSEQUENT TO BALANCE SHEET DATE
a. Agreement between the Company and its Subsidiary -
On November 29, 2020 an agreement was signed between the Company and its Subsidiary in the
framework of which the Company obligated to transfer to the ownership of the Subsidiary by
January 1, 2021 all the exploration assets as defined above. Concurrently, all the business
operations that are related to exploration assets were also transferred, including employees,
supervisors, engagements, advisors and suppliers, etc. Accordingly, all the results in regard
to operations related to exploration assets will be included for the Subsidiary commencing
with March 1, 2021.
Concurrently, it was agreed that as consideration for the abovementioned transfer of assets,
the Subsidiary will allocate ordinary shares to the Company at a quantity to be agreed upon
in accordance with the valuation that will be performed by an independent assessor.
Further, it was agreed that any delay in registering formally the ownership of the exploration
assets will not be able to harm the rights and/or liabilities of the Company and/or the Subsidiary
in accordance with the agreement between the companies.
b. During February 2021, the Company received an Exploration Permit, 1010C1, that includes the
area of approximately 990 dunam, in the "Daughter of Solomon" area that is valid until February
13, 2022.
c. During May 2021, an Exploration Permit received by the Company expired, and a renewal request
was submitted to the Mining Inspector, but this renewal request has not as yet been approved.
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END
FR FMMMTMTAJBIB
(END) Dow Jones Newswires
June 30, 2021 07:02 ET (11:02 GMT)
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