INX Digital : Quarterly Report - 2022 Q1 Financials

THE INX DIGITAL COMPANY INC.

(FORMELY: VALDY INVESTMENT LTD.)

CONSOLIDATED INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2022

U.S. DOLLARS IN THOUSANDS

UNAUDITED

INDEX

Page

Consolidated Balance Sheets	F-2
Consolidated Statements of Comprehensive Income	F-3
Consolidated Statements of Changes in Equity	F-4 - F-5
Consolidated Statements of Cash Flows	F-6
Notes to Consolidated Interim Financial Statements	F-7-F-27

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F-1

THE INX DIGITAL COMPANY INC.

CONSOLIDATED INTERIM BALANCE SHEETS

U.S. dollars in thousands (except share and per share data)

		March 31,		December 31,
		2022	2021
		(Unaudited)		(Audited)
Assets
Current assets:
Cash and cash equivalents	46,608	24,581
Cash and cash equivalents held in Reserve Fund	18,645	21,987
Receivable from related parties	29	15
Trade receivable	953	834
Customer funds	4,892	4,270
Prepaid expenses and other receivables	1,084		2,368
Total current assets	72,211	54,055
Non-current assets:
Property, plant and equipment, net	266	160
Digital assets	2,513	1,000
Long term investments held in Reserve Fund	17,378	14,036
Other financial assets	400	400
Intangible assets, net	4,277	4,394
Goodwill	2,425	2,455
Loan receivable from related parties	1,015	1,015
Rights-of-use-assets, net	1,699		987
		29,973		24,447
Total Assets	102,184	78,502
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses	2,366	2,564
Accrued bonuses	-	606
Funds due to customers	4,892	4,270
Lease liability	508	319
INX Token liability	164,597	282,642
INX Token warrant liability	6,116	9,814
Contingent consideration liability	400		400
Total current liabilities	178,879	300,615
Non-current liabilities:
Warrant liability	4,553	-
Lease liability	1,315		821
Total non-current liabilities	5,868	821
Equity:
Share capital and share premium	53,172	24,198
Contribution to equity by controlling shareholder	582	582
Foreign currency translation reserve	104	188
Treasury shares, at cost	(10)	-
Accumulated deficit	(136,411)	(247,902)
Total equity (deficit)	(82,563)		(222,934)
Total Liabilities and Equity		102,184		78,502

The accompanying notes are an integral part of the consolidated interim financial statements.

F-2

THE INX DIGITAL COMPANY INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

U.S. dollars in thousands (except share and per share data)

		Three months
		ended March 31,
		2022			2021
	Note	(Unaudited)
Income:
Revenues (primarily from brokerage fees)		1,561			-
Operating expenses (income):
Research and development		253			1,608
Sales and marketing		2,251			2,909
General and administrative		1,706			5,783
Fair value adjustment of INX Token warrant liability to
employees and service providers		(3,698)			-
Income (loss) from operations		1,049			(10,300)
Fair value adjustment of INX Token liability	5	118,045			-
Finance income (expenses)		(1,728)			124
Listing expenses	3	(5,875)			-
Net Income (loss)		111,491			(10,176)
Amounts that will be or that have been reclassified to profit or
loss when specific conditions are met:
Adjustments arising from translating financial statements
from functional currency to presentation currency		84			-
Total Comprehensive Income (loss)		111,575			(10,176)
Earnings (Loss) per share, basic		$0.56			$ (0.07)
Earnings (Loss) per share, diluted		$0.53			-
Weighted average number of shares outstanding, basic		200,046,764			147,976,845
Weighted average number of shares outstanding, diluted		210,718,214			-

The accompanying notes are an integral part of the consolidated interim financial statements.

F-3

THE INX DIGITAL COMPANY INC.

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

U.S. dollars in thousands (except share and per share data)

					Contribution	Foreign
					to equity by	currency
	Ordinary shares		Share		controlling	translation	Treasury			Accumulated		Total
	Shares		premium		shareholder	reserve	shares			deficit		deficiency
Balance as of January 1, 2022	167,331,410	24,198	582		188		(247,902)	(222,934)
Net income	-	-	-		-		111,491	111,491
Other comprehensive income	-	-	-		(84)		-	(84)
Issuance of shares for reverse takeover							-
transaction	5,124,740	4,372	-				-	4,372
Issuance of private placement shares, net							-
of issuance costs	31,680,000	25,336	-				-	25,336
Share based compensation to advisors	-	1,834	-		-		-	1,834
Share based compensation	-	(2,568)	-		-		-	(2,568)
Repurchase of shares	(15,500)		-		-		-		(10)		(10)
Balance as of March 31, 2022									(10)
(unaudited)	204,120,650		53,172		582		104				(136,411)		(82,563)

The accompanying notes are an integral part of the consolidated interim financial statements.

F-4

THE INX DIGITAL COMPANY INC.

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

U.S. dollars in thousands (except share and per share data)

					Receivable on		Conversion option
	Ordinary shares		Share	account of		of convertible		Accumulated		Total
	Shares		premium	shares		Loans		deficit		deficiency
Balance as of December 31, 2020	143,038,761	$10,884		(9)	$ 46	$ (32,667)	$ (21,746)
Total comprehensive loss	-	-		-	-	(10,176)	(10,176)
Conversion of CLA	10,029,193	194		-	(46)	-	148
Conversion of SAFE	3,980,843	1		-	-	-	1
Exercise of SAFE warrant	3,206,903-	570		-	-	-	570
Share-based payment	--	5,968		-	-	-	5,968
Balance as of March 31, 2021
(unaudited)	160,255,700		$17,617		(9)		$ -		$ (42,843)		$ (25,235)

The accompanying notes are an integral part of the consolidated interim financial statements.

F-5