20-F: Hold Me Ltd. Faces Going Concern Doubt Amidst Revenue Decline and Accumulated Deficit in 2024 Annual Report

Hold Me Ltd.'s 2024 annual report reveals significant financial challenges, including recurring losses, a substantial accumulated deficit, and dependence on external financing, raising substantial doubt about the company's ability to continue as a going concern.

Summary

• Hold Me Ltd.'s annual report for the fiscal year ended December 31, 2024, highlights significant financial difficulties.
• The company faces substantial doubt about its ability to continue as a going concern due to recurring losses from operations and dependence on external financing.
• As of December 31, 2024, Hold Me Ltd. reported an accumulated deficit of 3,792,458 NIS and a stockholders deficiency of 2,619,934 NIS.
• Revenues decreased significantly from 927,000 NIS in 2023 to 55,845 NIS in 2024, primarily due to the termination of a collaboration with Galileo.
• The company's previous sole customer, Galileo Tech Ltd., discontinued their licensing agreement, resulting in no revenue generated from the platform in 2023 and 2024.
• General and administrative expenses increased by approximately 71% from 432,088 NIS in 2023 to 739,681 NIS in 2024.
• The company estimates needing $80,000 for the next 12 months of operations but lacks sufficient capital resources to continue without raising additional funds.
• The report identifies material weaknesses in internal control over financial reporting, including a lack of accounting staff with U.S. GAAP knowledge and insufficient documented financial closing policies.
• The company plans to take remedial measures to address these weaknesses, including hiring qualified accounting personnel and establishing an internal audit function.
• Hold Me Ltd. is pursuing a non-bank loan business activity, having obtained a non-bank lending license, but faces risks related to credit standards, interest rate fluctuations, and compliance with Israeli laws and regulations.
• The company's operations are subject to risks associated with doing business in Israel, including potential disruptions from military conflicts and political instability.
• The company's ordinary shares are subject to penny stock rules, which may limit the trading market and reduce investment value.
• The company's majority shareholder and principal officer, Menachem Shalom, has substantial influence, which may not align with the interests of other shareholders.

Sentiment

Score: 2

Explanation: The document paints a concerning picture of the company's financial health, with recurring losses, a significant accumulated deficit, and dependence on external financing. The loss of a key customer and the need for additional capital raise significant red flags.

Positives

• The company has obtained a non-bank lending license, enabling it to lend up to 25,000,000 NIS as a non-bank.
• The company is taking remedial measures to address material weaknesses in its internal control over financial reporting.
• The company plans to hire more qualified accounting personnel with relevant U.S. GAAP and SEC reporting experience.
• The company plans to establish an internal audit function and engage an external consulting firm to improve overall internal control.
• The company plans to appoint independent directors, establish an audit committee, and strengthen corporate governance.

Negatives

• The company has suffered recurring losses from operations and is dependent on external sources for financing.
• The company has a significant accumulated deficit and a stockholders deficiency.
• The company's revenue has decreased substantially due to the termination of a key collaboration.
• The company has identified material weaknesses in its internal control over financial reporting.
• The company's shares are subject to penny stock rules, which may limit the trading market and reduce investment value.
• The company's majority shareholder has substantial influence, which may not align with the interests of other shareholders.

Risks

• The company's financial situation creates doubt about its ability to continue as a going concern.
• The company may not be able to generate sufficient cash flow from operations or obtain additional financing.
• The company may be forced to discontinue operations if adequate working capital is not available.
• The company currently does not have any customers for its digital payments business.
• The market for digital payments may not continue to grow.
• The company may not be able to successfully compete in the digital payment market.
• Raising additional capital and the conversion of preferred shares could cause significant dilution to existing shareholders.
• The company may not be able to introduce products acceptable to customers or improve technology in response to changing needs.
• The company may need to change its pricing models to compete successfully.
• The company's products may fail to protect against attacks, leading to security breaches and reputational damage.
• The company may need to raise substantial additional capital before becoming profitable.
• The company is solely dependent on Amazon Cloud, which poses risks if the agreement is terminated or there are service issues.
• The company's relationships with other suppliers could terminate, disrupting its business.
• The company is dependent on Mr. Shalom, and his loss could have a material adverse effect.
• The company may be subject to intellectual property infringement claims.
• The company may not be able to prevent others from unauthorized use of its intellectual property.
• The company is not in compliance with certain corporate governance requirements under the Companies Law.
• Provisions of Israeli law and the company's articles of association may delay or prevent an acquisition.
• The company may be exposed to liabilities under the U.S. Foreign Corrupt Practices Act and other anti-corruption laws.
• An active trading market for the company's ordinary shares may not develop, and the trading price may fluctuate significantly.
• The trading price of the company's shares is likely to be volatile, which could result in substantial losses to investors.
• Negative publicity may harm the company's brand and reputation.
• The company does not expect to pay dividends in the foreseeable future.
• The company is a foreign private issuer and may take advantage of certain reduced reporting requirements.
• The company may lose its foreign private issuer status, which could result in significant additional costs and expenses.
• If the company fails to establish and maintain proper internal financial reporting controls, its ability to produce accurate financial statements could be impaired.
• The company's credit standards and on-going credit assessment processes might not protect it from significant credit losses.
• The amount of the company's future loan losses could be influenced by changes in economic, operating and other conditions.
• The company's proposed lending business will also subject it to specific Israeli laws and regulations.
• Conditions in Israel may adversely affect the company's operations and limit its ability to manage and market its products.
• The company's operations may be disrupted as a result of the obligation of Israeli citizens to perform military service.
• The company's sales may be adversely affected by boycotts of Israel.
• It may be difficult to enforce a U.S. judgment against the company, its officer and director or to assert U.S. securities laws claims in Israel or serve process on its officers and directors.
• Your rights and responsibilities as the company's shareholder are governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.

Future Outlook

The company anticipates needing $80,000 for the next 12 months of operations and expects to incur operating losses in 2025. The company's future operations are dependent on securing additional financing.

Management Comments

• Management estimates that in order to continue operations we will need $80,000 for the next 12 months of operations.
• Using currently available capital resources, which consist of, we cannot continue operations, unless we raise money from our existing shareholder or from other resources.

Industry Context

The digital payment market is intensely competitive, with big tech companies like Google, Apple, and PayPal vying for market share. The shift towards a cashless society, accelerated by the COVID-19 pandemic, has impacted all actors in the financial services ecosystem.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• Without specific financial benchmarks for comparable companies in the digital payment or non-bank lending sectors, a comprehensive assessment is not possible.
• Companies like PayPal, Square (Block, Inc.), and Adyen are key players in the digital payments space, but their business models and scale differ significantly from Hold Me Ltd.
• Assessing Hold Me Ltd.'s performance against these industry leaders would require a more detailed analysis of its specific market niche and competitive advantages.

Related Party Transactions

• Payment of management fees to Menachem Shalom, a controlling shareholder and director of the Company.
• The Company owes Menachem Shalom NIS 765,385 (include accrued interest NIS 65,486).
• The Company owes Billio Ltd NIS 1,312,931 (include accrued interest in amounts of NIS 64,829).
• The Company owes Tamarindi Ltd NIS 254,512 (include accrued interest in amounts of NIS 13,220).

Stakeholder Impact

• Shareholders face the risk of significant dilution if the company raises additional capital through equity offerings.
• Shareholders may experience substantial losses due to the volatile trading price of the company's shares.
• Employees may be affected by potential disruptions from military conflicts and political instability in Israel.
• Creditors face the risk of the company being unable to satisfy its obligations due to its financial difficulties.

Next Steps

• The company plans to take remedial measures to address material weaknesses in its internal control over financial reporting.
• The company will be looking to form commercial partnerships with software distributors and integrators to expand its market reach and sales.
• The company is looking to expand its product offering by developing, acquiring or licensing additional products relevant for its customer-base.
• The company intends to continue to finance its operating activities by raising capital.

Key Dates

Keywords

going concern, accumulated deficit, financial performance, revenue decline, internal control, risk factors, penny stock, Israeli law, related party transactions, non-bank lending, financial statements, Hold Me Ltd