THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED FINANCIAL STATEMENTS AND THE RELATED NOTES THAT APPEAR ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q AND THE FINANCIAL STATEMENTS AND RELATED NOTES THERETO FOR THE FISCAL YEAR ENDED DECEMBER 31, 2021 AND THE RELATED MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, BOTH OF WHICH ARE CONTAINED IN OUR ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC"), ON MARCH 31, 2022. PAST OPERATING RESULTS ARE NOT NECESSARILY INDICATIVE OF RESULTS THAT MAY OCCUR IN FUTURE PERIODS. THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT OUR PLANS, ESTIMATES AND BELIEFS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW AND ELSEWHERE IN THIS QUARTERLY REPORT.

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. Forward-looking statements may include statements regarding our goals, beliefs, strategies, objectives, plans, including product and technology developments, future financial conditions, results or projections or current expectations These forward-looking statements involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "may," "should," "potential," "continue," "expects," "anticipates," "intends," "plans," "believes," "estimates," and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected-in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Our actual results may differ materially from those anticipated in these forward-looking statements. These forward-looking statements are made as of the date of this report, and we assume no obligation to update these forward-looking statements whether as a result of new information, future events, or otherwise, other than as required by law. In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this report might not occur and actual results and events may vary significantly from those discussed in the forward-looking statements. Further information on potential factors that could affect our business is described under the heading "Risk Factors" in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended March 31, 2022. Readers are also urged to carefully review and consider the various disclosures we have made in that report.

When used in this quarterly report, the terms "Sativus," "the Company," "we," "our," and "us" refer to SATIVUS TECH CORP., a Delaware corporation, unless otherwise indicated or as otherwise required by the context.





Company Overview

Sativus Tech Corp. (the "Company"), was formed on January 16, 2015, under the laws of the State of Delaware. Prior to September 14th, 2018, the Company was solely a provider of risk management and asset protection ("RAP") services for businesses, individuals and families. On September 14th, 2018, executed an Acquisition and Share Exchange Agreement with Eroll Grow Tech Ltd. ("Eroll"), an Israeli Corporation that was formed on May 18th, 2015 under the laws of the state of Israel. On September 17, 2018, the Board of Directors adopted an Amendment to its Articles, changing the name of the Corporation to SEEDO CORP. Since the Acquisition of Eroll and through to December 31, 2019, Eroll produced a plant growing device managed and controlled by an artificial intelligent algorithm, allowing consumers to grow their own herbs and vegetables effortlessly from seed to plant, while providing optimal conditions to assure premium quality produce year-round. On December 13, 2021, the Company changed its name from Seedo Corp to Sativus Tech Corp.

On July 19, 2020, the Company formed a new wholly-owned subsidiary in Israel, Hachevra Legiduley Pkaot Beisrael Ltd. (the "New Subsidiary"), to develop a fully automated and remotely managed system for growing saffron and other vegetables. On November 5, 2020, the New Subsidiary changed its name to Saffron-Tech Ltd. ("Saffron Tech").

The Company, through Saffron Tech, is focusing on its in-house research and development of agriculture technology products, among others, in the fields of exotic plants and mushrooms. Saffron Tech plans to roll out its proof of concept in the coming months. This technology will provide turnkey automated growing containers for high-quality, high-yield saffron all year round. The Company is in advanced stages of developing and testing a fully automated and remotely managed system for growing high-quality, high-yield saffron anywhere and anytime.





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The Company's proof of concept utilizes the "Grow Next to Consumer" policy and is therefore sustainable and fit the COVID-19 restrictions on transport. It is also environmentally friendly, using economic levels of water, space, fertilizer, and energy. Accounting to the Company's calculations, we believe that the controlled indoor growing area will produce ten times more yield compared to the same land area using traditional methods. The sealed environment eliminates the need for harmful pesticides and herbicides, producing a clean and safe product that is easy to control from anywhere. The Company's solution is easily scalable and pre-designed to quickly grow operations.

Saffron is used in many industries, such as the food industry, particularly by famous chefs and Michelin starred restaurants, the natural cosmetics industry and the natural medicine industry and as a dye in the textile industry. Medicinal claims as an anti-depressant, antioxidant, and antiseptic are constantly increasing.

On December 8, 2021, Saffron Tech announced it has begun construction of a new state-of-the-art indoor farm that will help increase its production of the saffron spice. Saffron Tech has already successfully completed two harvests of saffron using vertical farming technology at its initial location in Ganot, Israel. The Company's mission with this new facility, located at Mavki'im, Israel, is to complete a third cycle to triple the amount of saffron produced annually. Traditional agriculture only produces one harvest of saffron per year through a labor-intensive process.

On December 9, 2021, FINRA gave final approval for the Company's 1-for-10 consolidation, or reverse split, of our issued and outstanding common shares, as noted in our 8K of December 13, 2021. Except where otherwise indicated, all share and per share data in these financial statements have been retroactively restated to reflect said consolidation.

On January 6, 2022, the Company announced that its subsidiary, Saffron Tech, has planted approximately 25,000 Saffron bulbs in fields in the Golan Heights, in Norther Israel. The planation is being managed in conjunction with the Shamir Research Institute, which operates under the auspices of the Haifa University, Israel.

On April 4, 2022, the Company appointed Mrs. Tal Wilk-Glazer as Director and CEO of the Company. Gadi Levin stepped down as CEO and remains the Company's CFO. On the same day, Mr. Moshe Bar Siman Tov and Mrs Iris Ginsburg resigned from their positions as Directors. Their resignation was not the result of any disputes with the Company.





Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP") for interim financial statement presentation and in accordance with Form 10-Q. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited condensed financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.

These unaudited condensed financial statements should be read in conjunction with our December 31, 2021, annual financial statements included in our Form 10-K, filed with the SEC on March 31, 2022.





Going Concern

Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the condensed consolidated financial statements for the three months ended March 31, 2022 regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

Our unaudited condensed financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited condensed financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.





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Financing

We will require additional financing to implement our business plan, which may include joint venture projects and debt or equity financings. The nature of this enterprise and constraint of positive cash flow places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable profits and losses can be demonstrated. Therefore, any debt financing of our activities may be costly and result in substantial dilution to our stockholders.

Future financing through equity investments is likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other derivative securities, which may have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and financing, including investment banking fees, legal fees, accounting fees, and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition.

Our ability to obtain needed financing may be impaired by such factors as the capital markets, both generally and specifically in the Agro-tech industry, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenue from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.

There is no assurance that we will be able to obtain financing on terms satisfactory to us, or at all. We do not have any arrangements in place for any future financing. If we are unable to secure additional funding, we may cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations.





Results of Operations

Three months ended March 31, 2022 compared to the three months ended March 31, 2021





Operating Expenses

Research and development expenses for the three months ended March 31, 2022, were $65 thousand compared to $176 thousand for the same period in 2021. Gross research and development expenses were $287 thousand, offset by the cancellation of share-based expenses from previous years in the amount of $105 thousand and amounts received in respect of participation in expenses by the Israeli Innovation Authority in the amount of $117 thousand (previous period - nil) which reduced total research and development expenses for the three months ended March 31, 2022, to $65 thousand.

Total marketing expenses for the three months ended March 31, 2022, were $nil compared to $68 thousand for the same period in 2021.

General and administrative ("G&A") expenses for the three months ended March 31, 2022, were $92 thousand compared to $540 thousand for the same period in 2021. Gross general and administrative expenses were $198 thousand, offset by the cancellation of share-based expenses from previous year in the amount of $106 thousand which reduced total general and administrative expenses for the three months ended March 31, 2022, to $92 thousand.

Total financial income for the three months ended March 31, 2022, was $578 compared to $1,447 thousand expenses for the same period in 2021. The reason for the change is due to financial gains related to revaluations of convertible component in convertible loans.

Liquidity and Capital Resources





Overview

Since inception on January 16, 2015, the Company has a cumulative deficit of $20,629 thousand and a working capital deficit of $2,172 thousand as of March 31, 2022. Our future growth is dependent upon achieving further purchase orders and execution, management of operating expenses and ability of the Company to obtain the necessary financing to fund future obligations, and upon profitable operations.

Historically, we have financed our cash flow and operations from the initial contribution of our majority shareholder and by raising equity and convertible loans.

As of March 31, 2022, we had current assets of $564 thousand consisting of $353 thousand in cash and cash equivalents, $13 thousand in restricted cash and $198 thousand in other current assets.





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We had $2,736 thousand in current liabilities consisting of $142 thousand in other current liabilities, $1,289 thousand in Convertible loans, $1,256 thousand in convertible component, $20 thousand in short-term lease liability and $29 thousand accounts payables.

As of December 31, 2021, we had current assets of $963 thousand consisting of $866 thousand in cash and cash equivalents, $20 thousand in restricted cash and $77 thousand in prepaid expenses and other receivables. We had $3,358 thousand in current liabilities, which consisted of $12 thousand in accounts payable, $110 thousand other accounts payable, $2,994 thousand Convertible loans, $222 thousand in BCF liability, and $20 thousand in short term lease liability

We had a negative working capital of $2,172 thousand and $2,395 thousand as of March 31, 2022 and December 31, 2021, respectively.

Our Current liabilities as of March 31, 2022 were $2,736 thousand compared to $3,358 thousand as of December 31, 2021.

During the three months ended March 31, 2022, we had negative cash flow from operations of $260 thousand which was mainly the result of a net profit of $421 thousand, offset mainly by share-based revenues of $24 thousand and financial gains from revaluations of convertible component in convertible loans in the amount of $591 thousand.

During the three months ended March 31, 2022, we had negative cash flow from investing activities of $177 thousand compared to a negative cash flow from investing activities of $8 thousand during the three months ended March 31, 2021. The increase is due to investment in leasehold improvements.

During the three months ended March 31, 2022, we had negative cash flow from financing activities of $83 thousand compared to a positive cash flow from financing activities during the three months ended March 31, 2021. Cash flow from financing activities in the three months ended March 31, 2021, was a result of proceeds of convertible loans in the amount of $530 thousand, and issuance of shares to minority interests in a subsidiary in the amount of $1,406 thousand.

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