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. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expect," "intend," "plan,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue," the
negative of such terms, or other variations thereon or comparable terminology.
The statements herein and their implications are merely predictions and
therefore inherently subject to known and unknown risks, uncertainties,
assumptions and other factors that may cause actual results, performance levels
of activity, or our achievements, or industry results to be materially different
from those contemplated by the forward-looking statements. Except as required by
law, we undertake no obligation to release publicly the result of any revision
to these forward-looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events. 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 December 31, 2019.
Readers are also urged to carefully review and consider the various disclosures
we have made in that report.
Overview and Recent Developments
The Company's new business activity was introduced immediately upon the change
of control of the Company which occurred on February 27, 2020.
The Company's new business activity comprises creating value and implementing
expansion strategies for growth-stage technology companies. The Company believes
the health, wellness, food tech and Israeli medical cannabis fields are
demonstrating high growth potential, and is therefore primarily focused on these
sectors. The Company aims to empower innovative companies to become global
leaders and improve the health and quality of life of as many people as possible
worldwide. The Company aims to support local and global expansion of such target
companies via an array of services customized to each company's needs, from
assistance with strategic business planning to solving real estate-related and
finance issues. The Company offers multistrategy solutions combining strategic
marketing, business development, real estate and site management services and
financing solutions. By offering such a wide spectrum of services the Company
aims to help create an integrated strategy that supports its target companies in
achieving their local and global expansion ambitions. The Company seeks to work
proactively and collaboratively with the target companies in order to allow them
to scale quickly and achieve their milestones. Further detail is provided in the
notes to the financial statements.
Description of the New Business
Following the recent change of control over the Company, we started a new
business. Our vision is to be a powerhouse for high-growth technology companies
via our business and financial expertise. To better align our name with the new
business, we decided to change the name of the Company to Citrine Global, Corp.
We filed a Schedule 14(C) information statement in connection with the name
change and expect the name change to take effect soon. On or about the same
time, we expect to also start trading under a new ticker symbol. We will file a
current report on Form 8-K once the new name and new ticker symbol become
We are focused on creating value and implementing expansion strategies for
growth-stage technology companies.
We aim to support local and global expansion of our client companies. We plan to
bolster high-growth technology companies via an array of services, with the
ability to customize them to each company's needs - from assistance with
strategic business planning to solving real estate-related and finance issues.
We offer multi-strategy solutions combining strategic marketing, business
development, real estate and site management services and financing solutions.
Such wide spectrum of services is targeted at helping create an integrated
strategy that supports our client companies in achieving their local and global
We seek to work proactively and collaboratively with our clients in order to
allow them to scale quickly and achieve their milestones.
We believe the health, wellness and food tech fields are demonstrating high
growth potential and are therefore primarily focused on these sectors. We plan
on empowering innovative companies to become global leaders and improve the
health and quality of life of as many people as possible worldwide.
We offer a mix of business development services, site management and real estate
support and financing solutions to help our client companies achieve their
Potential client companies we review will only receive financing with our
assistance after successful completion of due diligence and evaluation of legal,
IP, financial, technological, business, equity/collateral secured loans, shares,
sales, assets and real estate aspects in order to minimize risk.
The Company seeks to work proactively and collaboratively to achieve the best
possible results. Through our offices and partners around the world, we believe
we have the platform to achieve our goals. Our global network of partners and
advisers has vast experience in working with start-ups and growth-stage
companies helping them create strategic growth plans and present unique,
strategic partnership options using a global professional network.
The Company's partners and managers are all experienced investors and top-level
managers that held high level positions in leading companies. They place at the
Company's disposal their network, experience and expertise and offer deep
industry know-how in emerging technology markets, to achieve the growth goals
and global success our client companies strive for.
The Company's services range from assistance with strategic business planning to
operational execution and financing, customized for the needs of each client
Business Development and Consulting:
Business development, creating synergistic partnerships, assisting managements
build a strategy and set milestones, assist in finding M&A targets and in paving
the way for a public offering.
We assist our client companies with:
? The Business - assisting the company management in building strategic
analysis, business modelling, sales strategies, brand positioning, process
development, and milestones for global success.
? Optimize Product Strategy - we bring marketing and industry experts to perfect
? Ramp up Sales Force - having scaled businesses globally, our team assists in
further sales ramp-up.
? Expand Globally - assisting the company management in building strategy and
milestones for global success.
? Preparation for Investment - support with financial valuations, preliminary
negotiations for investment, mergers, IPO and more.
? Local and International Networking - market development with the support of
our partners and business network, we help our companies access international
? The Board - provide board advisory support and assist in finding the right
? The Team - our extensive network allows us to find the right team and recruit
? Capital Raising - public and private capital raising.
? Public Capital - as a publicly traded company we help with solutions adapted
to public trade.
? Streamline Operations - with a strong operational background, we assist in
? Scale Infrastructure - we want our businesses to be references in terms of
? Asset and Real Estate - provide solutions for companies' real estate and sites
to support their local and global expansion.
Provide solutions for companies' real estate-related needs: whether it is an
office space, a lab or a greenhouse, we will assist the company in finding the
right real estate at the right place and provide ongoing management services to
these assets - all with the aim of enabling our client companies to focus on the
core aspects of their business and create value for their shareholders.
Assist client companies in finding potential sources of financing for their
businesses, whether by connecting them to third party investors or,
exceptionally, making an investment ourselves, or both.
Selection Criteria and Process:
Growth stage technology companies in the fields of healthcare and wellness with
high growth potential.
? The companies' technology and IP
? The management team
? Financial model, market strategy and growth potential
? Addressable global market, competition and potential for international
partnerships, mergers, and strategic investments
? Capability for providing collateral
? Substantial equity and revenue base
? Public companies - an advantage
The Company intends to initially focus on Israeli companies through its Israeli
subsidiary CTGL - CITRINE GLOBAL ISRAEL LTD (company number 516201159) which was
incorporated on June 3, 2020.
Key Target Markets
We primarily target growth-stage technology companies focused on health and
Health and Wellness Market - Overview:
The health and wellness industry is growing consistently and rapidly on a global
scale, consisting of over 10% of the global GDP. Health and wellbeing tops
consumer agendas creating addressable target markets of trillions of dollars.1
The digital health market is projected to reach over $500 billion at a CAGR of
nearly 30% by 2025, the biotech market is expected to reach $775 billion by
2024, and the wellness market is estimated at $4,500 billion.2
The healthcare industry, and specifically the biotech sector, seeks to solve
many of the world's medical problems.
The wellness industry is defined as products and solutions that enable people to
incorporate wellness activities and lifestyles into their daily life.
The industry is divided into the following main categories:
Improvements in health technology and scientific breakthrough innovations are
changing treatment paradigms towards directions of:
? holistic patient care
Democratized knowledge is driving demand for innovative health and wellness
products and services across all demographics and geographies.
Changing consumer behavior and disruptive technologies are enabling the rapid
consumerization and personalization of healthcare.
There is an evolution from prescription drugs, doctor-administered diagnostics
and medical treatments to a new marketplace centered around the well-being of
people as individuals not patients, enabling and improving 'quality of life' in
ways which can be seamlessly integrated into their daily routines.
For these reasons we decided to place our focus on personalized health and
Many of these innovations are being driven by a new generation of
venture-backed, more consumer-orientated companies, often underserved by the
traditional medical and pharma VC marketplace. There are also pronounced market
asymmetries between the sources of some of the most important wellness
innovations in parts of Europe and Israel and the large consumer-driven
marketplaces for these innovations globally.
Health and Wellness Markets - Fields:
? Vitamins and minerals
? Nutritional supplements
? Food allergies
? Personalized nutrition and functional foods
? Digestion and gut health
? Weight management
? Cannabis edibles
? Plant based alternatives
? Neutronics and personalized nutrition
? Cannabis plant genetics
? Pharmacological cannabis effects
? Cannabis cultivation methods
? Cannabis-infused edibles
? Cannabis-based medications
? Cannabis products development
? Cannabis wellness solutions development
? Cannabis personalized medicine solutions
Physical and Mental Wellbeing:
? Cognitive/brain wellbeing
? Physical therapies
? Injury prevention
? Relaxation management and meditation
? Brain health and neurosciences
? Mood and stress detection and management
? Anxiety and depression
Anti-Aging and Improved Longevity:
? Skin health/repair
? Bone/joint health
? Personalized fitness and physical mobility
? Lifestyle management
? Fatigue abatement
? Sleep quality
? Pain management
? Mental alertness and dementia abatement
? Preventive and personalized fitness tracking
? Continuous health monitoring and biofeedback
? Point of care testing and screening devices
? Personalized big data and e-health analytics
? Unregulated or minimally regulated wearables, implants
? Post hospital/surgery monitoring
Health and Wellness Markets - Trends and Drivers:
? Health and wellness industry drivers/trends turned into investment
? Deregulation of healthcare industry: devolution from
? Technical innovation driving change: consumerization, digitization and
democratization of wellbeing.
? Increased awareness of food and nutrition: new generation of functional and
? Cognitive health just as important as physical health: alternative remedies
and improved awareness.
? Increased lifespan places huge demands on current systems: anti-aging,
lifestyle management, quality of life.
? New consumers' preferences and behavior: non-surgical, nonprescription,
? New business models and connected ways of making payments: insurance coverage
includes more wellbeing.
? New regulations allowing cannabis infused medications, products and edibles.
The Company opens opportunities with an insider's entree into fast-growing
industries with access to strategic investment opportunities. All this under a
credible institutional quality platform.
(graphic of potential future structure)
? Israel is truly a 'start-up nation' and has global leaders in almost any
category of technology-driven innovation covered by the Company.3
? Europe has very active health and wellness innovation clusters in the
Netherlands, UK, France, Nordic regions and Germany in particular.
? North America: - the USA is the market leader in health and wellness
innovations and leads the world in M&A activity in this area for mature
companies with proven revenues.
In December 2019, a strain of novel coronavirus (COVID-19) causing respiratory
illness emerged in the city of Wuhan in the Hubei province of China, and in
January 2020, the World Health Organization declared the COVID-19 outbreak a
public health emergency. The COVID-19 has spread to many countries and is
impacting the markets globally. Many countries, states and municipalities have
enacted quarantining regulations which severely limit the ability of people to
move and travel, and require non-essential businesses and organizations to close
their physical offices. The situation created by COVID-19 worldwide has made it
difficult and even impossible to meet with different investors, parties and
partners. The Company managed to adapt to the situation and built an alternative
plan in a short time. Since it was difficult and even impossible to travel
specifically to New York and Europe, and since the Company directors and
executives are based in Israel, the Company took the decision to focus on Israel
as first step, via its fully-owned subsidiary CTGL - CITRINE GLOBAL ISRAEL LTD
(company number 516201159) which was incorporated on June 3, 2020.
CGTL - Citrine Global Israel Ltd
CGTL - Citrine Global Israel Ltd, which is wholly owned by the Company, targets
Israeli startups and technology companies, and in particular public companies,
in the fields of healthcare, wellness, foodtech and medical cannabis.
About Israel - the "Startup Nation" 4:
? Israel has earned the nickname "Startup Nation" for a very good reason: with a
population of around 8.5 million, it has the largest number of startups per
capita in the world, around one startup per 1,400 people. This phenomenon has
caught the eyes of companies with global reach and global aspirations.
? The hi-tech ecosystem in Israel is currently focusing its attention on
research and development in the areas of healthcare and biotech, including
solutions for COVID-19 and the medical cannabis plant for medical purposes.
? Israel is known for its academic research yielding world renowned innovations
and Nobel prize winners.
? In addition, the government recognizes the role of the high-tech industry as a
main economic catalyst and supports innovations via funding and other models.
? Israel, as small as it may be, has attracted the interest of the world's major
technology companies, some of which have set up R&D centres in Israel.
CGTL - Citrine Global Israel Ltd - Strategy:
CGTL - Citrine Global Israel Ltd offers a unique, independent strategy that
covers the whole spectrum of services and financing options to ensure the
success of its chosen client companies, combining working capital financing,
business escort, technological consulting services, real estate and
infrastructure services for companies and a global network of experts and
business contacts in the relevant fields.
CTGL - Citrine Global Israel Ltd - Professional Ecosystem:
CTGL - Citrine Global Israel Ltd has a network which includes serial
entrepreneurs, leading business people, top scientists, researchers and industry
leaders, and this helps it to promote its client companies towards success.
CTGL - Citrine Global Israel Ltd leverages the knowledge and experience of its
affiliate Citrine S A L Investment & Holdings Ltd, whose wholly owned
subsidiaries Citrine S A L High Tech Ltd and Citrine S A L Biotech Ltd serve as
general partners in investment funds that have been operating for years in the
Israeli start up market and have long term experience in investing in and
promoting many startup companies.
CTGL - Citrine Global Israel Ltd also leverages the knowledge and experience of
its affiliates comprising the WealthStone Group, which specializes in real
estate and hedge funds, and the Neto Group, which specializes in insurance and
financial planning consultancy.
CTGL - Citrine Global Israel Ltd - Target Market: Medical Foods:
The medical foods market covers fields including: vitamins and minerals;
nutritional supplements; food allergies; personalized nutrition and functional
foods; digestion and gut health; weight management; cannabis edibles; plant
based alternatives; neutronics and personalized nutrition.
The global medical foods market is expected to be worth $30.4 billion by 2027,
growing from $18.4 billion in 2019 at a CAGR of 6.3%. 5
Medical food market drivers include:
? Rise in geriatric population
? Growing incidences of chronic diseases
? Increasing awareness regarding clinical nutrition amongst patients and
In the past, meal replacements were mainly consumed by the elderly or the ill,
frequently suffering from nutritional deficiencies. This has changed in recent
years, with the marketing of meal replacements increasingly targeting healthy
In addition, we see the emergence of cannabis-enhanced health edibles and
drinks, that is expected to continuously grow by more than 250% by 2021. 6
CTGL - Citrine Global Israel Ltd Target Market: Regulated Medical Cannabis:
The medical cannabis market covers fields including: cannabis plant genetics;
pharmacological cannabis effects; cannabis cultivation methods; cannabis-infused
edibles; cannabis-based medications; cannabis products development; cannabis
wellness solutions development; cannabis personalized medicine solutions.
Medical cannabis solutions have been approved for medical use in many countries
and have been shown to benefit more than 40 serious medical conditions,
? Multiple sclerosis
? Chronic pain
? Post trauma
? Chronic digestive problems, Crohn's Disease
? Anxiety and sleep disorders
? Concentration and memory problems
? Tourette Syndrome
Medical cannabis in Israel:
? The State of Israel is currently focusing its attention on research and
development on the cannabis plant for medical purposes.
? Research into the cannabis plant began in Israel in the 1960s, when Prof.
Rafael Meshulam first discovered the main components of the cannabis plant, a
discovery that was a world breakthrough in the study of the plant at the time.
? Research into the cannabis plant in Israel has continued ever since, in
academic and research institutions. In recent years, many studies have been
conducted in the field of medical cannabis in Israel. Israel is considered a
world center in the field of cannabis research and treatment.
? The cannabis plant is still not permitted for research in the USA, is still
restricted under US federal law, and is only recently increasingly studied in
? As a result, Israel has an advantage in the field, relative to the rest of the
world, and in academic knowledge on the medical potential of the cannabis plant
in treating diseases such as cancer, epilepsy, and childhood autism.
? The world's major drug companies have already begun to express an interest in
Israeli research, as well as the big challenge involved in registering patents
and intellectual property for drugs using the cannabis plant, which is a complex
plant with hundreds of active ingredients.
? Around 100 cannabis-related startups are currently operating in Israel.
Medical Cannabis Global Market Size:
? In the world, there are over 40 countries that allow legal use of medical
cannabis and the medical cannabis industry is also expanding to the wellness and
medical foods sectors with cannabis incorporated into a variety of edibles,
pills, spray products, transdermal patches, supplements, salves, ointments and
? Legal medical cannabis products sales grew 45.7% to $14.9 billion in 2019.
This worldwide growth estimate reflects the highest annual growth rate to date.
As a result of expected growth ArcView Group has updated their 2024 forecast to
$42.7 billion in worldwide legal cannabis sales. 7
? In addition, we see the emergence of the cannabis-enhanced health edibles and
drinks market, that is expected to continuously grow by more than 250% by 2021.
Facilities and real estate services for the health and medical cannabis
? The healthcare and medical cannabis industry creates attractive opportunities
to invest in the industrial real estate sector with a focus on regulated
medical-use cannabis facilities.
? Healthcare and medical cannabis companies specifically need infrastructure and
assets that are licensed and guarded according to various regulations, involve
long-term rentals, and more.
? CTGL - Citrine Global Israel Ltd has built a model adapted to these companies'
needs, covering innovation centers, laboratories, pharmacies, and clinics. The
Cannovation Center is an application of this model.
Cannovation Center - a center for cannabis innovation in Israel.
The "Cannovation Center" - Cannabis Innovation Center - in Israel, referred to
in Note 10 above, is being designed to address the needs of the emerging
cannabis, CBD and hemp industry. It is intended that the Cannovation Center,
when built, will demonstrate a unique model of an all-in-one platform including
factories for producing cannabis, hemp and CBD products, laboratories, and a
logistics and distribution center. It is intended that it will support the
cannabis eco-system including cannabis growers, cannabis product developers,
researchers and other cannabis businesses, which operate in a field that
requires interdisciplinary professional expertise, compliance with a wide set of
regulatory demands including IMC-GMP production standards, 24/7 surveillance and
security, special recycling procedures, and more. It is intended that the
Cannovation Center in Israel will provide solutions for companies in Israel and
worldwide, leveraging Israel's leadership in cannabis innovation and promoting
the production and distribution of cannabis, hemp and CBD products for local and
global markets. Affiliates of the Company are in the process of obtaining a
government grant for the Cannovation Center. The Israeli Government provides
grants and subsidies specific to the cannabis industry as part of its strategy
for boosting the economy through technological innovation. Israel is a leading
source of technological innovation, including in the cannabis industry. It is
anticipated that the Company's Israeli Subsidiary will hold around 60% of the
shares in the Cannovation Center. The Cannovation Center venture is a result of
years of involvement by affiliates of the Company in the cannabis industry. It
is hoped that this will be the first center, to be joined by additional centers
around the world.
The Company at this time intends to carry out its cannabis-related activity
through its Israeli subsidiary only, and not the US parent company, and to be
involved, and engage with client companies that are involved, in
cannabis-related activities only in countries where the activity has been
authorised under all appliable laws. The Company does not at this time intend to
be involved, either directly or indirectly, in cannabis-related activity in the
United States, in light of the federal-level restrictions in place at this time.
The Company's primary shareholders
The Company and its wholly-owned subsidiary CTGL - Citrine Global Israel Ltd
leverage the knowledge and experience of the Company's primary shareholders:
members of the WealthStone Group, which specializes in real estate and hedge
funds; Citrine S A L Investment & Holdings Ltd, which is part of the Wealthstone
Group's private equity activity for investments in the high-tech and biotech
sectors; and members of the Neto Group, which specializes in insurance and
financial planning consultancy.
The WealthStone GroupThe WealthStone Group, which is one of the Company's primary shareholders and
makes its knowledge and experience available to the Company, specializes in
alternative investments and operates in various fields with extensive financial
knowledge and experience. The WealthStone Group has real estate funds, hedge
funds and technology investments funds and manages more than half a billion US
dollars in investments in Israel.
The Wealthstone Group introduces private investors to a world of investments
which until now was reserved to an exclusive group, to allow investors to
benefit from diversified alternative investments, with strong collateral and
The Wealthstone Group has a variety of products with a wide range of investment
periods, risk and security levels, so that each investor is matched with the
most suitable investment.
The world of alternative investments is multi-faceted, with a wide range of
investment opportunities that tend to be quite confusing for those who are
unfamiliar with the field.
The management team and the funds' GP partners specialize in each fund's area,
covering real estate, technologies, hedge funds and financing, and they are
supported by top professional consultants in the respective fields, among them,
appraisers, engineering companies, legal advisers, and other experts in each
Wealthstone Real Estate Ltd:
Wealthstone Real Estate Ltd, which is part of the Wealthstone Group, deals with
financing and lending for projects in the real estate sector, urban renewal,
removal-and-construction, and projects requiring equity and senior debt
financing. It is one of the largest companies in Israel for financing renewal
projects through limited partnerships in which it serves as a general partner.
It is ranked by DUN'S 100 among the leading 100 companies in Israel's real
estate sector. DUN'S 100 is a professional, objective, and reliable guide based
on fixed, defined, and measurable criteria according to various market sectors.
Citrine S A L Investment & Holdings Ltd
Citrine S A L Investment & Holdings Ltd, which is one of the Company's primary
shareholders and makes its knowledge and experience available to the Company, is
part of Wealthstone's private equity activity for investments in the high-tech
and biotech sectors.
Citrine S A L Investment & Holdings Ltd's related technology funds, in which its
wholly owned subsidiaries serve as general partners, invest in high potential
Israeli startup companies that own transformational technologies, leading a
unique, independent investment strategy with a professional team and a global
network of first-class partners and advisors.
Citrine S A L Investment & Holdings Ltd operates through limited partnerships,
in which its wholly owned subsidiaries Citrine S A L High Tech Ltd and Citrine S
A L Biotech Ltd serve as general partners, offering a wide array of investment
opportunities to private investors, for a range of investment periods.
The funds operate in various fields of technology investment and include:
? Partnerships for investing in high-tech companies.
? Partnerships for investing in biotech companies.
? Partnerships for investing in companies designed for an IPO.
? Along with bringing the financial investment, Citrine S A L Investment &
Holdings Ltd provides assistance in building strategies, finding business
partners, giving support in financial processes, mergers and acquisitions.
Citrine S AL Investment & Holdings Ltd's related funds have already invested in
several promising Israeli companies including Nicast, NanoMedic, WellBe, Biocep,
Improdia, Intelicanna, IBOT, Cannbit, Novomic, Dario, BSP Medical, and ICB
Israel-China Fund and more.
The Citrine S A L Investment & Holdings Ltd - ICB Israel-China Fund
collaboration targets strategic international and Chinese partners interested in
investment in and commercial cooperation with technology companies. Such
investment and commercial collaboration includes investment in medical and
biomedical companies in order to bring them to China as part of joint ventures.
Additionally, Citrine S A L Investment & Holdings Ltd offers models and
investments in partnerships that are designed for institutional investors,
foreign investors and designated investment groups.
Neto Financial Planning Insurance Agency Ltd
Neto Financial Planning Insurance Agency Ltd, which is part of the Neto Group,
one of the Company's primary shareholders, and makes its knowledge and
experience available to the Company,was founded over 27 years ago and is one of
the largest companies in the Israeli private and business financial planning and
Neto Financial Planning Insurance Agency Ltd has thousands of loyal customers,
which it has been accompanying for many years, providing financial advisory
services in respect of products with a market worth of over $3 billion.
Neto Financial Planning Insurance Agency Ltd is Israel's largest financial
planning private company. DUN'S 100 has ranked Neto Financial Planning Insurance
Agency Ltd among the leading 100 companies in Israel's financial planning sector
each year since 2018. Neto Financial Planning Insurance Agency Ltd is the only
Israeli broker included in the DUN'S 100 rankings. Neto Financial Planning
Insurance Agency Ltd provides holistic (comprehensive) financial planning for
thousands of clients across Israel, through a network which includes financial
planners who are licensed pension advisors and an administrative and
professional support team.
Neto Financial Planning Insurance Agency Ltd's significant scale and experience
enable its clients to benefit from a wide variety of investment opportunities,
and services and benefits covering income tax planning and reduction, retirees,
wills, medical committees, loans, mortgages, review and analysis of their
insurance files, basic insurance, lower costs and access to current and
comprehensive knowledge and technologies, for the management of their entire
The Neto Group offers financial planning products encompassing the full range of
financial needs of every household in Israel, including Neto - Financial
Planning, Neto - Financial Protection, Neto - Savings and Investment Portfolios
for Retirement Planning and Neto - Alternative Investments.
Neto - Alternative Investments: the Neto Group offers its clients a variety of
alternative investments that are not directly sensitive to capital markets
swings in Israel and globally. The operations in this area are conducted through
the Wealthstone Group (which is owned 50% by Neto), which serves as the Neto
Group's alternative investments arm.
Results of Operations
We generated $11 thousand in revenues in the six months ended June 30, 2020
compared to $85 thousand in revenues in the six months ended June 30, 2019. The
decrease is mainly attributable to a decrease in the demand for Novomic products
and our failure to obtain FDA approval for Novomic products or enter into
additional engagements with distributers, and also to us selling 90% of our
shares in Novomic and focusing on our new business activity.
We incurred a gross loss during the six months ended June 30, 2020, of $2
thousand, compared to $33 thousand in the six months ended June 30, 2019.
Research and Development Expenses
Our research and development expenses during the six months ended June 30, 2020
were $18 thousand as compared to $80 thousand, during the six months ended June
30, 2019. The decrease is mainly attributable to decrease in expenses related to
the Novomic products as a result of the conclusion of our board of directors
that the Company would not be able to successfully commercialize the Novomic
Marketing, General and Administrative Expenses
Our marketing, general and administrative expenses during the six months ended
June 30, 2020 were $1,757 thousand as compare to $811 thousand during the six
months ended June 30, 2019 The increase in our marketing, general and
administrative expenses is mainly attributable to the increase in our share
based compensation expenses somewhat offset by a decrease in marketing expenses
and professional services as a result of the conclusion of our board of
directors that the Company would not be able to successfully commercialize the
During the six months ended June 30, 2020 we incurred a net loss of $1,786
thousand. During the six months ended June 30, 2019, we incurred a net loss of
$937 thousand. The increase in net loss is mainly attributable to the share
based compensation expenses as described above.
Liquidity and Capital Resources
Our balance sheet as of June 30, 2020 reflects total assets of $4,476 thousand,
consisting mainly of cash and cash equivalents in the amount of approximately
$580 thousand, prepaid share based payment and other current assets of
approximately $3,445 thousand and investments valued under the measurement
alternative of approximately $450 thousand. As of December 31, 2019, our balance
sheet reflects total assets of approximately $257 thousand consisting mainly of
cash and cash equivalents in the amount of approximately $18 thousand, inventory
in the amount of approximately $35 thousand, other receivables of approximately
$19 thousand and property and equipment net, of approximately $156 thousand.
As of June 30, 2020, we had total current liabilities of approximately $630
thousand, consisting mainly of accounts payable and accrued expenses of
approximately $175 thousand, commitment to issue shares of approximately $105
thousand, fair value of shares exchange agreement of approximately $66 thousand
and fair value of convertible component in convertible loan of approximately
$285 thousand. As of December 31, 2019, we had total current liabilities of
approximately $360 thousand consisting mainly of accounts payable and accrued
expenses of approximately $224 thousand and a note payable of approximately $123
As of June 30, 2020, excluding prepaid share based payment of $3,445 thousand to
a service provider, we had a negative working capital of approximately $50
thousand, compared to negative working capital of approximately $278 thousand at
December 31, 2019. Our total liabilities as of June 30, 2020 were approximately
$1,211 thousand, compared to approximately $368 thousand at December 31, 2019.
During the six months ended June 30, 2020, we used approximately $473 thousand
of cash in our operating activities. This resulted mainly from an overall net
loss of approximately $1,786 thousand, net of an increase in stock-based
compensation of approximately $1,340 thousand, fair value adjustment of
liability in connection with stock exchange agreement of approximately $66
During the six months ended June 30, 2019, we used approximately $690 thousand
of cash in our operating activities. This resulted mainly from an overall net
loss of approximately $937 thousand, management fee waiver of approximately
$145, a decrease in accounts payable and accrued expenses of approximately $75
thousand and an increase in other current assets of approximately $132 thousand.
During the six months ended June 30, 2020, we used approximately $464 thousand
of cash in our investing activities. This resulted mainly from subsidiary no
longer consolidated of approximately $14 thousand and an investment accounted
under the measurement alternative of $450 thousand, as compared to approximately
$4 thousand in the same period in the prior year.
During the six months ended June 30, 2020, we provided approximately $1,501
thousand of cash by our financing activities. This resulted mainly from the
issued convertible notes and warrants of approximately $1,170 thousand and a
commitment to issue shares to related parties of approximately $105 thousand and
an issuance of common stock of approximately $72 thousand and loans from related
parties of approximately $154 thousand, as compared to approximately $457
thousand in the same period in the prior year.
The Company has a history of accumulated losses and its development and
execution of its strategy is still uncertain. However, based on the Company's
current cash balances, capital raised in the second quarter of 2020 and the
irrevocable letter it has received (as noted above), the Company has sufficient
funds for its plans for continuing its new activity in the next twelve months
from the issuance of this Form 10Q.
Off-Balance Sheet Arrangements
The Company has no off-balance sheet arrangements.
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