Sativus Tech Corp 10-Q for FY2022 Q3
Sativus Tech Corp. (SATT)
About this 10-Q
Sativus Tech Corp filed this 10-Q on November 14, 2022, covering the quarter ended September 30, 2022 (FY2022 Q3).
Headline figures
Quarter ended September 30, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Net loss
- $842K
- compared with a net loss of $588K a year earlier
- Diluted EPS
- -$0.17
- compared with -$0.01 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
OR
For the period from January 1, 2022
to
Commission file number:
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| | ||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate by check mark whether
the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 day.
Indicate by check mark whether
the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such files). Yes ☐
(Does not currently apply to the Registrant)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 if the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth company,
indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial
accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether
the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of November 14, 2022,
the registrant had
When used in this quarterly report, the terms “Sativus Tech Corp.” “the Company,” “we,” “our,” and “us” refer to Sativus Tech Corp.
TABLE OF CONTENTS
i
PART I. Financial Information
SATIVUS TECH CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2022
1
SATIVUS TECH CORP.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2022
IN THOUSANDS OF U.S. DOLLARS
INDEX
- - - - - - - - - - - -
F-1
SATIVUS TECH CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data
| September 30, | December 31, | |||||||
| 2022 | 2021 | |||||||
| ASSETS | (Unaudited) | |||||||
| CURRENT ASSETS: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Restricted cash | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Right-of-use asset | ||||||||
| Property and equipment, net | ||||||||
| Total non-current assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payables | ||||||||
| Other current liabilities | ||||||||
| Convertible loans | ||||||||
| Fair value of convertible component in convertible loans | ||||||||
| Short term lease liability | ||||||||
| Total current liabilities | ||||||||
| LONG-TERM LIABILITIES | ||||||||
| Long term lease liability | ||||||||
| Total Liabilities | ||||||||
| SHAREHOLDER’S DEFICIT | ||||||||
| Ordinary shares of $0.0001 par value | ||||||||
| Additional Paid in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| ( | ) | ( | ) | |||||
| Non-controlling interests | ( | ) | ||||||
| Total shareholders’ deficit | ( | ) | ( | ) | ||||
| Total liabilities and shareholders’ deficit | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-2
SATIVUS TECH CORP.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)
U.S. dollars in thousands, except share and per share data
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Selling and marketing | ( | ) | - | ( | ) | |||||||||||
| General and administrative | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Financial expenses, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | |||||
| Non-controlling interests | ||||||||||||||||
| Net loss attributable to equity holders of the Company | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| $ | ( | ) | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-3
SATIVUS TECH CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
U.S. dollars in thousands, except share and per share data
| Ordinary shares | Additional Paid in | Accumulated | Total Shareholders’ | Non- controlling | ||||||||||||||||||||||||
| Number | Amount | capital | Deficit | Deficiency | interests | Total | ||||||||||||||||||||||
| Balance as of January 1, 2021 | $ | | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | |||||||||||||||
| Transactions with non-controlling interests | - | |||||||||||||||||||||||||||
| Share Based Compensation to employees and non-employees | - | |||||||||||||||||||||||||||
| Beneficial conversion feature related to convertible loans | - | |||||||||||||||||||||||||||
| Exercise of warrants | - | |||||||||||||||||||||||||||
| Issuance of shares in respect of RSU’s | ||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of March 31, 2021 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Share Based Compensation to employees and non-employees | - | |||||||||||||||||||||||||||
| Conversion of convertible loans | ||||||||||||||||||||||||||||
| Issuance of shares in respect of RSU’s | ||||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of June 30, 2021 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Share Based Compensation to employees and non-employees | ||||||||||||||||||||||||||||
| Conversion of convertible loans | ||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Balance as of September 30, 2021 (Unaudited) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-4
SATIVUS TECH CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
U.S. dollars in thousands, except share and per share data
| Ordinary shares | Additional Paid in | Accumulated | Total Shareholders’ | Non- controlling | ||||||||||||||||||||||||
| Number | Amount | capital | Deficit | Deficiency | interests | Total | ||||||||||||||||||||||
| Balance as of January 1, 2022 | $ | | $ | $ | ( | ) | $ | ( | ) | $ | | $ | ( | ) | ||||||||||||||
| Share based compensation to non-controlling parties | - | |||||||||||||||||||||||||||
| Share Based Compensation to employees and non-employees | - | |||||||||||||||||||||||||||
| Cancellation of share options in subsidiary | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Net income | - | ( | ) | |||||||||||||||||||||||||
| Balance as of March 31, 2022 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Share based compensation to non-controlling parties | - | |||||||||||||||||||||||||||
| Share Based Compensation to employees and non-employees | - | |||||||||||||||||||||||||||
| Net income | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||
| Balance as of June 30, 2022 (Unaudited) | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Transactions with non-controlling interests | - | - | - | |||||||||||||||||||||||||
| Share based compensation to non-controlling parties | - | |||||||||||||||||||||||||||
| Share Based Compensation to employees and non-employees | - | |||||||||||||||||||||||||||
| Net income | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||
| Balance as of September 30, 2022 (Unaudited) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-5
SATIVUS TECH CORP.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
U.S. dollars in thousands
| Nine months ended | ||||||||
| September 30, | ||||||||
| 2022 | 2021 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share based compensation expenses to employees and non-employees | ||||||||
| Financial expenses related to convertible loans and warrants | ( | ) | ||||||
| Change in fair value of convertible component in convertible loans | ||||||||
| Changes in assets and liabilities: | ||||||||
| Increase (decrease) in other accounts receivable | ( | ) | ||||||
| Increase (decrease) in trade payables | ( | ) | ||||||
| Increase (decrease) in other current liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Decrease (Increase) in restricted cash | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Proceeds from convertible loans | ||||||||
| Lease payments | ( | ) | ||||||
| Repayment of convertible loans | ( | ) | ( | ) | ||||
| Proceeds from issuance of shares to minority interests in subsidiary | ||||||||
| Net cash provided by financing activities | ||||||||
| Increase (decrease) in cash and cash equivalents and restricted cash | ( | ) | ||||||
| Cash and cash equivalents and restricted cash at the beginning of the year | ||||||||
| Cash and cash equivalents at the end of the period | $ | $ | ||||||
| Supplemental disclosures of cash flow information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Conversion of convertible loans | $ | $ | ||||||
| Purchase of fixed assets by issuance of share capital | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
F-6
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 1:- | GENERAL |
| a. | 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. From September 14, 2018 through to December 31, 2019, the Company shifted its business to producing 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 and on September 17, 2018, the Board of Directors adopted an Amendment to its Articles, changing the name of the Corporation to Seedo Corp. 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.
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.
During July 2022, Saffron Tech received
a total of $
Saffron Tech is currently in the process
of raising equity by crowd funding through the Israeli crowd funding platform – Pipelbiz. Assuming the maximum amount (NIS
As of September 30, 2022, the Company
owns
On December 9, 2021, the Company implemented a 1-for-10 consolidation, or reverse split, of the Company’s issued and outstanding common shares. Except where otherwise indicated, all share and per share data in these financial statements have been retroactively restated to reflect the reverse stock split.
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
| b. | The Company has an accumulated deficit in the total amount of $ |
The Company intends to finance operating costs over the next twelve months with existing cash on hand, reducing operating spend, and future issuances of equity and debt securities, or through a combination of the foregoing. However, the Company will need to seek additional sources of financing if the Company requires more funds than anticipated during the next 12 months or in later periods.
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business.
The consolidated financial statements for the nine and three months ended September 30, 2022, do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.
F-7
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 1:- | GENERAL (cont.) |
| c. | The COVID-19 pandemic, which originated in China in late 2019, has since spread across the globe and affected the economic condition of most, if not all, countries, including the United States, Israel and many countries in Europe. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. While COVID-19 is still spreading and the final implications of the pandemic are difficult to estimate at this stage, it is clear that it has affected the lives of a large portion of the global population. As of September 30, 2022, the pandemic has caused repeated states of emergency to be declared in various countries, ongoing and extended travel restrictions have been imposed for several months, strict quarantines rules have been established and maintained for an extended period of time in a plethora of jurisdictions and various institutions and companies have been closed and rendered bankrupt. The Company is actively monitoring the pandemic and is taking any necessary measures to respond to the situation in cooperation with the various stakeholders. Due to the uncertainty surrounding the COVID-19 pandemic, the Company will continue to assess the situation, including government-imposed restrictions, market by market. It is not possible at this time to estimate the full impact that the COVID-19 pandemic could have on the Company’s business, the continued spread of COVID-19, and any additional measures taken by governments, health officials or by the Company in response to such spread, could have on the Company’s business, results of operations and financial condition. The COVID-19 pandemic and mitigation measures have also negatively impacted global economic conditions, which, in turn, could adversely affect the Company’s business, results of operations and financial condition. The extent to which the COVID-19 outbreak continues to impact the Company’s financial condition will depend on future developments that are highly uncertain and cannot be predicted, including new government actions or restrictions, new information that may emerge concerning the severity, longevity and impact of the COVID-19 pandemic on economic activity. |
| NOTE 2:- | UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
Basis of Presentation and Principles of Consolidation:
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary and were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
All intercompany accounts and transactions have been eliminated in consolidation.
Unaudited Interim Financial Information
The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 2021, and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 31, 2022 (the “2021 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the nine and three months ended September 30, 2022, are not necessarily indicative of the results for the year ending December 31, 2022, or for any future period.
As of September 30, 2022, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 2021 Annual Report.
F-8
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 2:- | UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (cont.) |
Fair value of financial instruments
ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.
In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the inputs as follows:
| Level 1 — | Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access. | |
| Level 2 — | Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly. | |
| Level 3 — | Valuations based on inputs that are unobservable and significant to the overall fair value measurement. |
The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.
The carrying amounts of cash and cash equivalents, short term deposits, trade receivables, trade payables and short-term loan approximate their fair value due to the short-term maturity of such instruments.
The Company elected to measure some of the convertible loans under the fair value option. Under the fair value option the convertible loans will be measured at fair value in each reporting period until they will be converted, with changes in the fair values being recognized in the Company’s consolidated statement of operations as financial income or expense. The proceeds received for the issuance of the convertible loans were allocated at fair value conducted on an arm’s-length basis.
The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| Balance as of September 30, 2022 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs | $ | $ | $ | $ | ||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
| Balance as of December 31, 2021 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Liabilities: | ||||||||||||||||
| Fair Value of convertible component in convertible loan, net of discounts and debt issue costs | $ | $ | $ | $ | ||||||||||||
| Total liabilities | $ | $ | $ | $ | ||||||||||||
F-9
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 3:- | CONVERTIBLE LOANS |
| a. | On February 21, 2019, |
The Company at its option shall have
the right to redeem, in part or in whole, outstanding principal amount and interest under this loan agreement prior to the maturity date.
The Company shall pay an amount equal to the principal amount being redeemed plus a redemption premium equal to
The February 2019 Lender shall be
entitled to convert at its option any portion of the outstanding and unpaid principal or accrued interest into fully paid and nonassessable
of shares of common stock, at the lower of the fixed conversion price then in effect or the market conversion price. The number of shares
of common stock issuable upon conversion of any conversion amount shall be determined by dividing (x) such conversion amount by (y) the
fixed conversion price of $
As of December 31, 2021, the Company has defaulted on the February 2019 Loan and the February 2019 Loan was presented in fair value in the financial statements for the year ended December 31, 2021.
On January 18, 2022, the Company
paid accrued interest of the February 2019 Loan in the amount of $
Conversion feature
In accordance with ASC 815-15-25 the conversion feature was considered an embedded derivative instrument, and is to be recorded at its fair value separately from the convertible notes, within current liabilities in the Company’s balance sheet. The conversion component is then marked to market at each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the conversion feature
(hereafter “Convertible Component”) in the amount of $
| March 31, 2022 | September 30, 2022 | |||||||
| Share price | $ | $ | ||||||
| Dividend yield | % | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| Volatility | % | % | ||||||
The February 2019 Loan is included
in the convertible loans in current liabilities as of September 30, 2022, in the amount of $
During the nine months ended September
30, 2022, the Company recorded financial income related to February 2019 Loan in the amount of $
| b. | On October 15, 2019, |
The October 2019 Lender shall be
entitled to convert the principal loan and the outstanding interest (the “Conversion Amount”) into such number of ordinary
shares determined by dividing (x) such Conversion Amount by (y) the fixed conversion price of $
F-10
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 3:- | CONVERTIBLE LOANS (cont.) |
As of December 31, 2021, the Company
has defaulted on the October 2019 Loan and the October 2019 Loan is presented in fair value in the financial statements for
the year ended December 31, 2021. On January 18, 2022, the Company paid accrued interest of the October 2019 Loan in the
amount of $
Conversion feature
In accordance with ASC 815-15-25 the conversion feature was considered an embedded derivative instrument, and is to be recorded at its fair value separately from the convertible notes, within current liabilities in the Company’s balance sheet. The conversion component is then marked to market at each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the conversion feature
(hereafter “Convertible Component”) in the amount of $
The Company estimated the fair value of BCF using the Monte Carlo option pricing model using the following weighted average assumptions:
| March 31, 2022 | September 30, 2022 | |||||||
| Share price | $ | $ | ||||||
| Dividend yield | % | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| Volatility | % | % | ||||||
The October 2019 Loan is included
in the convertible loans in current liabilities as of September 30, 2022, in the amount of $
During the nine months ended September
30, 2022, the Company recorded financial income related to October 2019 Loan in the amount of $
| c. | On August 7, 2020, |
The August 2020 Loan is convertible by the August 2020 Lender into Shares, at their discretion, at the lower of a fixed price of $1.02 (the “Fixed Conversion Price”) or 80% of the lowest volume weighted average price (“VWAP”) of the Company’s common stock during the 10 trading days immediately preceding the conversion date (the “Market Conversion Price”).
The Company also granted the August 2020
Investor warrants to purchase
The fair value of the conversion feature
(hereafter “Convertible Component”) in the amount of $
| December 31, 2021 | September 30, 2022 | |||||||
| Share price | $ | $ | ||||||
| Dividend yield | % | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| Volatility | % | % | ||||||
F-11
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 3:- | CONVERTIBLE LOANS (cont.) |
The August 2020 Loan is included
in the convertible loans in short term liabilities as of September 30, 2022, in the amount of $
During the nine months ended September
30, 2022, the Company recorded interest and financial expenses related to the August 2020 Loan in the amount of $
| d. | On July 31, 2020, the Company received a convertible loan from Mr. Shmuel Yannay (a third party at that time, and a director of the Company as of October 28, 2021) in the amount of $ |
The Director Loan is convertible into
Shares, at his discretion, at the lower of a fixed price of $
The Company also granted the Mr. Yannay
warrants to purchase
The fair value of the conversion feature
(hereafter “Convertible Component”) an amount of $
| December 31, 2021 | September 30, 2022 | |||||||
| Share price | $ | $ | ||||||
| Dividend yield | % | |||||||
| Risk-free interest rate | % | % | ||||||
| Expected term (in years) | ||||||||
| Volatility | % | % | ||||||
The Director Loan is included in the
convertible loans in short term liabilities as of September 30, 2022, in the amount of $
During the nine months ended September
30, 2022, the Company recorded interest and financial expenses related to the Director Loan in the amount of $
| e. | From June 2022 through to August 2022, Saffron Tech entered into a number of Simple Agreement for Future Equity (“2022 SAFES”) agreements with third parties (“2022 SAFE Investors”) for gross proceeds of approximately $
The 2022 SAFES shall be converted into shares of Saffron Tech, following a financing event of at least $
The SAFE Price is the Valuation Cap ($
In the event of a liquidity event, the Company will issue Shares equal to the 2022 SAFES Investment Amount divided by the liquidity price, as defined in the 2022 SAFES Agreement.
If there is a dissolution event, the Company will pay the investor an amount equal to the purchase amount, without any interest.
| |
| f. | On August 11, 2022, |
F-12
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 4:- | RELATED PARTIES |
| a. | During the nine months ended September 30, 2022 and 2021, the Company paid compensation expenses to related parties (CEO, CFO and directors) in the amount of $ |
| b. | Amounts owing to related parties (CEO, CFO and directors) as of September 30, 2022, and December 31, 2021, were $ | |
| c. | On January 5, 2022, Saffron Tech granted |
| d. | On January 5, 2022, following the resignation of two Saffron Tech directors certain share options in Saffron Tech that were granted to the two former directors were cancelled. During the nine months ended September 30, 2022, the Company recorded income in the amount of $ |
| NOTE 5:- | SHAREHOLDERS’ DEFICIENCY |
| a. | Share issuances
There were no share issuances during the nine months ended September 30, 2022. |
| b. | Warrants |
A summary of warrant activity during the nine months ended September 30, 2022, and year ended December 31, 2021, is as follows:
| Number | Average exercise price | |||||||
| Warrants outstanding at January 1, 2021 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited/Cancelled | ( | ) | ||||||
| Forfeited/Cancelled | ( | ) | ||||||
| Warrants outstanding at December 31, 2021 | $ | |||||||
| Expired | ( | ) | ||||||
| Exercised | ||||||||
| Forfeited/Cancelled | ||||||||
| Warrants outstanding at September 30, 2022 | $ | |||||||
The following warrants and are outstanding as of December 31, 2021:
| Issuance date | Warrants outstanding | Exercise price per warrant | Warrants outstanding and exercisable | Expiry date | ||||||||||
| February 21, 2019 | $ | | ||||||||||||
| October 15, 2019 | $ | |||||||||||||
| August 7, 2020 | $ | |||||||||||||
| August 11, 2020 | $ | |||||||||||||
| December 31, 2021 | $ | |||||||||||||
F-13
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 5:- | SHAREHOLDERS’ DEFICIENCY (cont.) |
The following warrants and are outstanding as of September 30, 2022:
| Issuance date | Warrants outstanding | Exercise price per warrant | Warrants outstanding and exercisable | Expiry date | ||||||||||
| October 15, 2019 | $ | |||||||||||||
| August 7, 2020 | $ | |||||||||||||
| August 11, 2020 | $ | |||||||||||||
| December 31, 2021 | $ | |||||||||||||
| c. | Share option plans: |
On April 1, 2019, the Company’s board of directors adopted the Sativus Tech Corp. 2018 Share Options Plan (the “2018 Plan”).
Awards granted under the 2018 Plan are subject to vesting schedules and unless determined otherwise by the administrator of the 2018 Plan, generally vest following a period of four years from the applicable vesting commencement date, such that the awards vest in four annual equal installments and/or generally vest following a period of one year from the applicable vesting commencement date, such that the awards vest in four quarterly equal installments.
Subject to the discretion of the 2018 Plan administrator, if an award has not been exercised within seven years after the date of the grant, the award expires.
(i) A summary of employee share options activity during the nine months ended September 30, 2022, and for the year ended December 31, 2021, is as follows:
| Number | Average weighted exercise price | |||||||
| Options outstanding at January 1, 2021 | $ | |||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Forfeited | ( | ) | ||||||
| Options outstanding at December 31, 2021 | $ | |||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited | ||||||||
| Options outstanding at September 30, 2022 | $ | |||||||
| Options exercisable at September 30, 2022 | $ | |||||||
F-14
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 5:- | SHAREHOLDERS’ DEFICIENCY (cont.) |
The following options are outstanding as of September 30, 2022:
| Issuance date | Options outstanding | Exercise price per option | Options outstanding and exercisable | Expiry date | ||||||||||
| September 1, 2020 | $ | |||||||||||||
| October 13, 2020 | $ | |||||||||||||
| November 3, 2020 | $ | |||||||||||||
| November 3, 2020 | $ | |||||||||||||
| December 14, 2021 | $ | |||||||||||||
| d. | Restricted Share Units: |
Shares issued pursuant to any RSUs units may (but need not) be made subject to exercise conditions, as shall be established by the Company and set forth in the applicable notice of grant evidencing such award. During any restriction period in which shares acquired pursuant to an award of RSUs remain subject to exercise conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of unless otherwise provided in the 2018 Plan. Upon request by the Company, each grantee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares hereunder and the Company may place appropriate legends evidencing any such transfer restrictions on the relevant share certificates.
A summary of RSU activity during the nine months ended September 30, 2022, and the year ended December 31, 2021, is as follows:
| Number | ||||
| RSU outstanding at January 1, 2021 | ||||
| Granted | ||||
| Exercised | ( | ) | ||
| Forfeited | ||||
| RSU outstanding at December 31, 2021 | ||||
| Granted | ||||
| Exercised | ||||
| Forfeited | ( | ) | ||
| RSU’s outstanding at September 30, 2022 | ||||
F-15
| SATIVUS TECH CORP. |
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) |
| U.S. dollars in thousands |
| NOTE 6:- | FINANCIAL EXPENSES |
| Three months ended | Nine months ended | |||||||||||||||
| September 30, 2022 | September 30, 2021 | September 30, 2022 | September 30, 2021 | |||||||||||||
| Financial expenses related to interest and revaluation of convertible component in convertible loans | $ | $ | $ | $ | ||||||||||||
| Financial expenses related to warrants | ||||||||||||||||
| Foreign currency transactions and other | ( | ) | ( | ) | ( | ) | ||||||||||
| NOTE 7:- | LIENS, COMMITMENTS |
Saffron leases its facility on a lease
that expires on
Saffron Tech is committed to pay royalties
to the IIA on the proceeds from sales of products resulting from research and development projects in which the IIA participates by way
of grants.
| NOTE 8:- | SUBSEQUENT EVENTS |
| a. | Saffron Tech is currently in the process of raising equity by crowd funding through the Israeli crowd funding platform – Pipelbiz. |
| b. |
F-16
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
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 December 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.
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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.
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.
From June 2022 through to August 2022, Saffron Tech entered into a number of Simple Agreement for Future Equity (“2022 SAFES”) agreements with third parties for gross proceeds of approximately $239.
During July 2022, Saffron Tech received a total of $100 in respect of the issuance of 76,890 shares to third party investors at price of NIS 4.5 per share (approximate $1.36 per share). The investors also received an option to convert the shares of Saffron Tech into shares of the Company. The option expires on January 1, 2023.
On August 30, 2022, the Company announced that Saffron Tech has announced its intention to raise up to 5 million New Israeli Shekels (“NIS”) (approximately $1.5 million) at a pre-money valuation of NIS 32.5 million (approximately $10 million) through the Israeli crowd funding platform – Pipelbiz. Assuming the maximum amount is raised, the Company will own approximately 61% of the Saffron Tech. As of the day of this report the Saffron Tech has raised $ 0.6 million.
3
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 nine months ended September 30, 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.
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.
4
Results of Operations
Nine months ended September 30, 2022, compared to the nine months ended September 30, 2021
Operating Expenses
Research and development expenses for the nine months ended September 30, 2022, were $494 thousand compared to $443 thousand for the same period in 2021. Gross research and development expenses were $704 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 $105 thousand (previous period – nil) which reduced total research and development expenses for the nine months ended September 30, 2022, to $494 thousand.
Total marketing expenses for the nine months ended September 30, 2022, were $nil compared to $131 thousand for the same period in 2021.
General and administrative (“G&A”) expenses for the nine months ended September 30, 2022, were $490 thousand compared to $1,020 thousand for the same period in 2021. Gross general and administrative expenses were $596 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 nine months ended September 30, 2022, to $490 thousand.
Total financial expenses for the nine months ended September 30, 2022, was $117 compared to $1,340 thousand expenses for the same period in 2021. The reason for the change is due to financial losses related to revaluations of convertible component in convertible loans.
Three months ended September 30, 2022, compared to the three months ended September 30, 2021
Operating Expenses
Research and development expenses for the three months ended September 30, 2022, were $218 thousand compared to $125 thousand for the same period in 2021.
Total marketing expenses for the three months ended September 30, 2022, were $nil compared to $50 thousand for the same period in 2021.
General and administrative (“G&A”) expenses for the three months ended September 30, 2022, were $189 thousand compared to $315 thousand for the same period in 2021.
Total financial expenses for the three months ended September 30, 2022, was $435 compared to $98 thousand for the same period in 2021. The reason for the change is due to financial losses related to revaluations of convertible component in convertible loans.
5
Liquidity and Capital Resources
Overview
Since inception on January 16, 2015, the Company has a cumulative deficit of $21,973 thousand and a working capital deficit of $3,395 thousand as of September 30, 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 September 30, 2022, we had current assets of $242 thousand consisting of $191 thousand in cash and cash equivalents, $11 thousand in restricted cash and $40 thousand in other current assets.
We had $3,637 thousand in current liabilities consisting of $111 thousand in other current liabilities, $2,176 thousand in Convertible loans, $1,302 thousand in convertible component, $15 thousand in short-term lease liability and $33 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 $3,395 thousand and $2,395 thousand as of September 30, 2022, and December 31, 2021, respectively.
Our Current liabilities as of September 30, 2022, were $3,637 thousand compared to $3,358 thousand as of December 31, 2021.
During the nine months ended September 30, 2022, we had negative cash flow from operations of $732 thousand which was mainly the result of a net loss of $1,101 thousand, share-based expenses of $172 thousand and offset by financial gains from revaluations of convertible component in convertible loans in the amount of $100 thousand.
During the nine months ended September 30, 2022, we had negative cash flow from investing activities of $190 thousand compared to a negative cash flow from investing activities of $31 thousand during the nine months ended September 30, 2021. The increase is due to investment in leasehold improvements.
During the nine months ended September 30, 2022, we had positive cash flow from financing activities of $248 thousand compared to a positive cash flow from financing activities of $1,862 during the nine months ended September 30, 2021. Cash flow from financing activities in the nine months ended September 30, 2022, was mainly a result of proceeds of convertible loans in the amount of $239 thousand, and proceeds from issuance of shares to minority interests in a subsidiary in the amount of $100 thousand. Cash flow from financing activities in the nine months ended September 30, 2021, was mainly 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.
6
Item 3. Quantitative and Qualitative Disclosures about Market Risk
We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act of 1934, as amended (the “Exchange Act”) and are not required to provide the information required under this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of our Quarterly Report on Form 10-Q, an evaluation was carried out by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of September 30, 2022. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
During evaluation of disclosure controls and procedures as of September 30, 2022, conducted as part of our preparation of the quarterly unaudited condensed financial statements, management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective.
Changes in Internal Control Over Financial Reporting
As of the end of the period covered by this report, there have been no changes in internal control over financial reporting that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
7
Part II- Other Information
Item 6. Exhibits
| Exhibit Number |
Description | |
| 10.1 | Form of Subscription Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on April 2, 2019). | |
| 31.1* | Rule 13a-14(a) Certification of the Chief Executive Officer | |
| 31.2* | Rule 13a-14(a) Certification of the Chief Financial Officer | |
| 32.1** | Section 1350 Certification of Chief Executive Officer | |
| 32.2** | Section 1350 Certification of Chief Financial Officer | |
| 101.INS | Inline XBRL Instance Document. | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |
| * | Filed herewith. |
| * | Furnished herewith. |
8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.
| Dated: November 14, 2022 | By: | /s/ Tal Wilk-Glazer |
| Tal Wilk-Glazer | ||
| Chief Executive Officer | ||
| SATIVUS TECH CORP. |
9
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Tal Wilk-Glazer, certify that:
| 1. | I have reviewed this Form 10-Q of SATIVUS TECH CORP.; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report; |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
| 5. | I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
| b) | Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| Date: November 14th, 2022 | By: | /s/ Tal Wilk-Glazer |
| Tal Wilk-Glazer | ||
| Director, Chief Executive Officer | ||
| SATIVUS TECH CORP. |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Gadi Levin, certify that:
| 1. | I have reviewed this Form 10-Q of SATIVUS TECH CORP.; | |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | |
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods present in this report; | |
| 4. | I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have: | |
| a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | |
| 5. | I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | |
| a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b) | Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant’s internal control over financial reporting. | |
| Date: November 14th, 2022 | By: | /s/ Gadi Levin |
| Gadi Levin | ||
| Chief Financial Officer | ||
| SATIVUS TECH CORP. |
Exhibit 32.1
CERTIFICATION OF
PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of SATIVUS TECH CORP. (the “Company”) on Form 10-Q for the quarter ending September 30th, 2022, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Tal Wilk-Glazer, Director and Chief Executive Officer (Principal Executive Officer) of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | Such Quarterly Report on Form 10-Q for the quarter ending September 30th, 2022, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in such Quarterly Report on Form 10-Q for the quarter ending September 30th, 2022, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 14th, 2022 | By: | /s/ Tal Wilk-Glazer |
| Tal Wilk-Glazer | ||
|
Director, Chief Executive Officer SATIVUS TECH CORP. |
Exhibit 32.2
CERTIFICATION OF
PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002
In connection with this Quarterly Report of SATIVUS TECH CORP. (the “Company”) on Form 10-Q for the quarter ending September 30th, 2022, as filed with the U.S. Securities and Exchange Commission on the date hereof (the “Report”), I, Gadi Levin, Chief Financial Officer (Principal Financial Officer) of the Company, certify to the best of my knowledge, pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Sec. 906 of the Sarbanes-Oxley Act of 2002, that:
| 1. | Such Quarterly Report on Form 10-Q for the quarter ending September 30th, 2022, fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| 2. | The information contained in such Quarterly Report on Form 10-Q for the quarter ending September 30th, 2022, fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| Date: November 14th, 2022 | By: | /s/ Gadi Levin |
| Gadi Levin | ||
|
Chief Financial Officer SATIVUS TECH CORP. |