World Health Energy Holdings, Inc 10-Q for FY2023 Q1
World Health Energy Holdings, Inc. (WHEN)
About this 10-Q
World Health Energy Holdings, Inc filed this 10-Q on May 22, 2023, covering the quarter ended March 31, 2023 (FY2023 Q1).
Headline figures
Quarter ended March 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $32.34K
- down 0.6% from $32.54K a year earlier
- Net loss
- $2.46M
- compared with a net loss of $1.64M a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
MARK ONE
for
the Quarterly Period ended
for the transition period from ________ to ________
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | 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 | ||
| N/A | N/A | N/A |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed 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 days.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of 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 ☐
As of May 22, 2023, there were issued and outstanding shares of the registrant’s common stock, par value $0.00001 per share, were outstanding.
WORLD HEALTH ENERGY HOLDINGS, INC.
Form 10-Q
March 31, 2023
| i |
WORLD HEALTH ENERGY HOLDINGS, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2023
(UNAUDITED)
| 2 |
WORLD HEALTH ENERGY HOLDINGS, INC .
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2023
IN U.S. DOLLARS
(UNAUDITED)
TABLE OF CONTENTS
| 3 |
WORLD HEALTH ENERGY HOLDINGS, INC .
CONDENSED INTERIM CONSOLIDATED BALANCE SHEETS
(U.S. dollars except share and per share data)
| March 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | ||||||||
| Accounts receivable, net | ||||||||
| Prepaid share based payment to service providers | ||||||||
| Other current assets | ||||||||
| Total Current assets | ||||||||
| Non-current assets | ||||||||
| Right of use asset arising from operating lease | ||||||||
| Long term prepaid expenses | ||||||||
| Property and Equipment, Net | ||||||||
| Funds in respect of employee rights upon termination | ||||||||
| Investment in investee (Note 5) | ||||||||
| Intangible assets | ||||||||
| Total non-current assets | ||||||||
| Total assets | ||||||||
| Liabilities and Shareholders’ Deficit | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | ||||||||
| Short term operating lease liability | ||||||||
| Other account liabilities | ||||||||
| Total current liabilities | ||||||||
| Non-current Liabilities | ||||||||
| Liability for employee rights upon retirement | ||||||||
| Long term operating lease liability | ||||||||
| Deferred tax liability | ||||||||
| Total current liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ Equity | ||||||||
| Series A preferred stock, par $, shares authorized, shares issued and outstanding as of March 31, 2023, and December 31, 2022 | ||||||||
| Common stock, par $, shares authorized as of March 31, 2023 and December 31, 2022. and shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | ||||||||
| Additional paid-in capital | ( | ) | ( | ) | ||||
| Treasury stock at cost – shares of common stock | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Company’s stockholders’ equity | ||||||||
| Non-controlling interests | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ deficit | ||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 4 |
WORLD HEALTH ENERGY HOLDINGS, INC .
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(U.S. dollars except share and per share data)
| 2023 | 2022 | |||||||
| Three months ended | ||||||||
| March 31 | ||||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| Revenues | ||||||||
| Research and development expenses | ( | ) | ( | ) | ||||
| Selling and marketing expenses | ( | ) | ||||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Operating loss | ( | ) | ( | ) | ||||
| Financing income, net | ||||||||
| Loss before equity in net loss of equity investments | ( | ) | ( | ) | ||||
| Less: Equity in net loss of equity investments | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| Net loss attributable to non-controlling interests | ||||||||
| Net loss attributable to the Company’s stockholders | ( | ) | ( | ) | ||||
| Basic and diluted net loss per share | ( | ) | ( | ) | ||||
| Weighted average number of shares outstanding used in computing basic and diluted net loss per share | ||||||||
| Comprehensive loss: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive loss - Foreign currency translation adjustments | ( | ) | ||||||
| Comprehensive loss | ( | ) | ( | ) | ||||
| Net - loss attributable to equity investments | ||||||||
| Other comprehensive loss attributable to non-controlling interests | ( | ) | ||||||
| Comprehensive loss attributable to the Company’s stockholders | ( | ) | ( | ) | ||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
| 5 |
WORLD HEALTH ENERGY HOLDINGS, INC .
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT
(U.S. dollars, except share and per share data)
| Number of Shares | Amount | Number of Shares | Amount | paid-in capital | account of shares | Treasury shares | Comprehensive Income | Accumulated deficit | equity (deficit) | Controlling Interest | equity (deficit) | |||||||||||||||||||||||||||||||||||||
Series A Preferred Stock | Common Stock | Additional | Proceeds on | Accumulated Other | Total Company’s stockholders’ | Non- | Total stockholders’ | |||||||||||||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of Shares | Amount | paid-in capital | account of shares | Treasury shares | Comprehensive Income | Accumulated deficit | equity (deficit) | Controlling Interest | equity (deficit) | |||||||||||||||||||||||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2021 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| CHANGES DURING THE PERIOD OF THREE MONTHS ENDED MARCH 31, 2022: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares | ||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payment to employees and services providers | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Proceeds on account of shares | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| BALANCE AS OF MARCH 31, 2022 | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
Series A Preferred Stock | Common Stock | Additional | Proceeds on | Accumulated Other | Total Company’s stockholders’ | Non- | Total stockholders’ | |||||||||||||||||||||||||||||||||||||||||
| Number of Shares | Amount | Number of Shares |
Amount | paid-in capital | account of shares | Treasury shares | Comprehensive Income | Accumulated deficit | equity (deficit) | Controlling Interest | equity (deficit) | |||||||||||||||||||||||||||||||||||||
| BALANCE AS OF DECEMBER 31, 2022 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
| CHANGES DURING THE PERIOD OF THREE MONTHS ENDED MARCH 31, 2023: | ||||||||||||||||||||||||||||||||||||||||||||||||
| Issuance of shares | ||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based payment to employees and services providers | - | - | ||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| BALANCE AS OF MARCH 31, 2023 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
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WORLD HEALTH ENERGY HOLDINGS, INC .
CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars except)
| 2023 | 2022 | |||||||
| Three months ended | ||||||||
| March 31, | ||||||||
| 2023 | 2022 | |||||||
| (Unaudited) | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss for the period | ( | ) | ( | ) | ||||
| Adjustments required to reconcile net loss for the period to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Increase in liability for employee rights upon retirement | ||||||||
| Equity in losses of non-consolidated entity | ||||||||
| Share-based compensation expense | ||||||||
| Decrease in operating lease liability | ( | ) | ( | ) | ||||
| Increase in accounts receivable | ( | ) | ( | ) | ||||
| Increase in other current assets | ( | ) | ( | ) | ||||
| Decrease in accounts payable | ( | ) | ( | ) | ||||
| Decrease in other accounts liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Loans repaid by (granted to) related parties | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from stock issued for cash | ||||||||
| Proceeds on account of shares | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ||||||||
| INCREASE IN CASH AND CASH EQUIVALENTS | ||||||||
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF PERIOD | ||||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Non cash transactions: | ||||||||
| Issuance of share in exchange for debt | ||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
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WORLD HEALTH ENERGY HOLDINGS, INC .
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – GENERAL
| A. | Operations |
World Health Energy Holdings, Inc. (the “Company” or “WHEN”) was formed on May 21, 1986 under the laws of the State of Delaware. The Company has invested in a variety of internally developed software programs that it strove to commercialize.
UCG, INC. (the “UCG”) was incorporated on September 13, 2017, under the laws of the State of Florida. The Company wholly-owns the issued and outstanding shares of RNA Ltd. (“RNA”).
RNA is primarily a research and development company that has been performing software design work for UCG in the field of cybersecurity under the terms of development agreement between UCG and RNA. UCG is primarily engaged in the marketing and distribution of cybersecurity-related products.
In anticipation of the transaction contemplated under the SG Merger Agreement, SG 77 Inc., a Delaware corporation and a wholly-owned subsidiary of UCG (“SG”), was incorporated on April 16, 2020 and all of the cybersecurity rights and interests held by UCG, including the share ownership of RNA, were assigned to SG.
| B. | SG Transaction |
On April 27, 2020, the Company completed a reverse triangular merger pursuant to the Agreement and Plan of Merger ( “SG Merger Agreement”) among the Company, R2GA, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Sub”), UCG, SG, and RNA. Under the terms of the SG Merger Agreement, R2GA merged with SG, with SG as the surviving corporation and a wholly-owned subsidiary of the Company (“SG Merger”). The SG Merger was effective as of April 27, 2020, whereby SG became a direct and wholly owned subsidiary of the Company and RNA became an indirect wholly owned subsidiary of the Company.
As consideration for the SG Merger, the Company issued Series B convertible preferred stock, par value $ per share, to UCG. Each share of the Series B convertible preferred stock will automatically convert into shares of common stock, par value $, for an aggregate amount of shares of common stock, upon the filing with the Secretary of State of Delaware of an amendment to the Company’s certificate of incorporation increasing the number of authorized shares of common stock that the Company is authorized to issue from time to time.
On October 7, 2021, and following the approval by the stockholders, the Company increase its authorized shares to (from shares) and changed the par value of the common stock to $ (from $) (see Note 10).
Following the effectiveness of the Amendment referred to above, on December 3, 2021, the Company issued shares of common stock to UCG upon the automatic conversion of all outstanding Series B convertible preferred stock issued in April 2020 in connection with the acquisition of RNA from UCG.
The SG Merger was accounted for as a reverse asset acquisition. Under this method of accounting, SG was deemed to be the accounting acquirer for financial reporting purposes. This determination was primarily based on the facts that, immediately following the SG Merger: (i) SG’s stockholders owned a substantial majority of the voting rights in the combined company, (ii) SG designated a majority of the members of the initial board of directors of the combined company, and (iii) SG’s senior management holds all key positions in the senior management of the combined company. As a result of the a reverse asset acquisition transaction, the shareholders of SG received the largest ownership interest in the Company, and SG was determined to be the “accounting acquirer” in the a reverse asset acquisition transaction.
As a result, the historical financial statements of the Company were replaced with the historical financial statements of SG. The number of shares prior to the reverse capitalization have been retroactively adjusted based on the equivalent number of shares received by the accounting acquirer in the Recapitalization Transaction.
| 8 |
WORLD HEALTH ENERGY HOLDINGS, INC .
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – GENERAL (continue)
| C. | CrossMobile Transaction |
On
March 22, 2022, the Company, CrossMobile Sp. z o.o, a company formed under the laws of Poland (“CrossMobile”) and the shareholders
of CrossMobile (of which Mr. Giora Rosenzweig, held
On
July 13, 2022, the Company issued common shares with fair value of $
CrossMobile is a licensed mobile virtual network operator in Poland, providing the necessary licenses and key infrastructure in the EU. With its involvement in CrossMobile, the Company expects to provide advanced cybersecurity solutions and other next-generation value-added services to CrossMobile’s future product offerings.
In addition, under the CrossMobile Agreement, the Company has the option, through January 22, 2024, to purchase additional shares of CrossMobile (“Additional Share Purchase Option”) such that following the additional purchase, the Company shall hold approximately % of CrossMobile’s outstanding common shares on a fully diluted basis. In the event the Company shall choose to exercise the option, the Company shall issue such number of restricted shares of common stock of the Company calculated based on pre-money valuation of CrossMobile as determined by an independent appraiser agreed between the Company and CrossMobile.
On October 25, 2022, the Company exercised the Additional Share Purchase Option and as a result the Company holds approximately % of CrossMobile’s outstanding common shares on a fully diluted basis. In consideration for the exercise of the Additional Share Purchase Option, the Company issued common stock on November 28, 2022 to Crossmobile.
The Company, collectively with SG, RNA and CrossMobile are hereunder referred to as the “Group”.
| D. | InstaView Transaction |
On
January 26, 2023, the Company, InstaView Ltd. (“InstaView”) and the shareholder of InstaView entered into an Investment
Agreement (the “InstaView Investment Agreement”) pursuant to which the Company purchased
In
addition, under the InstaView Investment Agreement, the Company has the option to purchase additional shares of InstaView in each of
calendar years 2023, 2024 and 2025, representing, in each such year, respectively,
In connection with the InstaView Investment Agreement, the Company, InstaView and the InstaView shareholder also entered into a shareholders agreement pursuant to which the Company was granted standard preemptive rights, veto rights over certain corporate action by InstaView , restrictions on transfer of shares, rights of first offer and tag along rights. In addition, the InstaView shareholder undertook to not compete with InstaView for so long as he is an InstaView shareholder and for a three year period thereafter.
The
Company determined the value of the restricted shares of Company common stock to be issued to InstaView based on Company’s
share price on the agreement date at $
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WORLD HEALTH ENERGY HOLDINGS, INC .
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
| E. | Board and Shareholder Authority for Reverse Stock Split |
On
June 21, 2021,
| F. | Liquidity |
Since inception, the Company has incurred losses and negative cash flows from operations. The Company has financed its operations mainly through fundraising from various investors.
The
Group and George Baumeohl, a Company director, have entered into an investment agreement where the director has committed through August
2025 to invest up to $
Based on the projected cash flows with the investment agreement signed on November 1, 2022, management is of the opinion that its existing cash will be sufficient to meet its obligations for a period which is longer than 12 months from the date of the approval of these consolidated financial statements.
| G. | Risk factors |
The Group face a number of risks, including uncertainties regarding finalization of the development process, demand and market acceptance of the Group’s products, the effects of technological changes, competition and the development of products by competitors. Additionally, other risk factors also exist, such as the ability to manage growth and the effect of planned expansion of operations on the Group’s future results. In addition, the Group expects to continue incurring significant operating costs and losses in connection with the development of its products and increased marketing efforts. As mentioned above, the Group has not yet generated significant revenues from its operations to fund its activities, and therefore the continuance of its activities as a going concern depends on the receipt of additional funding from its current stockholders and investors or from third parties.
Unaudited Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiary, prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and with the instructions to Form 10-Q. In the opinion of management, the financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the three-months ended March 31, 2023. However, these results are not necessarily indicative of results for any other interim period or for the year ended December 31, 2023. The preparation of financial statements in conformity with GAAP requires the Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.
| 10 |
WORLD HEALTH ENERGY HOLDINGS, INC .
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continue)
Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (“SEC”). These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on published on the OTCIQ, for the year ended December 31, 2022.
Principles of Consolidation
The consolidated financial statements are prepared in accordance with US GAAP. The consolidated financial statements of the Company include the Company and its wholly-owned and majority-owned subsidiaries. All inter-company balances and transactions have been eliminated.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. As applicable to these financial statements, the most significant estimates and assumptions relate to the going concern assumptions.
NOTE 3 – COMMON STOCK
| a. | On
January 24, 2023, the Company received subscription proceeds of $ |
| b. | On
February 8, 2023, the Company entered into an investment agreement with a shareholder pursuant
to which it raised $ |
| c. | On
February 8, 2023, the Company issued to the investor specified in item 2 above and a designee
an aggregate of shares of r common stock in satisfaction of a loan made by
the shareholder to the Company in the principal amount of $ |
| d. | On
March 10, 2023, the Company received subscription proceeds of $ |
| 11 |
WORLD HEALTH ENERGY HOLDINGS, INC .
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
| 1. | The following table presents the Company’s stock option activity during the three months ended March 31, 2023: |
SCHEDULE OF STOCK OPTION ACTIVITY
| Number of Options | Weighted Average Exercise Price | |||||||
| Outstanding at December 31,2022 | ||||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited or expired | ||||||||
| Outstanding at March 31,2022 | ||||||||
| Number of options exercisable at March 31, 2022 | ||||||||
The aggregate intrinsic value of the awards outstanding as of March 31, 2023 is . These amounts represent the total intrinsic value, based on the Company’s stock price of $ as of March 31, 2023, less the weighted exercise price. This represents the potential amount received by the option holders had all option holders exercised their options as of that date.
SCHEDULE OF STOCK OPTIONS OUTSTANDING RANGE OF EXERCISE PRICE
| Exercise price | Stock options outstanding | Weighted average remaining contractual life – years | Stock options vested | |||||||||
| As of March 31, 2023 | ||||||||||||
The stock options outstanding as of March 31, 2022, have been separated into exercise prices, as follows:
| Exercise price | Stock options outstanding | Weighted average remaining contractual life – years | Stock options vested | |||||||||
| As of March 31, 2022 | ||||||||||||
Compensation expense recorded by the Company in respect of its stock-based compensation awards for the period of three months ended March 31, 2023 was $ and are included in the Statements of Operations.
| 2. | On January 26, 2023, RNA entered into an agreement for design of new generation of Internet Of Things (“IOT”) device with a consultant under which it undertook to issue to the consultant Non-Plan option to purchase shares of the Company’s common stock at per share exercise price of $, exercisable over years, of which options for of the share will vest on each of the anniversaries of the execution of the agreement, beginning with January 24, 2024 and thereafter on each subsequent anniversary, subject to continued services with RNA. The fair value of the options was determined using the Black-Scholes pricing model at $, assuming a risk free rate of %, a volatility factor of %, dividend yields of % and an expected life of years. Total compensation expenses during the three months ended March 31, 2023 amounted to $ and were recorded as share based compensation under research and development expenses. |
| 3. | On January 24, 2023, RNA entered into an agreement for research and update of international needs of IOT device with a consultant under which it undertook to issue to the consultant Non-Plan option to purchase shares of the Company’s common stock at per share exercise price of $, exercisable over years, of which options for of the share will vest on each of the anniversaries of the execution of the agreement, beginning with January 24, 2024 and thereafter on each subsequent anniversary, subject to continued services with RNA. The fair value of the options was determined using the Black-Scholes pricing model at $, assuming a risk free rate of %, a volatility factor of %, dividend yields of % and an expected life of years. Total compensation expenses during the three months ended March 31, 2023 amounted to $ and were recorded as share based compensation under research and development expenses. |
| 12 |
WORLD HEALTH ENERGY HOLDINGS, INC .
NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5 - EQUITY METHOD INVESTMENTS IN UNCONSOLIDATED AFFILIATES
The
Company applies the equity method to investments when it has an ability to exercise significant influence over the operational decision-making
authority and financial policies of the investee. During the three months ended March 31, 2023, the Company accounted for its
The following tables summarize the carrying amounts, including changes therein, of our equity method investment in InstaView during the period:
SCHEDULE OF EQUITY METHOD INVESTMENT
| Three months ended March 31, 2023 | ||||
(Unaudited) | ||||
| Opening balance | $ | |||
| Initial investment | ||||
| Other comprehensive loss | ( | ) | ||
| Equity losses | ( | ) | ||
| Balance as of March 31, 2023 | $ | |||
NOTE 6 – RELATED PARTIES
SCHEDULE OF RELATED PARTY EXPENSES
| A. | Transactions and balances with related parties |
Three months ended March 31 | ||||||||
| 2023 | 2022 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| General and administrative expenses: | ||||||||
| Salaries and fees to officers | ||||||||
| (*) of which share based compensation | ||||||||
| Research and development expenses: | ||||||||
| Salaries and fees to officers | ||||||||
| (*) of which share based compensation | ||||||||
| B. | Balances with related parties and officers: |
As of March 31, | As of December 31, | |||||||
| 2023 | 2022 | |||||||
| (Unaudited) | (Audited) | |||||||
| Other current assets | ||||||||
| Other accounts liabilities | ||||||||
| Liability for employee rights upon retirement | ||||||||
| Long term loan from related party (*) | ||||||||
| (*) |
NOTE 7 – SUBSEQUENT EVENTS
| A. | On
May 5, 2023 the Company issued to George Baumeohl, a director and a shareholder,
shares of common stock for $ | |
| B. | On May 15, 2023, the Company issued shares of common stock as consideration under InstaView Transaction (see note 1D above). |
| 13 |
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 as filed with the Securities and Exchange Commission (the “SEC”) on April 17, 2023. Certain statements made in this discussion are “forward-looking statements” within the meaning of the private securities litigation reform act of 1995,. These statements are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by the Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “future,” “intend,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company’s business, industry, and the Company’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.
Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.
Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.
Overview
World Health Energy Holdings (“WHEN” or the “Company” or “us” ) is primarily engaged in the cybersecurity technology field. On April 27, 2020, WHEN completed a reverse triangular merger pursuant to the Merger Agreement among the Company, R2GA, UCG, SG, and RNA. Under the terms of the Merger Agreement, R2GA merged with and into SG, with SG remaining as the surviving corporation and a wholly-owned subsidiary of the Company. The Merger became effective as of April 27, 2020. Each of Gaya Rozensweig and George Baumeohl, directors of the Company, are also the sole shareholders and directors of UCG.
RNA is primarily a research and development company that has been performing software design services in the field of cybersecurity. SG is primarily engaged in the marketing and distribution of cybersecurity related products. In anticipation of the transaction contemplated under the Merger Agreement, SG was formed and all of the cybersecurity rights and interests held by UCG, including the share ownership of RNA, were assigned to SG.
Following the closing, each of SG 77 and RNA became wholly-owned subsidiaries of the Company.
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Significant Developments
Acquisition of CrossMobnile
On March 22, 2022 the Company, CrossMobile Sp z o.o., a company formed under the laws of Poland (“CrossMobile”) and the shareholders of CrossMobile (of which our CEO, Giora Rosenzweig, holds 40.67% and George Baumeohl, a director, holds 6.67%, of the issued preferred share capital of CrossMobile), entered into an Investment Agreement (the “Agreement”) pursuant to which the Company purchased in July 2022 an initial 26% equity stake of the outstanding common share capital of CrossMobile on a fully diluted basis, in consideration of the issuance by the Company to CrossMobile of 10,000,000,000 restricted shares of Company . In addition, for 18 months following the date of the Agreement, the Company has the option to purchase additional shares of CrossMobile, (the “Additional Share Purchase Option”), such that following such additional purchase, the Company shall hold approximately 51% of CrossMobile’s outstanding share capital on a fully diluted basis. On October 25, 2022, the Company exercised the Additional Share Purchase Option to acquire such additional shares of CrossMobile and the Company now holds approximately 51% of CrossMobile’s outstanding share capital on a fully diluted basis. In consideration for the exercise of the Additional Share Purchase Option, the Company issued to CrossMobile an additional 10,000,000 shares of the Company’s common stock.
CrossMobile provides public mobile telephone services in Europe, (without its own radio infrastructure) We believe that the acquisition of CrossMobile provides an opportunity in our evolution and provides us with a strong foothold in the European mobile telecom market.. CrossMobile is planning to roll-out a comprehensive suite of value-added services for B2B and B2C customers in the telecom industry.
With our involvement in CrossMobile, we expect to provide advanced cybersecurity solutions and other next-generation value-added services to CrossMobile’s future product offerings.
The global telecom market was valued at $1.6 trillion in 2020 and is expected to grow at 5.4% Compound Annual Growth Rate (CAGR) through 20281. The global cybersecurity market was valued at $140 billion in 2021 and is expected to reach $376 billion by 20292. By combining the telecom focus with our existing cyber security product offering, our plan is to bring to market a new standard of service in value added telecom and security solutions for B2B and B2C customers alike.
1 Global Telecom Services Market Size Report, 2021-2028. (2022). Retrieved 21 August 2022, from https://www.grandviewresearch.com/industry-analysis/global-telecom-services-market
2 Insights, F. (2022). With 13.4% CAGR, Global Cyber Security Market Size to Surpass USD 376.32 Billion in 2029. Retrieved 21 August 2022, from https://www.globenewswire.com/news-release/2022/06/14/2461786/0/en/With-13-4-CAGR-Global-Cyber-Security-Market-Size-to-Surpass-USD-376-32-Billion-in-2029.html
CrossMobile anticipates that it in Q1-Q2 2023 will be able to
| a. | Be in the air with standard packages of Voice, SMS and Data in Poland and International Roaming. | |
| b. | Generate first invoice for sales of standard packages of Voice, SMS and Data in Poland and International Roaming | |
| c. | Initiate cooperation with existing or build new Telecom operators similar to CrossMobile to fully optimize ROI on the investment made in people and IT Systems. Focus areas will be USA, UK, Asia Pacific and selected countries in Europe with high potential. |
Acquisition of Instaview
On Feb. 26, 2023 we completed the acquisition of an initial 26% of Instaview Ltd. (“Instaview”), an emerging technology company in the field of AI-based image processing systems, thermal cameras, home and enterprise security, livestock tracking and control appliances plus much more.
Instaview is engaged in the field of image processing systems and thermal cameras. Over the past 18 years, Instview has provided innovative security and managing solutions in hundreds of projects in Israel and overseas.
We believe that there is synergy between Instaview and our activities and marks the beginning of the revolution of the home and enterprise security market, which is estimated to be $120 billion in 2022 and projected to grow at a compound annual growth rate of 8% through 2030.”
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Combined WHEN Product Offerings
Our product offerings are comprised of three complementary segments, namely
| 1. | Cyber Care, which is the long standing and core business segment of WHEN | |
| 2. | AI based image processing systems such as audio-video systems and security cameras solutions being an off-line extension of the on-line Cyber Care services entered through the acquisition of 26% shares in Instaview | |
| 3. | Mobile telecom GSM which is a new business segment, linking the off and on line business segments entered through the recent acquisition of CrossMobile |
All three are targeting commercial enterprises (B2B) and individual users (B2C).
Cyber Care
B2B Offerings—Our B2B Cybersecurity system software development and implementation program focuses on developing a threat management software that provides innovative solutions for the constantly evolving cyber challenges of businesses, non-governmental organizations (NGO’s) and governmental entities.
In 2021 we launched OTOGRAPH, our comprehensive cybersecurity and information security system, to enable business enterprises to monitor, analyze and prevent suspicious or harmful behavior on corporate networks and connected devices. The OTOGRAPH is designed to analyze and prevent internal or external abuse or abnormal activity on enterprise devices, such as PCs, mobile phones, servers or any other operating system (OS)-based Internet of things (IOT) devices. IoT devices are the nonstandard computing devices that connect wirelessly to a network and have the ability to transmit data.
The rapid transition to open and cloud-based remote workforce has exposed businesses and organizations across the world to higher risks of cyber-attacks and information security breaches. To enable businesses to better protect their data and workflow, we developed a Business Behavioral Analysis (BBA) system that enables business leaders to track all activity from any given location on a one-stop dashboard. Developed over the past two years, OTOGRAPH provides aggregated data and a wide variety of real-time analytics such as real time monitoring of online behavior, applications and system behavior, data breaches, internal and external connections analytics, productivity analysis and psycholinguistic analysis. Corporations and organizations can then use the dashboard to detect suspicious human or device activities that put their company at risk.
OTOGRAPH was developed based on based on a state of the art intelligence technology combined with AI technology that processes and analyzes massive amounts of behavioral and communication data and enables organizations to make real time accurate preventive assessments and decisions to protect company assets and ensure operational efficiency. OTOGRAPH deploys a unique Business Behavioral Analysis (BBA) machine learning software. Behavioral digital data is extracted from all endpoint devices that are connected to the company’s network infrastructure – whether physically, wirelessly or remotely. The data is processed and analyzed to learn and to reveal the unique digital behavioral pattern of the organization as a whole and of every endpoint or individual.
OTOGRAPH then sets baselines of normal patterns for each, and constantly searches for anomalies – deviations from those expected patterns. The anomalies are detected automatically and instantly, categorized by their type and generate push alerts which are sent to the business leader’s dashboard and enabling him to respond to the threat.
OTOGRAPH is continuously learning and calibrating the normal patterns and their thresholds to minimize the number of false alarms and constantly adapt to the changing needs of organizations in real time.
Our B2C Cybersecurity division targets families concerned with external cyber threats and exposures in addition to monitoring a child’s behavioral patterns that may alert parents to potential tragedies caused by cyber bullying, pedophiles, other predators, and depression.
B2C
SG’s Parental System offers a comprehensive solution which is designed to enable parents wishing to observe their children’s online behavior to learn if they are accessing inappropriate websites and content and/or to protect them from a range of threats including cyberbullying, pedophiles and other predators and identity theft.
The Parental System line is positioned as the “ultimate parental cyber solution”. This system incorporates a range of features enabling parents to view and manage their children’s Android phones and devices. The key elements of our proprietary solutions include the following: analysis of all incoming and outgoing written data; analysis of all incoming and outgoing audio communication; real time location tracking; environmental surroundings analysis; and cyber activity analysis.
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The Parental System has similar features to those of the B2B yet tailored to fit the needs of parents and guardians to protect their children. Such variations focus on online behavioral patterns whether vocally, via short message service (“SMS”) or social media platforms. If there is a change in behavior patterns, the product is designed to immediately send the parent or adult guardian an alert. For example, as stated in several international reports, one of the identifiable indicators before suicide is social withdrawal, something which today appears as a significant decrease in text message exchanges. The system categorizes this decrease as a red flag. Moreover, there are certain words and phrases which increase in use prior to suicide which the system will detect these it will put them in the red flag category.*
* https://www.mayoclinic.org/healthy-lifestyle/tween-and-teen-health/in-depth/teen-suicide/art-20044308
While analyzing voice calls based on; tone of speech, lengths of the conversation and the frequency of calls, Parental System Analytics is capable of identifying changes in behavioral patterns and flagging these changes. For example, studies showed that with deteriorating mental health, the frequency of calls decreases and the sentences along with the length of the conversations get shorter. Any such discrepancy in behavior patterns will send a real time alert to the parent or legal guardian, potentially avoiding a tragedy.
Strategy Cyber Care: We believe that the technology underlying our product offering is our primary competitive advantage. The strength of our solution is driven by several proprietary technologies and methodologies that we have developed, coupled with how we have combined them into our highly versatile platform incl. the mobile telecom platform discussed below. These advantages enable our end users to
| ● | Prevent trade secret and data leakage; | |
| ● | Protect against hackers; | |
| ● | Minimize loss of productivity; | |
| ● | Detect embezzlements and thefts; | |
| ● | Defend employees from harassments; | |
| ● | Prevent talent and client poaching; | |
| ● | Avoid human errors; | |
| ● | Develop a new level of decision-making ability based on accurate and real-time data; and | |
| ● | Assist parents and legal guardians in monitoring their minor children’s’ cyber online activities. |
The Company’s go-to-market strategy focuses principally on generating revenue from software, services and licensing. The Company intends to drive revenue growth and to achieve margins that are consistent with those of other enterprise software companies.
We currently intend to sell substantially all of our products and services to distributors and resellers, which will sell to end-user customers, which we refer to in this report as our customers.
The implementation of our strategies is subject to our raising significant cash resources, of which no assurance can be provided that we will be successful in raising the needed capital on commercially reasonable terms. As of the date of this prospectus, we have no commitments for any capital raise.
AI based audio-video systems and security cameras
With several hundred projects in Israel and abroad and 18 years of experience in the field, Instaview develops and provides high quality, innovative communication solutions.
Instaview provides support for its various projects, from the early planning stage through to the completion of the project, with options for using the most advanced management and control systems in the world.
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Its systems use solar technology and advanced communication systems independent of electricity and internet infrastructure. The system is supported by an advanced application that allows visual tracking at any given time from anywhere in the world, with the option of receiving mobile alerts in real time.
Instaview has a wide offering that is complementary to WHEN’s on-line Cyber Care solutions.
Instaview currently has three main areas of activity for B2B market:
| a) | Agriculture – Instaview supplies cameras and connected security control systems to farmers in order to monitor high value crops such as avocado, dates, Christmas trees or stocks of firewood | |
| b) | Construction Sites – supplying cameras and control systems to monitor activities on construction sites, in order to avoid theft of materials, adherence to safety regulations and so on. The technology and systems are applicable to ports and other sites which have similar needs. | |
| c) | Crane Operator Monitoring – working in cooperation with government and labor unions in Israel, Instaview has developed an advanced technology based system to verify the identification of crane operators and to ensure adherence to operating times and regulations generally. |
For the B2C market following services will bring added value to the WHEN group customers
| a) | Intelligent homes and small offices (gas and flood detectors, door and window alarms etc) | |
| b) | Collars for pets, cats and dogs with SIM cards for GPS location | |
| c) | Alert and location bracelets with SIM cards for GPS location for e.g. senior people |
Mobile telecom GSM
Following the first step, our next planned strategy is to add the advanced B2B and B2B Cyber Care bundled with the audio-video systems and security cameras solution and offer them as an integrated part of our GSM solutions. This will give our B2B the possibility to use the AI and BBA as a tool to increase not only security but as well efficiency in sales organizations where soft skills, emotions and personal relations are crucial.
In respect to the B2C market our strategy is to give families a tool to protect their assets and entire households in particular kids or pets and evenelderly members being fragile newcomers in the world of e-commerce, on-line banking and on-line dating.
The third step expected to be initiated in Q3 2023 in is to copy and paste the same scenario of combining Cyber Care and Mobile Telecom to other selected markets in North Africa, the USA and Europe.
Comparison of the Three Months Ended March 31, 2023 to the Three Months Ended March 31, 2022
Summary of Results of Operations
| Three months ended | ||||||||
| March 31 | ||||||||
| 2023 | 2022 | |||||||
| Revenues | $ | 32,340 | 32,542 | |||||
| Operating Expenses | ||||||||
| Research and development expenses | (502,935 | ) | (123,506 | ) | ||||
| Selling and marketing expenses | (26,669 | ) | - | |||||
| General and administrative expenses | (1,984,458 | ) | (1,549,128 | ) | ||||
| Operating loss | (2,481,722 | ) | (1,640,092 | ) | ||||
| Financing income, net | 4,887 | 3,296 | ||||||
| Loss before equity in net loss of equity investments | (2,476,835 | ) | (1,636,796 | ) | ||||
| Less: Equity in net loss of equity investments | (477 | ) | - | |||||
| Net loss | (2,477,312 | ) | (1,636,796 | ) | ||||
| Net loss attributable to non-controlling interests | 13,012 | - | ||||||
| Net loss attributable to the Company’s stockholders | (2,464,300 | ) | (1,636,796 | ) | ||||
Revenues
Our total revenue consists of sales of our products and services.
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Operating Expenses
Our current operating expenses consist of three components - research and development expenses, selling and marketing expenses and general and administrative expenses.
Research and Development Expenses, net
We expect to continue incurring substantial expenses for the next several years as we continue to develop our product lines. We are unable, with any certainty, to estimate either the costs or the timelines in which those expenses will be incurred. The design and development activities will consume a large proportion of our current, as well as projected, resources.
Our research and development costs include costs are comprised of:
● internal recurring costs, such as personnel-related costs (salaries, employee benefits, equity compensation and other costs), materials and supplies, facilities and maintenance costs attributable to research and development functions; and
● fees paid to external parties who provide us with contract services, such as preclinical testing, manufacturing and related testing and clinical trial activities.
The following table discloses the breakdown of research and development expenses:
Three
Months Ended | ||||||||
| 2023 | 2022 | |||||||
| Salaries and related expenses | $ | 62,344 | 88,077 | |||||
| Share-based compensation expenses | 400,524 | - | ||||||
| Subcontractors and other development costs | 8,832 | 9,949 | ||||||
| Depreciation and amortization | 4,268 | 13,975 | ||||||
| Rent and office maintenance | 22,624 | 6,979 | ||||||
| Other expenses | 4,343 | 4,526 | ||||||
| Total | $ | 502,935 | 123,506 | |||||
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of salaries and related expenses, professional services and other expenses.
The following table discloses the breakdown of selling and marketing expenses:
| Three Months Ended March 31 | ||||||||
| 2023 | 2022 | |||||||
| Professional services | 26,669 | - | ||||||
| Total | $ | 26,669 | - | |||||
We expect that our selling and marketing expenses will increase as we continue to increase our selling and marketing efforts in 2023 following the acquisition of Cross Mobile and our efforts to be in the air with standard packages of Voice, SMS and Data in Poland and International Roaming and initiate cooperation with existing or build new Telecom operators.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related expenses, professional services, rent and office maintenance and other non-personnel related expenses.
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The following table discloses the breakdown of general and administrative expenses:
| Three Months Ended March 31 | ||||||||
| 2023 | 2022 | |||||||
| Salaries and related expenses | $ | 94,439 | 65,960 | |||||
| Share-based compensation expenses | 1,846,363 | 1,426,492 | ||||||
| Professional services | 20,342 | 26,777 | ||||||
| Rent and office maintenance | 22,779 | 15,853 | ||||||
| Other expenses | 535 | 14,046 | ||||||
| Total | $ | 1,984,458 | 1,549,128 | |||||
Revenues
Revenues for the three months ended March 31, 2023 and 2022 were $32,340 and $32,542, respectively.
Research and Development Expenses. Research and development expenses consist of salaries and related expenses, share-based compensation expenses, consulting fees, service providers’ costs and overhead expenses. Research and development expenses increased from $123,506 during the three months ended March 31, 2022 to $502,935 during the three months ended March 31, 2023. The increase resulted primarily from increase in non-cash share-based compensation expenses and in rent and maintenance costs partially offset by decrease in salaries and related expenses and depreciation costs associated with our development activities.
Selling and Marketing Expenses. Selling and marketing expenses consist primarily of professional fees. Selling and marketing expenses for the three months ended March 31, 2023 amounted to $26,669 as compared to $0 for the three months ended March 31, 2022. The increase is primarily attributable to expenses incurred in connection with the purchase of 51% of CrossMobile, which we completed in November 2022.
General and Administrative Expenses. General and administrative expenses consist primarily of salaries and related expenses, share-based compensation expenses and other non-personnel related expenses such as legal expenses. General and administrative expenses increased from $1,549,128 for the three months ended March 31, 2022 to $1,984,458 in the three months ended March 31, 2023. The increase is primarily attributed to the increase in non-cash share-based compensation expenses and in salaries and related expenses partially offset by decrease in professional services and other non-personnel related expenses.
Financing Income, Net. Financing income, net increased from $3,296 of financing for the three months ended March 31, 2022 to financing income, net of $4,887 for the three months ended March 31, 2023. The increase is mainly a result of currency exchange differences between the Dollar and the New Israeli Shekel.
Net Loss. Net loss for the three months ended March 31, 2023 was $2,477,312 and is primarily attributable to increase in share based compensation expenses to our employees and services providers.
Financial Condition, Liquidity and Capital Resources
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. At March 31, 2023 and December 31, 2022, we had current assets of $354,313 and $276,508, respectively, and total assets of $10,452,865 and $10,233,018 respectively. The increase in total assets is mainly due to the increase in intangible assets attributable to the purchase of 26% of the issued and outstanding shares of InstaView. We had current liabilities of $741,333 as compared to $787,683 as of March 31, 2023 and December 31, 2022 , respectively and total liabilities of $3,901,185 as compared to $3,948,646 as of March 31, 2023 and December 31, 2022 , respectively.
At March 31, 2023 , we had a cash balance of $155,589 compared to the cash balance of $56,346 as of December 31, 2022. We have no cash equivalents.
At March 31, 2023 , we had a negative working capital of $387,020 as compared with a working capital deficiency of $511,175 at December 31, 2022.
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In November 2022, we entered into an investment agreement with George Baumeohl, our director, pursuant to which Mr. Baumeohl has agreed to support our operation by way of an equity investment of up to $3 million through August 2025, as needed. The agreement provides for sales of our common stock to Mr. Baumeohl at per share purchase prices ranging between $0.0003 and $0.0005. Through March 31, 2023, we have received an aggregate of $475,000 from Mr. Baumeohl in respect of which we issued to him in May 2023 1,583,333,333 shares of our common stock at a share price of $0.0003. We received an additional $150,000 in May 2023 from Mr. Baumeohl, in respect of which we have issued to him an additional 500,000,000 shares of our common stock.
In addition, in February 2023, the Company issued to the investor specified in item 2 above and a designee an aggregate of 1,440,000,000 shares of common stock in satisfaction of a loan made by the shareholder to the Company in the principal amount of $120,000 plus interest of $24,000 of accrued interest for the 10-year loan period.
Management believes that funds on hand, as well as the subscription proceeds that we are to receive on a periodic basis under the committed subscription agreements with our director, will enable us to fund our operations and capital expenditure requirements through the next twelve months. Our requirements for additional capital during this period will depend on many factors.
We may seek to raise any necessary additional capital through a combination of private or public equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights, future revenue streams, or product c,andidates or to grant licenses on terms that may not be favorable to us. If we raise additional capital through private or public equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends.
Critical Accounting Policies
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and consolidated statements of operations. Actual results may differ significantly from those estimates.
While our significant accounting policies are described in more detail in the notes to our audited consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported as specified in the SEC’s rules and forms and that such information required to be disclosed by us in reports that we file under the Exchange Act is accumulated and communicated to our management, including our Interim Chief Executive Officer, to allow timely decisions regarding required disclosure. Management, with the participation of our Interim Chief Executive Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of March 31, 2023. Based on that evaluation, our management, including our Chief Executive Officer, concluded that our disclosure controls and procedures were not effective as of March 31, 2023.
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Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As disclosed in Item 9A of our Annual Report on Form 10-K for the year ended December 31, 2022, our management concluded that our internal control over financial reporting was not effective at December 31, 2022. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The limitation of the Company’s internal control over financial reporting was due to the applied risk-based approach which is indicative of many small companies with limited number of staff in corporate functions. The identified weakness were:
| ● | Material Weakness – We did not maintain effective controls over certain aspects of the financial reporting process because we (i) lacked a sufficient complement of personnel with a level of accounting expertise and an adequate supervisory review structure that is commensurate with our financial reporting requirements and (ii) we lacked controls over the disclosure of our business operations. |
| ● | lack of segregation of duties Significant Deficiencies – Inadequate segregation of duties. |
Our management believes the weaknesses identified above have not had any material effect on our financial results.
We expect to be materially dependent upon third parties to provide us with accounting consulting services for the foreseeable future which we believe will mitigate the impact of the material weaknesses discussed above. Until such time as we have a chief financial officer with the requisite expertise in U.S. GAAP and establish an audit committee and implement internal controls and procedures, there are no assurances that the material weaknesses and significant deficiencies in our disclosure controls and procedures will not result in errors in our financial statements which could lead to a restatement of those financial statements.
Changes in Internal Controls over Financial Reporting.
Except for the material weakness noted above, there have been no changes in our internal control over financial reporting during the fiscal quarter ended March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 27, 2020 WHEN filed suit in State Court, Palm Beach County, Florida, against FSC Solutions, Inc. (“FSC”), Eli Gal Levy (“EL”) and Padem Consultants Sprl (collectively, the “Defendants”). The suit relates to the Stock Purchase Agreement entered into by WHEN with FSC and its shareholders, which included EL, pursuant to which WHEN acquired all of the issued and outstanding stock of FSC in exchange for the issuance of 70 billion shares of WHEN unregistered common stock. FSC was the putative owner of a software and trading platform which WHEN intended to use to enter into the on-line trading business. Subsequent to the completion of the acquisition, we determined that FSC did not have control over the trading platform and software we expected to acquire and operate. The suit seeks declaratory judgment to unwind the FSC transaction and cancel the shares of WHEN common stock issued in the FSC transaction that are still outstanding.
A hearing was set for January 6, 2021 whereupon mediation was ordered. Mediation meetings were held but no resolution was reached. The Florida lawsuit is currently pending.
On or about, January 19, 2022, EL filed a lawsuit in the Delaware Court of Chancery seeking to remove the restrictive legend from all the shares of Common Stock held by EL (the “2022 Lawsuit”), which are approximately 23,000,000,000 shares. The Company retained the services of Delaware counsel and has moved to dismiss or stay the 2022 Lawsuit in favor of the previously filed Florida lawsuit, which involves the same parties and same issues. The Company’s motion is currently pending in the Delaware Court of Chancery.
On June 24, 2022 the Company filed an amended complaint in Palm Beach County, Florida (CASE NO. 50-2020- CA-011735), alleging violation of Fla. Stat. 517.301, seeking declaratory relief with regard to the status of the shares held and transferred by EL, and seeking a temporary injunction with regard to the transfer of any subject shares. EL answered the complaint and a hearing has been set for September 12, 2023.
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The Company intends to continue to vigorously pursue this action and avail itself of all options lawfully available to it.
From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are not aware of any such legal proceedings or claims against us.
ITEM 1A. RISK FACTORS
An investment in the Company’s Common Stock involves a number of very significant risks. You should carefully consider the risk factors included in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2022, as filed with the SEC on April 17, 2023, in addition to other information contained in our reports and in this quarterly report in evaluating the Company and its business before purchasing shares of our Common Stock. There have been no material changes to our risk factors contained in our Annual Report on Form 10-K for the year ended December 31, 2022.
ITEM 2. UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
(i) In January 2023, the Company issued to a consultant Non-Plan option to purchase 1,000,000,000 shares of the Company’s common stock at per share exercise price of $0.0002, exercisable over four years, of which options for 250,000,000 of the share will vest on each of the anniversaries of the execution of the agreement, beginning with January 24, 2024 and thereafter on each subsequent anniversary, subject to the provision of continued services.
(ii) n January, 2023, the Company issued to a consultant Non-Plan option to purchase 1,000,000,000 shares of the Company’s common stock at per share exercise price of $0.0002, exercisable over four years, of which options for 250,000,000 of the share will vest on each of the anniversaries of the execution of the agreement, beginning with January 24, 2024 and thereafter on each subsequent anniversary, subject to the provision of continued services
(iii) In January 26, 2023, the Company, issued to Istaview of 770,000,000 restricted shares of Company common stock to InstaView Ltd. in consideration of an equity stake of 26% in Instaview.
(iv) In January 24, 2023, the Company received subscription proceeds of $175,000 under the investment agreement with Mr. Baumeohl, a director, referred to in Note 3 above in respect of which in May 2023 the Company issued in May 2023 to Mr. Baumeohl 583,333,333 shares of Common Stock.
(v) In February 2023, the Company raised $60,000 from the private placement of share of common stock at a per share purchase price of $0.0003, in respect of which it issued to the shareholder to 200,000,000 shares of Common Stock
(vi) In February 2023, the Company issued to the investor specified in item (v)above and a designee an aggregate of 1,440,000,000 shares of common stock in satisfaction of a loan made by the shareholder to the Company in the principal amount of $120,000 plus interest of $24,000 of accrued interest for the 10-year loan period.
(vii) In March 2023, the Company received subscription proceeds of $150,000 under the investment agreement with Mr. Baumeohll referred to in Note 3 above in respect of which in respect of which in respect of which in May 2023 the Company issued in May 2023 to Mr. Baumeohl 500,000,000 shares of Common Stock .
We relied upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the “Act”) by virtue of Section 4(a)(2) thereof and/or Regulation S promulgated by the SEC under the Act with respect to the issuance of such securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION:
None
ITEM 6. EXHIBITS
Exhibit Index:
| 10.1 | ||
| 31.1* | Certification of Interim Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 | |
| 32.1* | Certification of Interim Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
* Filed herewith
| 24 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| WORLD HEALTH ENERGY HOLDINGS, INC. | ||
| (Registrant) | ||
| By: | /s/ Giora Rozensweig | |
| Giora Rozensweig | ||
| Interim Chief Executive Officer | ||
| (Principal Executive Officer and Principal Financial and Accounting Officer) | ||
| Date: | May 22, 2023 | |
| 25 |
Exhibit 10.1
INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (this “Agreement”) is made as of the 26th day of January 2023, by and among WORLD HEALTH ENERGY HOLDINGS, INC., a Delaware corporation (“WHEN”), ISTA VIEW, LTD. (Registration No. 515439883), a company organized under the Laws of the State of Israel (“Company”) and Levi Simon (Israeli ID #: 35873090) (the “Company Shareholder”). For purposes of this Agreement WHEN, the Company, and the Company Shareholder are sometimes collectively referred to as the “Parties” and individually as a “Party.”
WHEREAS, the parties have been in discussions regarding cooperating in the design and development of certain marketable products and are continuing their respective due diligence reviews;
WHEREAS, in connection therewith WHEN desires to invest in the Company and the Company is agreeable to such investment, all as herein provided;
WHEREAS, the Parities agree that the foregoing Recitals are true and correct and are hereby incorporated into this Agreement by this reference; and,
NOW, THEREFORE, in consideration of the foregoing and the following mutual covenants and agreements the Parties agree as follows:
ARTICLE I
INVESTMENT
Section 1.1 Completion of Due Diligence Review/Entry into Shareholders Agreement. The effectiveness of this Agreement is expressly subject to the completion of the due diligence review by WHEN to the sole satisfaction of WHEN and the entry by the parties hereto into an shareholder’s agreement to address the ongoing operation and management of the Company.
Section 1.2 Initial Investment. Upon the terms and subject to the conditions of this Agreement, WHEN shall invest, in exchange of, and the Company shall issue to WHEN, THREE HUNDRED FIFTY (350) newly issued Ordinary Shares, par value 1.00 NIS (the “New Issued Ordinary Shares”) of the Company, representing on the date of issuance 26% of the issued and outstanding shares of the Company on a fully diluted basis, in consideration of which WHEN shall issue to the Company SEVEN HUNDRED AND SEVENTY MILLION (770,000,000) shares (the “WHEN Shares”) of WHEN common stock par value $0.001 per share, subject to adjustment in respect of any capital reorganization that may be implemented such as a reverse stock split (the “WHEN Common Stock”).
Section 1.3 Additional Issuance Subject to Revenue Target Milestones. Subject to the Company meeting the annual revenues target specified on Schedule I hereof for the years ending December 31, 2023, 2024 and 2025, as certified by the Company and its accountants and verified by WHEN, WHEN shall issue such number of additional WHEN Common Stock as are set forth next to the revenues target for such years, subject to adjustment in respect of any capital reorganization that may be implemented such as a reverse stock split (in each case, the “WHEN Incentive Shares”).
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Section 1.4 Option for WHEN. WHEN shall have the option, but not the obligation to purchase additional Ordinary Shares in the Company during each of the years 2023, 2024 and 2025 in the amounts set forth on Schedule I hereto and reflecting, in each year, the additional percentage amount shown (on a fully diluted basis) in consideration of which WHEN shall issue additional WHEN Common Stock in the amounts shown in such table, subject to adjustment in respect of any capital reorganization that may be implemented such as a reverse stock split (hereinafter, each such issuance being the “WHEN Option Shares”; together with the WHEN Shares and the WHEN Incentive Shares, the “WHEN Consideration Shares”).
Upon issuance, the WHEN Consideration Shares will be validly issued, fully paid and nonassessable and not subject to any pre-emptive or similar rights, and the Company shall have acquired the sole legal and beneficial ownership of the WHEN Consideration Shares free and clear of all encumbrances placed by WHEN.
Section 1.5 Restriction on Shares Transferred or Issued Pursuant to this Agreement. The Company acknowledges that the WHEN Consideration Shares issued pursuant to the terms and conditions set forth in this Agreement will be “restricted securities” under the Securities Act and as a result may not be sold, transferred or otherwise disposed, except pursuant to an effective registration statement under the Securities Act, or pursuant to an exemption from, or in a transaction not subject to the registration requirements of the Securities Act and in each case only in accordance with all applicable securities laws. All certificates representing the WHEN Consideration Shares issued upon Closing will be endorsed with the following legend pursuant to the Securities Act in order to reflect the fact that the WHEN Consideration Shares will be issued to the Company pursuant to an exemption from the registration requirements of the Securities Act:
“THE SECURITIES REPRESENTED HEREBY HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF WHEN
WHEN represents and warrants to the Company as follows.
Section 2.1 Organization and Good Standing. WHEN is duly incorporated, organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to own, lease its properties and to carry on its business as now being conducted and as presently proposed to be conducted. WHEN is duly qualified or licensed to do business and is in good standing in each of the jurisdictions in which it owns property, leases property, does business, or is otherwise active in a way which makes such qualification or licensing necessary, and where the failure to be so qualified or licensed would have a Material Adverse Effect on its businesses, operations, or financial condition or be material to WHEN’s ability to consummate the transactions contemplated hereby or to perform its obligations under this Agreement.
Section 2.2 Authority; Execution and Delivery. WHEN has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement, and to consummate the transactions contemplated hereby. The execution and delivery by WHEN of this Agreement has been, and the consummation of the transactions contemplated hereby, has been duly and validly authorized by all requisite corporate action on the part of WHEN. This Agreement has been duly and validly executed and delivered by WHEN. This Agreement constitutes a valid and binding obligation of WHEN enforceable against it in accordance with its terms, in each case, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally and subject to general principles of equity (regardless of whether enforceability is considered in a proceeding at law or equity).
Section 2.3 Valid Issuance of WHEN Consideration Shares. When issued, the WHEN Consideration Shares to be issued to the Company in accordance with this Agreement will be duly authorized, validly issued, fully paid and non-assessable, free and clear from all taxes, liens, claims and Encumbrances (except for applicable securities laws), and will not be subject to any preemptive rights or similar rights and will be duly registered in the name of the Company. The WHEN Consideration Shares will entitle their holders to the same rights and obligations as all other shares of WHEN Common Stock.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND COMPANY SHAREHOLDERS
The Company and each Company Shareholder represents and warrants to WHEN as follows.
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Section 3.1 Organization. The Company is a corporation duly formed under the law of the State of Israel, and has all requisite corporate power and authority to own its properties and assets, to conduct its business as now conducted and is duly qualified to do business and is in good standing in each jurisdiction in which the nature of its activities makes such qualification and being in good standing necessary, except where the failure to be so qualified and in good standing will not have a material adverse effect on its activities, business, operations, properties, assets, condition or results of operation or be material to the Company’s ability to consummate the transactions contemplated hereby or to perform its obligations under this Agreement.
Section 3.2 Authority; Execution and Delivery. The Company has all requisite corporate power and authority to execute, deliver and perform its obligations under this Agreement, and to consummate the transactions contemplated hereby. The execution and delivery by the Company of this Agreement has been, and the consummation of the transactions contemplated hereby, has been duly and validly authorized by all requisite corporate action on the part of the Company. This Agreement has been duly and validly executed and delivered by the Company. This Agreement constitutes a valid and binding obligation of the Company enforceable against it in accordance with its terms, in each case, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting creditors’ rights and remedies generally and subject to general principles of equity (regardless of whether enforceability is considered in a proceeding at law or equity).
Section 3.3 No Conflict; Consents
(a) The execution, delivery and performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, will not conflict with, or (with or without notice or lapse of time, or both) result in a termination, breach, impairment or violation of, or constitute a default under (i) any provision of the Articles of Association of the Company as currently in effect; (ii) any of the terms, conditions or provisions of any Material Contract, to which the Company is a party or by which any of its properties or assets are bound; or (iii) assuming that all consents, waivers, approvals, authorizations and other Permits have been obtained and all filings, registrations and notifications have been made any Law applicable to the Company or any of its properties or assets, other than, in the cases of clauses (ii) and (iii) above, where any such violations, breaches, defaults, or rights of termination or cancellation of obligations would not prevent or materially impair or delay the Company’s ability to consummate the transactions contemplated hereby.
(b) The lawful execution, delivery and performance of this Agreement by the Company, and the consummation by the Company of the transactions contemplated hereby, will not require any consent, waiver, approval, authorization or other Permit of, or filing or registration with or notification to, any other person or Governmental Authority, except for such consents, waivers, approvals, authorizations, Permits, filings, registrations or notifications, if any, which, if not made or obtained, would not prevent or materially impair or delay the Company’s ability to consummate the transactions contemplated hereby or to perform its obligations under this Agreement.
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Section 3.4 Litigation. There is no Action pending or, to the Knowledge of the Company, currently threatened against the Company or any director or officer of the Company in such capacity, that may affect the validity of this Agreement or the right of the Company to enter into this Agreement or to consummate the transactions contemplated hereby or thereby. There is no Action pending or, to the Knowledge of the Company, currently threatened against the Company or any director or officer of the Company in such capacity, before any court or by or before any governmental body or any arbitration board or tribunal, nor is there any judgment, decree, injunction or order of any court, governmental department, commission, agency, instrumentality or arbitrator against or relating to the Company. the Company is not a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality.
Section 3.5 Capitalization of the Company.
(a) The registered share capital of the Company is 39,100 New Israeli Shekels divided into 39,100 Ordinary Shares par value NIS 1.00 of which 1,000 are issued and outstanding (assuming the exercise of all issued and outstanding convertible securities). The Company Shareholders are the sole shareholders of the Company
(b) All of the issued and outstanding shares of Ordinary Shares of the Company the Company are duly authorized, validly issued, fully paid and non-assessable, will have been issued in compliance with all applicable securities laws and corporate laws of Israel and will have been issued free of pre-emptive rights of any security holder.
(c) There are no outstanding (i) options, subscriptions, warrants, or other rights to purchase or otherwise acquire from the Company any share capital of the Company, (ii) debt securities or instruments convertible into or exchangeable for shares of the Company or (iii) commitments of any kind for the issuance of additional shares of the Companyor options, warrants or other securities of the Company.
Section 3.6 Shareholders of the Company’s Ordinary Shares. the Company has provided WHEN a true and complete list of the holders of all issued and outstanding shares of the Company.
Section 3.7 Tax Matters.
(a) the Company has timely filed all tax returns in connection with any Taxes which are required to be filed on or prior to the date hereof, taking into account any extensions of the filing deadlines which have been validly granted to the Company or its subsidiaries, and all such returns are true and correct in all material respect;
(b) the Company has paid all Taxes that have become or are due with respect to any period ended on or prior to the date hereof, and has established an adequate reserve therefore on its balance sheets for those Taxes not yet due and payable, except for any Taxes the non-payment of which will not have a material adverse effect;
(c) the Company is not to its knowledge presently under and has not received notice of, any contemplated investigation or audit by regulatory or governmental agency of body or any foreign or state taxing authority concerning any fiscal year or period ended prior to the date hereof; and
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(d) all Taxes required to be withheld on or prior to the date hereof from employees for income Taxes, social security Taxes, unemployment Taxes and other similar withholding Taxes have been properly withheld and, if required on or prior to the date hereof, have been deposited with the appropriate governmental agency.
Section 3.8 Subsidiaries. the Company does not have any subsidiaries or agreements of any nature to acquire any subsidiary or to acquire or lease any other business operations.
Section 3.9 Personal Property. The Company possesses, and has good and marketable title of all property necessary for the continued operation of the business of the Company as presently conducted and as represented to WHEN. All material equipment, furniture, fixtures and other tangible personal property and assets owned by the Company is owned by the Companyfree and clear of all liens, security interests, charges, encumbrances, and other adverse claims.
Section 3.10 Intellectual Property Assets. The Company owns or holds an interest (including by way of a licence) in all intellectual property assets necessary for the operation of the business of the Company as it is currently conducted (collectively, the “Intellectual Property Assets”), including:
(a) all functional business names, trading names, registered and unregistered trademarks, service marks, and applications (collectively the “Marks”);
(b) all patents, patent applications, and inventions, methods, processes and discoveries that may be patentable (collectively the “Patents”);
(c) all copyrights in both published works and unpublished works (collectively, the “Copyrights”); and
(d) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints owned, used, or licensed by the Company as licensee (collectively, the “Trade Secrets”).
Section 3.11 Company Intellectual Property. A full list of all registered Company Intellectual Property Assets is included on Schedule 3.17 of this Agreement.
Section 3.12 Material Contracts. Schedule 3.18 attached hereto lists each Material Contract to which the Company is a party. Each Material Contract is in full force and effect, and there exists no material breach or violation of or default by the Company or any of its subsidiaries under any Material Contract, or any event that with notice or the lapse of time, or both, will create a material breach or violation thereof or default under any Material by the Company. The continuation, validity, and effectiveness each Material Contract will in no way be affected by the consummation of the transactions contemplated in this Agreement. There exists no actual or threatened termination, cancellation, or limitation of, or any amendment, modification, or change to any Material Contract.
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Section 3.13 Consultants. All consultants of the Company have been paid all salaries, wages, income and any other sum due and owing to them by the Company, as at the end of the most recent completed pay period. the Company is not aware of any labor conflict with any consultants that might reasonably be expected to have an Company Material Adverse Effect. To the Knowledge of the Company, no consultant of the Company is in violation of any term of their contract, nondisclosure agreement, non-competition agreement or any other contract or agreement relating to the relationship of such employee with the Company.
Section 3.14 Real Property. The Company does not own any real property. Each of the leases, subleases, claims or other real property interests (collectively, the “Leases”) to which the Companyis a party or is bound is legal, valid, binding, enforceable and in full force and effect in all material respects. All rental and other payments required to be paid by the Company pursuant to any such Leases have been duly paid and no event has occurred which, upon the passing of time, the giving of notice, or both, would constitute a breach or default by any party under any of the Leases. The Leases will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing Date. the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the Leases or the leasehold property pursuant thereto.
Section 3.15 Certain Transactions. the Company is not a guarantor or indemnitor of any indebtedness of any third-party, including any person, firm or corporation.
Section 3.16 Foreign Corrupt Practices Act. In connection with its business, the Company has not engaged in any activity, practice or conduct which would constitute an offence under the Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1, et seq and rules, regulations, thereunder and no action, investigation, inquiry, charge, claim, demand or notice has been filed or commenced against it alleging any failure to comply.
Section 3.17 Economic Risk. the Company and its shareholders have knowledge and experience in evaluating and investing in securities in companies similar to WHEN so that it is capable of evaluating the merits and risks of the transaction and have the capacity to protect their own interests.
Section 3.18 Company Information. The Company has had an opportunity to discuss WHEN’s business, management and financial affairs with directors, officers and management of WHEN.
ARTICLE IV
Section 4.1 Covenants of Company Prior to Closing
(a) Conduct of Business. Except as contemplated by this Agreement or as otherwise agreed in writing by the Parties, during the period from the date hereof to the closing, Company will conduct its operations in the ordinary course of business consistent with past practice and, to the extent consistent therewith, with no less diligence and effort than would be applied in the absence of this Agreement, seek to preserve intact its current business organization. Except as otherwise expressly provided in this Agreement, as of the date of this Agreement and up to the Closing Date, without the prior written consent of WHEN, Company shall not do any of the following:
(i) authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any stock of any class or any other securities or equity equivalents (including, without limitation, any stock options or stock appreciation rights) for any purpose whatsoever, including a capital raise;
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(ii) combine or reclassify any shares of its capital stock, declare, set aside or pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, make any other actual, constructive or deemed distribution in respect of its capital stock or otherwise make any payments to IR-Med Shareholders in their capacity as such, or redeem or otherwise acquire any of its securities;
(iii) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of Company;
(iv) other than in the ordinary course of business and consistent with past practice, (A) incur or assume any long-term or short-term debt or issue any debt securities; (B) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person; or (C) make any loans, advances or capital contributions to, or investments in, any other person;
(v) pledge or otherwise encumber shares of capital stock of Company or mortgage or pledge any of its material assets, or create or suffer to exist any material lien thereupon;
(vi) except as contemplated in this Agreement, acquire, sell, lease or dispose of any assets in any single transaction or series of related transactions (other than in the ordinary course of business);
(vii) except as may be required as a result of a change in law or in generally accepted accounting principles, change any of the accounting principles or practices used by it;
(viii) (A) Acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof or any equity interest therein; (B) enter into any contract or agreement other than in the ordinary course of business consistent with past practice; (C) authorize any new capital expenditure or expenditures which, individually is in excess of $5,000 or, in the aggregate, are in excess of $25,000, other than in the ordinary course of business and consistent with past practice;
(ix) make any tax election or settle or compromise any income tax liability material to Company;
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(x) settle or compromise any pending or threatened suit, action or claim which (A) relates to the transactions contemplated hereby or (B) the settlement or compromise of which could have a Material Adverse Effect on Company;
(xi) form any subsidiary, enter into any contract, issue any dividends, hire any employees, etc.; or
(xii) take, or agree in writing or otherwise to take, any action which would make any of the representations or warranties of Company or Company Shareholder contained in this Agreement untrue or incorrect.
(b) Access to Information. Between the date hereof and the Closing, in addition to the documents already provided up to the date hereof Company will give WHEN and its authorized representatives reasonable access to its facilities and its books and , will permit WHEN to make such inspections as WHEN may reasonably require and will cause its officers to furnish WHEN with such financial and operating data and other information with respect to the business and properties of itself as WHEN may from time to time reasonably request.
(c ) Company will deliver to WHEN, auditor reviewed financial statement with respect to the current fiscal year, together with related balance sheets, statements of income, cash flows, and changes in shareholder’s equity for such fiscal years and interim period then ended, which have been prepared in accordance with the books and records of Company, present fairly the financial condition of Company as of the date indicated and the results of operations for such period and have been prepared in accordance with U.S. GAAP.
(d) No Shop. From the date of the execution of this Agreement through the earlier of (i) the Closing or (ii) the 30th day following the termination of this Agreement by WHEN, neither IR-Med nor any of its directors, stockholders, officers, agents, employees or representatives will, directly or indirectly, (i) solicit, initiate or encourage any new inquiries or discussions or proposals for, (ii) continue, propose or enter into negotiations or discussions with respect to, or (iii) enter into any agreement or understanding providing for any transactions involving the subject matter hereof (or any transactions similar thereto) or which could negatively impact the Merger without the prior written consent of WHEN.
Section 5.2 Post Closing Undertakings. The following actin shall take place at the closing of the transactions contemplated hereunder
| (a) | Company Undertakings: At the closing, WHEN shall designate an senior member of management of Company (the “WHEN Designated Officer”). The Company and WHEN Designated Officer shall enter into an employment or other service agreement following the execution of this Agreement (the “WHEN Designated Officer Service Agreement”). | |
| (b) | Company shall undertake at closing to appoint the WHEN Designated Officer to a mutually agreeable management position. |
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| (c) | Signatory rights at Company’s bank account shall be revised so that the WHEN Designated Officer shall be required to consent to any payment to third parties or to the Shareholders in an amount exceeding 10,000 NIS or 20,000 NIS on an aggregate basis; | |
| (d) | Any amounts paid to Company Shareholder or to any employee or service provider of Company, by way of a fee, salary of dividend, shall be matched by an identical payment to the WHEN Designated Officer or its designee’ | |
| (e) | As soon as practicable after the closing, Company shall enter into a service agreement with WHEN pursuant to which WHEN will provide services to Company. |
Section 5.3 Confidentiality. The parties have previously entered into a confidentiality agreement, the terms of which are hereby incorporated herein.
Section 5.4 Shareholders Agreement. Following the execution of this Agreement, the WHEN, the Company and the Shareholder shall enter into a Shareholders Agreement relating to the management and operation of the Company (the “Shareholders Agreement”)
ARTICLE V
CONDITIONS TO CLOSING; DELIVERIES
Section 5.1 Closing. The consummation of the agreement pursuant to this Agreement (the “Closing”) shall take place remotely via the exchange of documents and signatures or at such time and place as WHEN and the Company shall designate (the “Closing Date”), subject to the fulfillment of the conditions to Closing as set forth hereunder.
Section 5.2 Closing Conditions of WHEN.
Section 5.2.1 Closing Deliverables. The obligation of WHEN to effect the investment shall be subject to the delivery at or prior to the Closing of the following documents (the “Company Documents), unless waived by WHEN:
(a) delivery to WHEN of copies of all resolutions and/or consents and actions adopted by or on behalf of the board of directors of the Company evidencing approval of this Agreement and the transactions contemplated hereunder;
(b) delivery to WHEN of excerpts of the Company’s share register, filled in as required by this Agreement and certificates representing the Company Shares;
Section 5.2.2 Conditions to Closing. The obligation of WHEN to effect the transaction shall be subject to the fulfillment at or prior to the Closing of the following conditions, unless waived by WHEN:
(a) each representation, warranty and covenant of the Company and the Company Shareholders is true and correct at the Closing as if made on and as of the Closing and at or prior to the Closing the Company shall have delivered to WHEN a certificate to that effect signed by an officer of the Company;
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(b) Each of the Company and the Company Shareholders shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Closing the Company shall have delivered to WHEN a certificate to that effect signed by an officer of the Company;
(c) From the date of this Agreement through the Closing, there shall not have occurred any change, circumstance or event concerning the Company that has had or could be reasonably likely to have a Material Adverse Effect on the Company;
(e) the Company shall have adopted at or prior to Closing a resolution of the Company Shareholders adopting amended restated Articles of Association for the Company;
(f) election of a WHEN designee to the Company Board of Directors;
(g) Execution of the WHEN Designated Officer Service Agreement;
(h) Execution of the Shareholders Agreement;
(i) delivery to WHEN of the Company Documents and
(j) No temporary restraining order, preliminary or permanent injunction or other Judgment or Law of, or issued by, any court of competent jurisdiction or other Governmental Authority shall be in effect, in each case having the effect of making the Share Exchange illegal or otherwise prohibiting consummation of the Share Exchange or imposing, individually or in the aggregate, a burdensome condition (collectively, “Legal Restraints”) and (ii) no Governmental Authority shall have instituted any action or proceeding (which remains pending at what would otherwise be the Closing Date) before any court or other Governmental Authority of competent jurisdiction seeking to temporarily or permanently enjoin, restrain or otherwise prohibit consummation of the Share Exchange or impose a Legal Restraint.
Section 5.3. Closing Conditions of the Company and the Company Shareholders.
Section 5.3.1 Closing Deliverables. The respective obligations of the Company and the Company Shareholders to effect the Transaction shall be subject to the delivery at or prior to the Closing of the following documents (the “Company Documents”), unless waived by the Company:
(a) delivery to the Company of copies of all resolutions and/or consents and actions adopted by or on behalf of the board of directors of WHEN evidencing approval of this Agreement and the transactions contemplated hereunder;
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(b) The Company shall have received from WEN stock certificates or, in lieu thereof, book entry form confirmation, evidencing their respective ownership of the WHEN Consideration Shares then due;
Section 5.3.2 Conditions to Closing. The obligation of Company and the Company Shareholders to effect the transactions shall be subject to the fulfillment at or prior to the Closing of the following conditions, unless waived by Company and the Company Shareholders:
(a) each representation, warranty and covenant of WHEN is true and correct at the Closing as if made on and as of the Closing and at or prior to the Closing WHEN shall have delivered to Company a certificate to that effect signed by an officer of WHEN;
(b) From the date of this Agreement through the Closing, there shall not have occurred any change, circumstance or event concerning WHEN that has had or could be reasonably likely to have a Material Adverse Effect on WHEN; and
(c) delivery to Company of the WHEN Documents and any other necessary documents, each duly executed by WHEN, as required to give effect to the transaction and
(d) No temporary restraining order, preliminary or permanent injunction or other
ARTICLE VI
TERMINATION
Section 6.1 Termination. This Agreement may be terminated at any time prior to the Closing contemplated hereby by:
(a) mutual agreement of WHEN and the Company;
(b) WHEN, if there has been a material breach by the Company or the Company Shareholders of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of the Company or the Company Shareholders that is not cured, to the reasonable satisfaction of WHEN, within 30 days after notice of such breach is given by WHEN (except that no cure period will be provided for a breach by the Company or the Company Shareholders that by its nature cannot be cured); provided that WHEN shall not be entitled to terminate the Agreement under this Section 6.1(b), if it is in breach of any material representation, warranty, covenant or agreement at such time and such breach by WHEN is not the direct result of the breach by the Company or the Company Shareholders, as the case may be, of any of material representation, warranty, covenant or agreement applicable to them;
(c) the Company, if there has been a material breach by WHEN of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of WHEN that is not cured, to the reasonable satisfaction of the Company, within 30 days after notice of such breach is given by the Company (except that no cure period will be provided for a breach by the Company that by its nature cannot be cured); provided that Company shall not be entitled to terminate the Agreement under this Section 6.1(c), if it is in breach of any material representation, warranty, covenant or agreement at such time and such breach by the Company is not the direct result of the breach by WHEN of any of material representation, warranty, covenant or agreement applicable to WHEN.
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(d) WHEN or the Company, if the Transaction contemplated by this Agreement has not been consummated prior to December 31, 2022, (other than as a result of any failure on the part of terminating party to comply with or perform any covenant or obligation of such party set forth in this Agreement or in any other agreement or instrument delivered to the non-terminating party in connection with the transactions contemplated by this Agreement);
(e) WHEN or the Company if (i) a court of competent jurisdiction or other Governmental Authority shall have issued a final and non-appealable order, decree or ruling, or shall have taken any other action, having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement; or (ii) there shall be any Law enacted, promulgated, issued or deemed applicable to the transactions contemplated by this Agreement by any Governmental Authority that would make consummation of such transactions illegal.
Section 6.2 Effect of Termination. In the event of the termination of this Agreement as provided in this Section, this Agreement will be of no further force or effect, provided, however, that no termination of this Agreement will relieve any party of liability for any breaches of this Agreement that are based on a wrongful refusal or failure to perform any obligations.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.1 Non-Survival of Representations and Warranties. The representations and warranties of the parties to this Agreement shall terminate upon the Closing, and only the covenants that by their terms survive the Closing shall survive the Closing.
Section 7.2 Successors and Assigns. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective successors and assigns; provided that no party shall assign or delegate any of the obligations created under this Agreement without the prior written consent of the other parties.
Section 7.3 Fees and Expenses. Except as otherwise expressly provided in this Agreement, all legal and other fees, costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the Party incurring such expenses, costs or fees, including without limitation the fees and expenses of any investment banks, attorneys, accountants, or other experts or advisors retained by such party.
Section 7.4 Notices. All notices and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been given or made if in writing and delivered personally, 7 days after being sent by registered or certified mail (postage prepaid, return receipt requested) or on the next business day after being transmitted by e-mail at the addresses set forth on the signature pages of this Agreement.
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No change in any of such addresses shall be effective insofar as notices under this Section 7.4 are concerned unless notice of such change shall have been given to such other party hereto as provided in this Section 7.4.
Section 7.5 Entire Agreement. This Agreement, together with the exhibits hereto, represents the entire agreement and understanding of the parties with reference to the transactions set forth herein and no representations or warranties have been made in connection with this Agreement other than those expressly set forth herein or in the exhibits, certificates and other documents delivered in accordance herewith, except for the NDA which shall continue to be in effect. This Agreement supersedes all prior negotiations, discussions, correspondence, communications, understandings and agreements between the parties relating to the subject matter of this Agreement and all prior drafts of this Agreement, all of which are merged into this Agreement.
Section 7.6 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible so as to be valid and enforceable.
Section 7.7 Titles and Headings. The Article and Section headings contained in this Agreement are solely for convenience of reference and shall not affect the meaning or interpretation of this Agreement or of any term or provision hereof.
Section 7.8 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement. Fax and PDF copies shall be considered originals for all purposes.
Section 7.9 Convenience of Forum; Consent to Jurisdiction. The parties to this Agreement, acting for themselves and for their respective successors and assigns, without regard to domicile, citizenship or residence, hereby expressly and irrevocably elect as the sole judicial forum for the adjudication of any matters arising under or in connection with this Agreement, and consent and subject themselves to the jurisdiction of, the courts Tel-Aviv-Jaffa, Israel, in respect of any matter arising under this Agreement.
Section 7.10 Governing Law. This Agreement shall be governed by and interpreted and enforced in accordance with the laws of the State of Israel without giving effect to the choice of law provisions thereof.
Section 7.11 Amendments and Waivers. Except as otherwise provided herein, no amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties hereto. No waiver by any party of any default, misrepresentation, or breach of warranty or covenant hereunder, whether intentional or not, shall be deemed to extend to any prior or subsequent default, misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any such prior or subsequent occurrence.
[Signature Page to Follow]
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In Witness, the undersigned have executed and delivered this Agreement as of the date first above written.
| WORLD HEALTH ENERGY HOLDINGS, INC. | ISTAVIEW LTD. | |||
| By: | /s/ Giora Rozensweig | By: | /s/ Simon Levi | |
| Title: | CEO | Title: | CEO | |
| /s/ Simon Levi | ||||
| Company Shareholder | ||||
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EXHIBIT 31.1
RULE 13a-14(a) CERTIFICATION
I, Giora Rozensweig, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2023, of World Health Energy Holdings, Inc.;
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 presented 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 13a-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 my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financing reporting, or caused such internal control over financial reporting to be designed under my 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 my 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 involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: May 22, 2023
| /s/ Giora Rozensweig | |
Giora Rozensweig, Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) |
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 (AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)
In connection with the Quarterly Report on Form 10-Q of World Health Energy Holdings, Inc. (the “Company”) for the for the fiscal quarter ended March 31, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Giora Rozensweig, Interim Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
1. The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| /s/ Giora Rozensweig | |
Giora Rozensweig Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) |
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| May 22, 2023 |