ITEM
1. BUSINESS
This
summary highlights selected information contained elsewhere in this prospectus and does not contain all the information that you should
consider before making your investment decision. Before investing in our common stock, you should carefully read this entire prospectus,
including the information set forth under the “Risk Factors” and “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” sections of this prospectus and our consolidated financial statements and the accompanying
notes included in this prospectus. Except as otherwise indicated herein or as the context otherwise requires, references in this prospectus
to “Citrine Global,” the “Company,” “we,” “us,” and “our” refer to Citrine
Global, Corp. and our consolidated subsidiaries, including our wholly-owned subsidiary, CTGL-Citrine Global Israel Ltd. and to our partially
owned subsidiary Cannovation Center Israel Ltd.;
Business Overview
We
are a plant-based wellness & pharma solutions company. Our business activity is primarily comprised of developing wellness and
pharma solutions, focused on science backed plant-based products to improve quality of life and complementary solutions for
balancing side effects caused by using medicines, cannabis, treatments, or an unbalanced lifestyle.
The
global health and wellness market is expected to reach USD 7.6 trillion by 2030, growing at a CAGR of 5.5% from 2021 to 20301
with growing awareness of health and wellness solutions for improving people’s quality of life2. We are witnessing a
global movement of health and wellbeing becoming a priority for the public, further emphasized by the recent global COVID-19 pandemic.
There is increasing recognition that people need to take charge of their own health, improve their quality of life, use natural products,
and balance side effects caused by medicines and treatment3.
We
believe the power of plant-based solutions from nature can help improve people’s health and quality of life. We have built an
end-to-end strategy to bring to market innovative plant-based wellness and pharma solutions covering the whole spectrum from
innovation, research and development, product development, infrastructure for production and manufacturing, distribution, and
marketing and sales on a global scale. Leveraging technology and research, we are focused on developing products portfolio based on
rigorous scientific research ranging from synergistic botanicals, herbal extract tinctures, medicinal mushrooms together with plant
extracts, vitamins, minerals, botanical formulations from seeds, roots, bark, fruits and a wide variety of plants that contain
substances with health-supportive effects. Such supportive effects include, but aren’t limited to, enhancing oral care,
anti-inflammatory properties, relaxation, sleep enhancement, energizing, mood and body balancing, and alleviating side
effects.
Our
headquarters and top executives are based in Israel, where we operate via our 100%-owned-subsidiary “CTGL Citrine Global Israel
Ltd.” and 60%-owned “Cannovation Center Israel Ltd.” Our experienced team and partners are leaders in their
respective fields with proven track records as top-level businesspeople and executives in technology, high-tech, biotech, investments,
entrepreneurship, real estate, finance, and proven experience in bringing companies to global success. We have a professional, experienced
group of primary shareholders that include Citrine S A L Investment & Technologies, which are supporting the Company.
Our
presence in Israel combined with our close contacts with leading universities, researchers, companies, shareholder and governmental support
powers us to access the latest technologies, talent, and innovation to bring innovative solutions to the global market.
Our mission is to become a leading company for plant-based wellness & pharma solutions to improve people’s quality of life.
Our
recent achievements and upcoming milestones include:
Developing
& Bringing Plant-Based Wellness & Pharma Products to Market
We
are developing plant-based solutions which include products for improving quality of life and complementary solutions for balancing
selected side effects caused by using medicines, cannabis, treatments, or an unbalanced lifestyle. In December 2021 we finalized
the development of 25 proprietary formulations in multiple form factors under the brand name of Green Side by Side™ for the wellness
industry.
The
Green Side by Side™ product line includes herbals medicinal mushrooms, vitamins, minerals, and a variety of researched plants known for their healing
qualities that contain substances with different anti-inflammatory properties and a variety of health-supportive effects that are
relaxing, sleep enhancing, energizing, mood and body balancing, as well as enhancing oral care, alleviating side effects, and many
botanical formulations that we target for balancing selected side effects and improving quality of life.
Green
Side by Side products are manufactured in Israel in a GMP-certified manufacturing facility approved by the Israeli Ministry of Health.
In Q1 2022 we launched in the Israeli market several products from the Green Side by Side™ product line, which includes
the SmokLy TM series, a line of sprays for the oral cavity to support people suffering from cavity dryness (xerostomia) as
a side effect.
We
have commercially started marketing the products with a local Israeli partner that is targeting medical cannabis distribution channels
and we plan to expand our activity in the Israeli market as well as distribute worldwide with local partners and according to local regulations.
Green Side by Side is positioned to capture market share in the nutritional supplements market that is expected to reach $625
billion by 20304.
1
Research, P., 2022. Health and Wellness Market Size to Hit USD 7,656.7 Bn by 2030.
[online] GlobeNewswire News Room.
2
NielsenIQ. 2022. An inside look into the 2021 global consumer health and wellness
revolution. [online]
3
Sullivan, F., 2022. Increasing Health Consciousness Among Consumers to Shift
the Global Prebiotic Ingredients Market. [online] Prnewswire.com.
4
Research, P., 2022. Nutritional Supplements Market to Hit US$ 624.7 Billion
by 2030. [online] GlobeNewswire News Room.
IP
and Research & Development Strategy
Our
IP strategy and R&D roadmap include building our patent portfolio, conducting clinical studies, advancing products through regulatory
approvals. Leveraging technology and research, we continue to innovate, developing solutions that combine botanical formulations,
herbal extracts, tinctures, sprays and other natural delivery methods with a variety of researched plants known for their healing qualities.
We
target to bring to the wellness and pharma market innovative products to improve quality of life and complementary solutions for balancing
selected side effects caused by medicines, treatments, cannabis, aging, stress, or an unbalanced lifestyle.
Our
mission includes developing plant-based medicines for the plant-derived drug market that is expected to reach $53 billion by 20265.
Side Effects Caused by Medicines, Cannabis and Treatments, or an Unbalanced Lifestyle
A
broad range of medicines, including use of cannabis, and treatments have common side effects such as dryness in the oral cavity (xerostomia),
headaches, dizziness, drowsiness, fatigue, nausea, vomiting, lack of concentration, and impaired appetite. We are researching and developing
complementary solutions to address the need to balance selected effects through wellness solutions, as well as clinically developed plant-based
pharmaceutical solutions6.
Addressing
a significant market need, we filed a provisional patent application with the US Patent and Trademark Office to address the side effects
of cannabis use titled “Pharmaceutical Compositions and Methods for the Treatment of Side-Effects Associated with the Use of Cannabis,
Cannabinoids and Related Products” patent No: 63/257,673.
Research
shows that nearly 70% of cannabis users experience constant dry mouth and 20% percent of the elderly suffer from xerostomia as a
side effect of their medications7. As part of
our Green Side by Side product line, we developed the SmokLy TM series of sprays for the oral cavity which contain plant
extracts distilled from seeds, roots, bark, fruits with active anti-inflammatory substances that encourage saliva production and
taste in the oral cavity and can balance the dry mouth side effect (xerostomia) from using medicines and cannabis. We are
working diligently on developing a broad array of plant-based wellness and pharma complementary solutions to address selected side
effects caused by medicines, cannabis, treatments or an unbalanced lifestyle.
Green
Vision Center Production & Innovation Center for Plant-Based Wellness & Pharma Products
The
Green Vision Center is part of our strategy to create end-to-end plant-based solutions covering all the infrastructure, facilities,
and activities required for developing, manufacturing, and bringing to market innovative plant-based wellness and pharma products.
In
February of 2022, we completed the acquisition of 125,000 sq ft (11,687 sq meters) of industrial land in Yerucham, a city in southern
Israel, to build the Green Vision Center Israel with the Israeli government support. Approximately 90% of the acquisition cost
was provided by Israeli government programs that encourage industrial development and includes additional grants and tax incentives.
Designed
by Avner Sher, one of Israel’s most highly regarded architects and artists, Green Vision Center will be a 60,000 sq ft (5,500 sq
meter) first-of-its-kind facility. The center will be constructed by a professional project construction
company that will oversee the aspects of the building including interfacing with sub-contractors and obtaining the requisite building
permits and other required authorizations.
As
demand for plant-based products in industries ranging from wellness, to pharma, to cosmetics, to food continues to increase, our Green
Vision Center will provide highly sought-after facilities for the development and production of botanical and plant-based products.
5
2018-2026, G. and 2018-2026, G., 2022. Botanical and Plant Derivative Drug Market
- Global Forecast 2018-2026. [online] Inkwood Research.
6
WebMD. 2022. Medication Side Effects: Types of Side Effects and FDA Regulations.
[online]
7
Harpreet, S., Joseph, K., Wafaa, S. and Seunghee, C., 2019. Impact of Cannabis on the Port
of Entry-Oral Tissues: An Overview. International Journal of Oral and Dental Health,
5(3).
Green
Vision Center is a first-of-its-kind center that combines:
| ● | Manufacturing
facilities for botanicals and nutritional supplements, plant-based pharmaceuticals, medical
cannabis and related products, plant-based cosmetics, foods, and beverages |
| ● | R&D
laboratories for development, clinical studies, and quality control testing |
| ● | Management
and consultant offices |
| ● | Distribution
and global logistics center |
| | ● | International
Visitor Complex including a conference center and museum |
Our
vision is to become a leading worldwide production and innovation center and bring together partners, market leaders, companies, technologies,
and scientific collaborations from Israel and around the world.
Israel
as a source of innovation & Global Expansion Strategy
Our
presence in Israel combined with our close contacts with leading universities, researchers, companies, shareholder and government support
empowers us to access the latest technologies, talent, and innovations. Israel, known as the Startup Nation, is well positioned as a
leader in technology with a critical mass of technology companies, researchers, scientists, and government support.
A
core part of our strategy includes building a worldwide network with local teams, partners, subsidiaries, Green Vision Centers, strategic
partnerships, collaborations, and mergers & acquisitions of technology and distribution companies. Initially, we are planning to
build infrastructure for business development and sales with local teams in North America and Europe.
Generating
Revenue Strategy
Our
strategy for generating revenue streams in the near term and future include:
| |
● |
Sales
of our proprietary products including Green Side by Side with local partners and distribution channels in Israel & worldwide
according to local regulations. |
| |
● |
Commercialization
and licensing our IP, products & brands. |
| |
● |
Green
Vision Center operations |
| |
● |
Mergers & acquisitions and strategic partnership
activities |
Corporate
and Development History
On
January 6, 2020, our predecessor company, TechCare Corp., a Delaware corporation (“TechCare”), and Citrine S A L Investment
& Holdings Ltd., an Israeli corporation and a major shareholder of the Company (“Citrine S A L”), and a group of related
persons and entities (the “Citrine S A L Group”) entered into a Common Stock Purchase Agreement (the “Citrine S A L
Group Agreement”), which was later amended and restated on February 23, 2020 (the “AR Citrine S A L Group Agreement”).
Pursuant to the AR Citrine Agreement, TechCare agreed to sell Citrine S A L Group and its group of business partners, up to an aggregate
of 893,699,276 shares of TechCare’s common stock, representing approximately 95% of TechCare’s fully diluted capital, in
two tranches, with the initial tranche of up to 452,063,196 shares of the TechCare’s common stock to be sold conditioned upon (i)
the resignation of the Company’s existing members of its board of directors (the “Board”), consisting of Oren Traistman
and Yossef De-Levy, (ii) the appointment of each of Ora Elharar Soffer (formerly Ora Meir Soffer), Ilan Ben-Ishay and Ilanit Halperin
as members of the Board, and (iii) the transfer of the TechCare’s signatory rights to all Company bank accounts in the name of
Citrine S A L Group’s nominee. In addition, the AR Citrine S A L Group Agreement provides for the second tranche of up to the remaining
number of shares of common stock that resulted in Citrine S A L Group, owning 95% of the TechCare’s fully diluted capital stock,
to be sold conditioned upon the filing of the Company’s previously approved amendment to its First Amended and Restated Certificate
of Incorporation to increase the Company’s authorized capital.
On
January 6, 2020, definitive agreements were executed for the sale of 90% of the shares in Novomic Ltd. (“Novomic”) to Traistman
Radziejewski Fundacja Ltd, which was completed on May 14, 2020 (the “Novomic Divestment”), and for the issuance and sale
of a number of shares equal after the issuance to 95% of the fully diluted capital stock of the Company to Citrine S A L Group, which
was amended on February 23, 2020, to provide for the issuance and sale of the shares in stages (the “Citrine Global Transaction”).
Shares of the Company were issued and sold in accordance with this amended agreement to Citrine S A L Group on February 27, 2020, March
5, 2020, and, after the Company amended its Certificate of Incorporation to increase its authorized share capital, on November 11, 2020.
On
February 27, 2020, the resignations of all then serving directors became effective, and the appointments of Ora Elharar Soffer, Ilan
Ben-Ishay, and Ilanit Halperin as new directors became effective. Zviel Gedalihou was appointed as Chief Financial Officer of the Company
on March 17, 2020, and was replaced in that role by Ilanit Halperin on May 27, 2020, and Ora Elharar Soffer was appointed Chief Executive
Officer of the Company on May 7, 2020. Doron Birger was appointed as a fourth director on September 3, 2020.
As
of March 31, 2022, the Company has one wholly-owned subsidiary, Citrine Global Israel, a company incorporated in Israel with registration
number 516201159, which holds 60% of the share capital of Cannovation Center Israel Ltd., a company incorporated in Israel with registration
number 516241270.
Material
Agreements and Arrangements
Financing
transaction with Affiliates
We
have financed our operations primarily through financing arrangements with affiliates of our company.
On
April 1, 2020, we entered into a Convertible Note Purchase Agreement (the “CL Agreement”) with Citrine S A L, WealthStone
Private Equity Ltd, WealthStone Holdings Ltd, Golden Holdings Neto Ltd, Beezz Home Technologies Ltd, Citrine Biotech 5 LP, Citrine High
Tech 6 LP, Citrine High Tech 7 LP, Citrine 8 LP, Citrine 9 LP and Citrine Biotech 10 LP (together, the “Buyer”), all of which
are affiliated with the Company. Under the CL Agreement, the Buyer agreed to purchase, and the Company agreed to issue and sell, for
up to an aggregate principal amount of up to $1,800 thousand, notes convertible into shares of common stock of the Company (the “Notes”),
with a drawdown period starting on April 1, 2020, and ending upon the earlier of (i) 6 months thereafter and (ii) the consummation of
a public offering by the Company. The CL Agreement provides that the Notes will bear an annual interest rate of six percent (6%) and
that the conversion price per share of common stock shall equal 85% multiplied by the market price (as defined in the Notes), representing
a discount of 15%, and that each Note will mature 18 months following the payment date. On April 19, 2020 and June 12, 2020, the Company
provided draw-down notices under the CL Agreement for amounts of $170 thousand and $1 million, respectively, which were received in cash
by the Company. On June 12, 2020, the CL Agreement (hereafter “CL Agreement Amendment”) was amended to provide that for each
draw down made by the Company under the CL Agreement, the Buyer shall be entitled to receive two types of warrants: A Warrants and B
Warrants, with the A Warrants exercisable at any time between 6 and 12 months after issuance for an exercise price per share equal to
1.25 times the average of the closing prices of the 3 trading days preceding the draw down, and the B Warrants exercisable at any time
between 6 and 24 months after issuance for an exercise price per share equal to 1.5 times the average of the closing prices of the 3
trading days preceding the draw down, and that the number of each of the A Warrants and the B Warrants issued will be equal to the draw
down amount divided by the average of the closing prices of the 3 trading days preceding the draw down, and that these amended terms
will apply in respect of all draw downs, including drawdowns made prior to the date of the amendment. On April 12, 2021, the parties
to the CL Agreement amended the agreement, so that (i) the annual interest on the Notes was changed to nine percent (9%) applicable from
January 1, 2021, (ii) the Company shall repay the loans at the time it consummates an investment of at least $5 million in the Company’s
securities, and (iii) the exercise prices of each of the A Warrants and B Warrants be modified to $0.10 per share, and the term of the
warrants be extended by one (1) year for the A Warrants and B Warrants. On June 24, 2021, the Company
received from Citrine 8 LP, a related entity, a loan of $350,000 made under and pursuant to the CL Agreement. Citrine agreed to honor
a Draw Down Notice for, and advanced to the Company, $350,000, under the terms of the CL Agreement. As provided for under the terms of
the CL Agreement, Citrine 8 was issued 10,500,105 A warrants and 10,500,105 B warrants for shares of common stock, where the A warrants
are exercisable beginning December 24, 2021 through December 24, 2023 and the B warrants, in each case at a per share exercise price
of $0.10.
On
August 13, 2021, the Company and Citrine 8 LP. Citrine High Tech 7 LP and Citrine 9 LP, the holders of $1,520,000 in principal amount
then outstanding under the CL Agreement (the “Outstanding CL Notes”), entered into an agreement pursuant to which the following
principal terms were effected:
| |
(i) |
Extension
of the maturity date on the Outstanding CL Notes to July 31, 2023, provided, that if the Company consummates prior to maturity an
investment of at least $5 million of the Company’s securities, then the Company shall repay the principal amount and accrued
interest of the Notes from such proceeds; |
| |
(ii) |
Amendment
of the conversion price on the Outstanding CL Notes to a fixed conversion price of $0.10; per share and |
| |
(iii) |
Confirming
the agreement of the holders of the Outstanding CL Notes to honor draw down notice for balance of remainder of the $1,800,000 originally
committed to under the CL Agreement (i.e., $280,000) through March 31, 2022. |
On
January 5, 2022, Citrine 9 LP, one of the Buyer entities (hereinafter “Citrine 9”) agreed to honor a Draw Down Notice for,
and has advanced to the Company, $180,000 on the same terms and conditions as are specified in the CL Agreement.. The annual interest
on the loan continues to be nine percent (9%). The principal and interest payment on the Note shall be made in New Israeli Shekels (NIS)
at the conversion rate which was in effect on the date on which the loan was advanced. Citrine 9 was be issued 6,666,667 Series A warrants
and 6,666,667 Series B warrants for shares of common stock, where the Series A warrants are exercisable beginning July 5, 2022 through
July 5, 2024 and the Series B warrants are exercisable beginning July 5, 2022 through July 5, 2025, in each case at an exercise price
of $0.5 per share. Additionally, on January 5, 2022, the Company and the Buyers entered into the Fourth Amendment to the Convertible
Note Agreement pursuant to which the following was agreed to:
| |
(i) |
The
principal and accrued interest on all outstanding loans shall be made in New Israeli Shekels (NIS) at the conversion rate which was
in effect on the date on which the loan was advanced; |
| |
|
|
| |
(ii) |
The
conversion price on all outstanding notes under the Convertible Note Agreement has been adjusted to a conversion price of $0.05 per
share |
| |
|
|
| |
(iii) |
The
exercise price on all outstanding warrants issued in connection with advances made under the Convertible Note Agreement has been adjusted
to an exercise price of $0.05 per share. |
Transaction
with Intelicanna Ltd.
On
May 31, 2020, we and Intelicanna entered into a share exchange agreement and an agreement for future issuance of shares. Ilanit Halperin,
a director and the Chief Financial Officer of the Company, is also the Chief Financial Officer of Intelicanna, and Doron Birger, a director
of ours, is the chairman of the board of directors of Intelicanna effective April 2021. The share exchange agreement provided that (i)
the number of shares each party issues to the other will be calculated by dividing $500 thousand by the volume-weighted average price
(VWAP) of the issuing party’s shares in the three trading days preceding the signing of the agreement, (ii) the Issuance
by Intelicanna will take place upon, and subject to, receipt of approval from the Tel Aviv Stock Exchange and the issuance by the Company
will follow immediately thereafter, and (iii) the parties may not sell the shares within the first six months after issuance, and thereafter
the parties may sell the shares issued to them if the shares become registered through a prospectus approved by the relevant securities
authority, or under an exemption provided by applicable securities law, subject to a limit on the number of shares either party may sell
per day. The agreement for future issuance of shares provided that a fall in a share price of a party, not exceeding 20%, measured six
months after issuance of shares by both parties pursuant to the share exchange agreement, will be offset by the issuance of additional
shares to the other party to bring up to $500 thousand the total value of the shares issued to the other party. On September 17, 2020
we issued to Intelicanna 2,143,470 shares of common stock in exchange for 619,589 of Intelicanna’s ordinary shares. The lock-up
period under the share exchange agreement with respect to the 619,589 Intelicanna’s ordinary shares held by the Company lapsed
in March 2021. Between August 3 – 9, 2021, we sold to an unrelated third party in an off
market transaction 619,589 ordinary shares of Intelicanna for aggregate gross proceeds to the Company of 1,260,611 NIS (approximately
$391,500 based on the current exchange rate). Following the sale, the Company no longer holds any Intelicanna shares. We sold our holdings
in Intelicanna primarily to avoid being deemed an “investment holding company”. In addition, on August 15, 2021, the
Company’s board of directors determined that it is required to issue to Intelicanna 535,867 shares of the Company’s common
stock under the agreements described above and has authorized the issuance of such shares to Intelicanna. As of December 31, 2021 the
common stock have not yet been issued to Intelicanna.
On
June 25, 2020, Citrine Global Israel has entered into a services agreement with Intelicanna to provide business development and consulting
services to Intelicanna, including assistance with raising financing. The agreement was terminated by mutual consent on October 5, 2021.
Also
on June 25, 2020, to assist Intelicanna to raise the first NIS 1 million, the Company and the Israeli Subsidiary entered into an agreement
to grant Intelicanna NIS 1 million in cash (approximately USD 290 thousand) in direct financing for working capital purposes. The financing
had a 6% annual interest and Intelicanna was required to make additional payments equaling 6% of its gross revenues between the date
the financing is received and the date Intelicanna’s aggregate gross revenues equal NIS 2 million. On July 9, 2020, we transferred
to Intelicanna NIS 500,000 (approximately $145,000 on the date of payment) on account of the above loan.
On March 31, 2021, Intelicanna repaid the outstanding principal loan with the 12% interest in an aggregate amount of $164,000.
Agreements
with iBOT for Manufacturing and Related Services
iBOT Israel Botanicals Ltd.,
is an Israeli botanical nutraceutical company and a related entity (“iBOT”). iBOT has a manufacturing facility for a wide
range of botanical formulations. iBOT has a manufacturing facility for a wide range of botanical formulations. Our directors,
Ora Elharar Soffer and Ilan Ben-Ishay are directors in iBOT and Citrine SAL, one of our principal shareholders, is a principal
shareholder in iBOT.
On
August 4, 2020, our Board of Directors approved for the Company and Citrine Global Israel to proceed with preparations for investing
in iBOT. On August 9, 2021, through our 60% owned subsidiary Cannovation Center Israel, we entered into an agreement with iBOT pursuant
to which iBOT agreed to manufacture a line of nutritional supplements for Cannovation Center Israel, including packaging and storage.
On September 29, 2021, we agreed to advance to iBOT, a loan of $50,000 with a 12 month maturity date and we transferred, as
a first tranche, $15,000 on October 8, 2021. The loan bears interest at an effective annual interest rate of 12% as and is convertible,
at the option of Citrine Global, into equity shares of iBOT at conversion rate equal to the lower of (i) 25% discount to the most
recent round of capital raised by iBOT during the term of the loan and (ii) the rate specified in the framework agreement]. In addition,
the agreement provided that our Israeli subsidiary is entitled to convert the outstanding loan, in whole or in part, to satisfy payments
of amounts owed to iBOT under the services agreements between the parties.
In October 2021, iBOT
granted to Citrine Global Group, a pre-emption right to any equity or equity linked securities that iBOT proposes to issue to an unrelated
third party with aggregate gross proceeds to the Company exceeding $1 million or which will result in a change in control in iBOT following
such issuance, then iBOT is to give to the Citrine Global Group written notice of such proposed issuance and the relevant terms thereof
and the Citrine Global Group shall have ten (10) days thereafter to determine if it elects to purchase a minimum of 51% of the proposed
issuance on the price and other terms specified in the notice sent by iBOT (the “Pre-Emption Right”). If the Citrine Global
Group elects to exercise the Pre-Emption Right, such purchase is to take place at no more than 90 days following the expiration of the
10 day notice period to the Citrine Global Group. Any iBOT securities of the Pre-Emption Right that Citrine Global Group elects to not
purchase are to be sold by not later than 90 days following the end of the Citrine Global Group’s notice period and if such shares
are not sold to such third party within the 90 day period, the Pre-Emption right shall apply to any subsequent proposed issuance. The
preemption right does not apply to certain specified exceptions.
On
November, 2021, the Company, Cannovation Center Israel and CTGL – Citrine Global Israel Ltd., on the one hand (collectively the
“Citrine Global Group”), and iBOT, on the other hand, entered into an Exclusive Strategic Collaboration and Alliance Agreement
(the “Exclusive Rights Agreement”) pursuant to which iBOT granted to the Citrine Global Group, jointly and individually,
exclusive world-wide rights, solely with respect to the cannabis market, to iBOT’s botanical
formulas and nutritional supplements, including, the development, manufacture, distribution
and sale of such products. The exclusive rights include the right of any of the Citrine Global Group to grant rights thereunder
to third parties so long as such third parties shall agree to be bound by terms consistent with those contained in this Agreement. In
consideration of the grant of the rights under the Exclusive Rights Agreement, Citrine Global Group granted to iBOT the exclusive right
to manufacture in State of Israel (consistent with the terms of the Manufacturing Agreement) the botanical products. In addition, so
long as iBOT is in compliance with the terms of this Agreement, in the event that the Citrine Global Group determines to manufacture
botanical products outside of Israel, then iBOT is to be afforded the opportunity to perform such manufacturing for the Citrine Group
at iBOT’s facility in Israel provided that iBOT complies with all of the terms and conditions relating to such manufacturing project,
including the price per unit, delivery schedules, packaging requirements regulation and other relevant terms.
Acquisition
of Land for the building the Green Vision Center Israel
We
previously disclosed that the Israeli Ministry of the Economy recommended that the Company’s majority-owned subsidiary, Cannovation
Center Israel, be granted the right to purchase an industrial parcel of land from the Israel Land Authority (“ILA”) at a
subsidized price and exempt from a tender procedures typically required under Israeli law. On February 8, 2022, Cannovation Ltd. received
from ILA a counter-signed development agreement (the “Development Agreement”) to purchase rights for long term lease
to 11,687 square meters of industrial land in Yeruham in Southern Israel (the “Land”) for purposes of building the Cannovation
Center, which is intended to include factories, laboratories, logistics and a distribution center for the wellness, pharma,
medical cannabis and botanicals industries. During December 2021, Cannovation Ltd. remitted to the Israeli Ministry of the Economy
and the ILA the aggregate amount of 687,650 NIS ($221,122 on the date of payment) to obtain the rights to the Land. The amount represents
approximately 10% of the prevailing market price for comparable land space in the general area and is part of the grant by the Israeli
government under government programs to encourage industrial development in Southern Israel. The amount remitted represents the total
amount that Cannovation Ltd. is required to pay as the purchase price for the Land.
Under
the Development Agreement, Cannovation Ltd. will build and develop the Green Vision Center in accordance with by the time frames,
terms and conditions of the Agreement. Typically, the initial time frame for completing the development is four (4) years, subject to
extensions that the ILA may approve. Upon completion of the development within the time frames and other requirements specified in the
Development Agreement, then Cannovation Ltd. will be entitled subject to Israeli law to long term lease agreement (49 years) to
the land (equivalent to ownership rights as most of the land in Israel is government owned and when marketed usually the developers
are granted with development/long lease rights).
Our
subsidiary Cannovation Ltd., holds title to the land under the Development Agreement. Under local law in Israel, there are restrictions
relating to the transfer of ownership of the premises on the land to a non-Israeli parties, as well as restrictions on the composition
of each of Cannovation’s shareholders to ensure that Israeli citizens control each such shareholder. Accordingly, the shareholders
of Cannovation, which include our 60% owned subsidiary CTGL Israel, entered into an agreement under which they undertook that at all
times they will comply with applicable law in this regard.
Cannovation
Ltd. is developing its Green Vision Center as development and production of wellness & pharma plant-based products, including botanical
solutions, nutritional supplements, vitamins, healthy snacks & beverages, natural cosmetics, medical cannabis & cannabinoid-based
products, plant-based pharma products and botanical drugs, and it is planned to include manufacturing plants, laboratories, logistics,
import and export, offices, training, conference center, and an international visitor complex.
On
February 7, 2022, the board of directors of Cannovation Ltd. authorized management of Cannovation Ltd. to finalize the terms of an agreement
with one of the leading real estate project construction companies in Israel to commence building the Green Vision Center. The selected
project manager is reputed for the successful completion of many projects amounting to hundreds of thousands of square meters of offices,
malls, stadiums, hospitals and public institutions throughout Israel. The project manager will oversee all aspects of the building project,
including interfacing with the sub-contractors and obtaining the requisite building permits and other required authorizations.
Cannovation
Ltd. and the Company are in discussions with commercial banks and prospective investors regarding the financing of the planned development.
Agreement
with Nanomedic
On
June 22, 2020, we entered into a share purchase agreement with Nanomedic Technologies Ltd., an Israeli private company and a related
party as further described below (“Nanomedic”) as part of A-1 funding round open only to existing Nanomedic shareholders
and their affiliates. Nanomedic developed SpinCare, a system that integrates electrospinning technology into a portable bedside device,
offering immediate wound and burn care treatment. We paid $450, 000 for A-1 preferred shares of Nanomedic and also received warrants
to purchase A-1 preferred shares. Such investment represents a holding of approximately 3.3% in Nanomedic. The round raised approximately
$2.2 million in total. Citrine S A L and certain of its partnerships, all affiliates of the Company, were already beneficial shareholders
of Nanomedic immediately prior to the A-1 funding round. Ilan Ben-Ishay, a director of the Company, was already a beneficial shareholder
of Nanomedic immediately prior to the A-1 funding round. Ora Elharar Soffer, our chairperson and CEO, was already a director of both
Nanomedic and its Israeli parent company, Nicast Ltd., immediately prior to the A-1 funding round, and she was also already a beneficial
shareholder of Nanomedic immediately prior to the A-1 funding round.
Filing
of Provisional Patent Application
On
October 20, 2021, Provisional Patent Application No: 63/257,673 for “PHARMACEUTICAL COMPOSITIONS AND METHODS FOR THE TREATMENT
OF SIDE-EFFECTS ASSOCIATED WITH THE USE OF CANNABIS, CANNABINOIDS AND RELATED PRODUCTS” registered at the US Patent and Trademark
Office. The patent application describes certain side effects of cannabis use, the needs, technologies and solutions to support
medical cannabis patients who experience side effects related to their cannabis treatment.
The
subject matter of our provisional patent is further discussed below.
In
December 2021 we finalized the development of 25 proprietary formulations in multiple form factors under the brand name of Green Side
by Side™ for the wellness industry. The Green Side by Side™ product line includes herbal extracts, medicinal mushrooms, and
variety of researched plants known for their healing qualities that contain substances with different anti-inflammatory properties and
a variety of health-supportive effects that are relaxing, sleep enhancing, energizing, mood and body balancing, as well as enhancing
oral care, alleviating side effects, and many botanical formulations that we target for balancing selected side effects and improving
quality of life .
The
Green Side by Side products are manufactured in Israel in iBOT Israel Botanicals Ltd under GMP-certified manufacturing facility approved
by the Israeli Ministry of Health.
In
Q1 2022 we launched in the Israeli market several products from the Green Side by Side™ product line, which include the SmokLy
TM series, a line of sprays for the oral cavity to support people suffering from cavity dryness (xerostomia) as a side
effect.
We
have commercially started marketing the products with an Israeli local partner that is targeting medical cannabis distribution channels
and we plan to expand our activity in the Israeli market as well as distribute worldwide with local partners and according to local regulations.
Corporate
Actions taken by Company Shareholders
On
November 22, 2020, certain of the Company’s stockholders representing more than 50% of the Company’s outstanding share capital
(the “Majority Consenting Stockholders”) approved an amendment to the Company’s Certificate of Incorporation (the “Reverse
Stock Split Certificate of Amendment”) in order to effect a reverse stock split of the Company’s common stock pursuant to
a range of between 40-to-1 and 100-to-1 (the “Reverse Stock Split”). Pursuant to the Reverse Stock Split, each forty or one
hundred shares of common stock, as shall be determined by the Board at a later time, will be automatically converted, without any further
action by the stockholders, into one share of common stock. No fractional shares of common stock will be issued as the result of the
Reverse Stock Split. Instead, each stockholder of the Company will be entitled to receive one share of common stock in lieu of the fractional
share that would have resulted from the Reverse Stock Split. In addition, the Majority Consenting Stockholders also approved the elimination
of the Company’s entire authorized class of fifty million (50,000,000) undesignated preferred stock, thereby reducing the total
number of shares of capital stock that the Company may issue from one billion five hundred fifty-thousand (1,550,000,000) shares to one
billion five hundred thousand (1,500,000,000) shares, all of which are designated as common stock (the “Certificate of Elimination”).
The Certificate of Elimination will be effective upon the filing with the Secretary of the State of Delaware, which was not completed
as of the date of this annual report’s filing. The Reverse Stock Split Certificate of Amendment will be effective upon receipt
of approval from the Financial Industry Regulatory Authority (“FINRA”) and the filing with the Secretary of the State of
Delaware, which both were not completed as of the date of the filing of this annual report.
Corporate
Diagram
*See
above detailed description of the Share Purchase Nanomedic.
**
See above detailed description about Novomic deal.
Our
registered office address in the State of Delaware is c/o Business Filings Incorporated, 108 West 13th St., City of Wilmington,
County of Newcastle, Delaware 19801, and the address of our primary executive office is 4 Haogen Steet Herzelia, Israel. Our website
address is www.citrine-global.com.
To
better align our name with our new business, we changed the name of the Company to Citrine Global, Corp. and the ticker symbol to “CTGL.”
These changes became effective on August 26, 2020. Our common stock is traded in the United States on the OTCQB market under the ticker
symbol “CTGL.
As
previously disclosed, we have applied to list our
common stock on the Nasdaq Capital Market. While we are working diligently in this regard, no assurance can be given that
our application will be approved or that a trading market will develop.
Description
of our Business and Industry Background
We
are a plant-based wellness & pharma solutions company. Our business activity is primarily comprised of developing wellness and pharma
solutions, focused on science backed plant-based products to improve quality of life and complementary solutions for balancing side effects
caused by using medicines, cannabis, treatments, or an unbalanced lifestyle.
The
global health and wellness market is expected to reach USD 7.6 trillion by 2030, growing at a CAGR of 5.5% from 2021 to 20308
with growing awareness of health and wellness solutions for improving people’s quality of life9. We are witnessing a
global movement of health and wellbeing becoming a priority for the public, further emphasized by the recent global COVID-19 pandemic.
There is increasing recognition that people need to take charge of their own health, improve their quality of life, use natural products,
and balance side effects caused by medicines and treatment10.
We
believe the power of plant-based solutions from nature that can help improve people’s health and quality of life.
We have built
an end-to-end strategy to bring to market innovative plant-based wellness and pharma solutions covering the whole spectrum from innovation,
research and development, product development, infrastructure for production and manufacturing, distribution, and marketing and sales
on a global scale.
Leveraging
technology and research, we are focused on developing products portfolio based on rigorous scientific research ranging from synergistic
botanicals, herbal extract, tinctures, medicinal mushrooms together with plant extracts, vitamins, minerals, botanical formulations from
seeds, roots, bark, fruits and a wide variety of plants that contain substances with health-supportive effects. Such supportive effects
include, but aren’t limited to, enhancing oral care, anti-inflammatory properties, relaxation, sleep enhancement, energizing, mood
and body balancing, and alleviating side effects.
Our
headquarters and top executives are based in Israel, where we operate via our 100%-owned-subsidiary “CTGL Citrine Global
Israel Ltd.” and 60%-owned “Cannovation Center Israel Ltd.” Our experienced team and partners are leaders in their
respective fields with proven track records as top-level businesspeople and executives in technology, high-tech, biotech,
investments, entrepreneurship, real estate, finance, and proven experience in bringing companies to global success. We have a
professional, experienced group of primary shareholders that include Citrine S A L Investment & Technologies, which are
supporting the Company.
Citrine
S A L, which has been operating for years in the Israeli market through technology companies and funds including Citrine S A L Biotech
& Hi-Tech funds, is experienced in bringing start-up companies to the global market and has already invested in Israeli technology
companies including: Nicast, NanoMedic, WellBe, Biocep, Improdia, Intelicanna, iBOT, Cannbit, Novomic, Dario, BSP Medical, ICB Israel-China
Fund and more.
We
have strategic alliance and manufacturing agreements with iBOT Israel Botanicals, nutritional supplements’ company and GMP-certified
manufacturing facility approved by the Israeli Ministry of Health. As part of our activity with iBOT Israel Botanicals we are developing
and manufacturing our product line including the Green Side by Side product line.
Our
presence in Israel combined with our close contacts with leading universities, researchers, companies , shareholder and governmental
support powers us to access the latest technologies, talent, and innovation to bring innovative solutions to the global market.
Our
mission is to become a leading company for plant-based wellness & pharma solutions to improve people’s quality of life.
8
Research, P., 2022. Health and Wellness Market Size to Hit USD 7,656.7 Bn
by 2030. [online] GlobeNewswire News Room.
9
NielsenIQ. 2022. An inside look into the 2021 global consumer health and wellness
revolution. [online]
10
Sullivan, F., 2022. Increasing Health Consciousness Among Consumers to Shift
the Global Prebiotic Ingredients Market. [online] Prnewswire.com.
We
created multi-strategy solutions to realize our mission, the highlights of which include the following:
| |
1. |
Developing
& Bringing Plant-Based Wellness & Pharma Products to Market: |
We
believe the power of plant-based solutions from nature can help improve people’s health and quality of life. We have built a strategy
for developing a plant-based product portfolio with scientific and research-based plants such as herbal extracts, medicinal mushrooms,
and other natural ingredients for the wellness industry and pharma solutions with the mission of developing plant-based medicines.
The
plant-based products market is booming with health-conscious consumers spending more on natural
products, ranging from nutraceuticals, natural superfoods, beverages, cosmetics, to legal
cannabis and the evolving market of botanical and plant-derived drugs. The COVID-19 pandemic
has left a lasting impression on consumer behavior, particularly in relation to plant-based
nutrition and natural immunity boosters11.
Here
are the various growing plant-based product market segments:
| |
● |
The
nutritional supplements market is expected to reach USD 624.7 billion by 203012. |
| |
● |
The
superfoods market is expected to reach USD 287.7 billion by 202713. |
| |
● |
The
legal cannabis market is expected to reach USD 70.6 billion by 202814. |
| |
● |
The
botanical and plant-derived drug market is expected to reach USD 53 billion by 202615. |
| |
● |
The
natural cosmetics market is expected to reach USD 20.8 billion by 202716. |
We
are basing our efforts on technologies to create research and innovation, developing plant based solutions which include products for
improving quality of life and complementary solutions for balancing selected side effects caused by using medicines, cannabis, treatments,
or an unbalanced lifestyle.
About
Side Effects Caused by Using Medicines Cannabis and Treatments or an Unbalanced Lifestyle
Side
effects are unexpected reactions which may result from using medicines and treatments. There are common side effects, such as dryness
in the oral cavity (xerostomia), headaches, dizziness, drowsiness, fatigue, nausea, vomiting, lack of concentration, and impaired appetite
that are associated with the use of medicines, treatments and the use of cannabis and related products17.
Natural
plant-based products show great promise in improving quality of life and can be used as complementary products to balance side effects.
Antibiotics and probiotics are an excellent use case. Antibiotics are important for treating bacterial infections; however, they
can sometimes cause side effects such as diarrhea, liver disease and changes to the gut microbiota. Using probiotics during and after
a treatment with antibiotics can help reduce the risk of diarrhea and restore the gut microbiota to a healthy state18.
Addressing
a significant market need, we included in our product roadmap is the development of plant based complementary solutions through wellness as well as clinically developed plant-based pharmaceutical
products to address the need to balance selected effects and support
people who experience side effects from using medicines, cannabis, and various treatments such as:
About Xerostomia Dry-Mouth-Side-Effect
Research
has shown that nearly 70% of cannabis users experienced constant dry mouth and 20% of the elderly population suffer from xerostomia
as a side effect of medications19.
11
Sullivan, F., 2022. Increasing
Health Consciousness Among Consumers to Shift the Global Prebiotic Ingredients Market.
[online] Prnewswire.com.
12
Research, P., 2022. Nutritional Supplements Market to Hit US$ 624.7 Billion
by 2030. [online] GlobeNewswire News Room.
13
Research, I., 2022. Global Superfoods Market Size is Projected To Reach US$
287.75 Billion by 2027 | Superfoods Market Store, Delivery Options, Emerging Trends 2022 | Segmentation by Product Type, Applications,
Regions, & Key-Players (ADM, Ardent Mills, Bunge). [online] GlobeNewswire News Room.
14
Grandviewresearch.com. 2022. Legal Marijuana Market Size Worth $70.6 Billion
By 2028.
15
2018-2026, G. and 2018-2026, G., 2022. Botanical and Plant Derivative Drug
Market - Global Forecast 2018-2026. [online] Inkwood Research.
16
Mynewsdesk. 2022. Vegan Cosmetics Market is Growing at 6.9% CAGR, Market Size,
Share, Statistics, Cosmetics Industry Trends, Leading Company Profiles, Forecast & Estimations to 2027.
17
U.S. Food and Drug Administration. 2022. Learning about Side Effects.
18
Healthline. 2022. What You Should Eat During and After Antibiotics.
[online]
19
Harpreet, S., Joseph, K., Wafaa, S. and Seunghee, C., 2019. Impact of Cannabis on the Port
of Entry-Oral Tissues: An Overview. International Journal of Oral and Dental Health,
5(3).
We
researched the oral cavity dryness side effect, xerostomia, a common side effect associated with damage to the glands responsible to
produce saliva that may result from smoking, using cannabis, medications, and treatments. Saliva contains calcium and phosphorous which
protects teeth, helps the digestive system, prevents bad smell through balancing the acidity that comes from food and bacteria, has enzymes
that help break down food, washes food scraps and bacteria, and helps speech as pronunciation of movements and syllables is done with
saliva and tongue. It is important to maintain the saliva level in the mouth and prevent problems and damage, as saliva plays a key role
in maintaining health in the oral cavity.
Following
investigation of dry mouth side effect (xerostomia), And as part of our Green Side by Side line, we developed the SmokLy TM series
of sprays for the oral cavity which contain plant extracts distilled from seeds, roots, bark, fruits with active anti-inflammatory substances
that encourage saliva production and taste in the oral cavity and can balance the dry mouth side effect (xerostomia) from using medicines
and cannabis.
About
Side Effect from Cannabis Use
Following
thorough investigation of cannabis’ side effects, we filed a provisional patent application
titled “PHARMACEUTICAL COMPOSITIONS AND METHODS FOR THE TREATMENT OF SIDE-EFFECTS ASSOCIATED WITH THE USE OF CANNABIS, CANNABINOIDS
AND RELATED PRODUCTS”, patent No: 63/257,673 in the U.S. Patent & Trademark Office.
There
are currently over 200 million cannabis users worldwide and an increased interest in cannabis as a medicine in recent years20.
Cannabis was approved for medical use showing benefit in serious medical conditions including cancer, multiple sclerosis, Parkinson’s,
epilepsy, chronic pain, post trauma, and more21. Research indicates that some medical cannabis users experience side effects
during their cannabis treatment, which may cause them to discontinue treatment despite good clinical outcomes achieved with the cannabis
treatment22.
According
to the Mayo Clinic in the US these are the most reported side effects in association with cannabis use23:
| |
● |
Headaches |
| |
● |
Dry
mouth and dry eyes |
| |
● |
Lightheadedness
and dizziness |
| |
● |
Drowsiness |
| |
● |
Fatigue |
| |
● |
Nausea
and vomiting |
| |
● |
Disorientation |
| |
● |
Hallucinations |
| |
● |
Increased
heart rate |
| |
● |
Increased
appetite |
| |
● |
Impaired
attention, judgement, and coordination |
| |
● |
Worsened
manic symptoms in people who have bipolar disorder |
| |
● |
Increased
risk of depression or worsen depression symptoms |
| |
● |
Increased
risk of psychosis in people who have schizophrenia |
| |
● |
Impaired
memory and cognitive function |
| |
● |
Harmful
cardiovascular effects, such as high blood pressure |
| |
● |
Worsened
respiratory conditions |
| |
● |
Adverse
interactions with Alcohol, Anticoagulants, and more. |
20 Statista.
2022. Cannabis users worldwide number by region 2011-2019 | Statista. [online]
21
2017. The Health Effects of Cannabis and Cannabinoids.
22
Kudahl, B., Berg, M., Posselt, C., Nordentoft, M. and Hjorthøj, C., 2021. Medical
cannabis and cannabis-based medicine show both potential efficacy and potential harms: Cross-sectional comparison with controls on self-rated
and interviewer-rated outcomes within the Danish pilot program on medical cannabis. Complementary Therapies in Clinical
Practice, 45, p.101476.
23 Mayo
Clinic. 2022. What you can expect from medical marijuana.
[online]
Figure
1: schematic representation of side effects associated
with
the use of cannabis
*Illustration Taken from:
Positive Choices Educational Program24
Our
product roadmap includes continuing to develop and file additional patent applications and the development of complementary solutions
for balancing selected side effects caused by medicines, treatments, cannabis, aging, stress, and an unbalanced lifestyle.
About
the Green Side by Side™ Product Line:
Figure
2: The Green Side by Side™ Product Line
Leveraging
technology and research, we developed a wellness plant-based product line under the brand name of Green Side by Side™ targeting
to improve quality of life and complementary products for balancing selected side effects caused by medicines, cannabis, treatments or
an unbalanced lifestyle.
We
used innovative technologies and experience to create the products combining a variety of well researched plants including herbal extracts,
medicinal mushrooms, vitamins , minerals and variety of researched plants known for their healing qualities that contain substances with
different anti-inflammatory properties and a variety of health-supportive effects that are relaxing, sleep enhancing, energizing, mood
and body balancing, as well as enhancing oral care, alleviating side effects and more .
In
December 2021 we finalized the development of 25 researched plant-based products under our wellness Green Side by Side™ product
line in multiple form factors, such as sprays, powders, tablets, capsules, and tinctures. The
products are manufactured in Israel in iBOT Israel Botanicals Ltd under a GMP-certified manufacturing facility approved by the Israeli Ministry of Health.
In
Q1 2022 we launched in the Israeli market several products from the Green Side by Side™ products line, which include the SmokLy
TM series, a line of sprays for the oral cavity to support people suffering from cavity dryness (xerostomia) as a side
effect.
We
have commercially started selling the products with a local Israeli partner that is targeting medical cannabis distribution channels
and we plan to expand our activity in the Israeli market as well as distribute worldwide with local partners and according to local
regulations. Green Side by Side is positioned to capture market share in the nutritional supplements market that is expected to
reach $625 billion by 203025.
24
Positive Choices. 2022. Cannabis: Factsheet.
[online]
25
Research, P., 2022. Nutritional Supplements Market to Hit US$ 624.7 Billion by
2030. [online] GlobeNewswire News Room.
| |
2. |
Green Vision CenterTM Production and Innovation Center for Plant-based Wellness & Pharma Products |
The
Green Vision Center is part of our strategy to create end-to-end plant-based solutions covering all the infrastructure, facilities, and
activities required for developing, manufacturing, and bringing to market innovative plant-based wellness and pharma products.
Figure
3: Green Vision Center Israel Building Demonstration
All
image rights are reserved to the Company and are for illustration purposes only and do not bind the company.
About
Green Vision CenterTM Israel
In
February of 2022, we completed the acquisition from the Israel Lands Authority (ILA) of 125,000 sq ft (11,687 sq meters) of industrial
land in Yerucham, a city in southern Israel, to build Green Vision Center Israel. Approximately 90% of the acquisition cost was provided
by Israeli government programs that encourage industrial development and includes additional grants and tax incentives.
Designed
by Avner Sher, one of Israel’s most highly regarded architects and artists, Green Vision Center will be a 60,000 sq ft (5,500 sq
meter) first-of-its-kind facility including a unique roof in the shape of a lotus flower and built with solar panels in accordance with
ecological green principles of saving energy. The Green Vision Center is a first-of-its-kind center that combines development
and production facilities, manufacturing plants, laboratories, logistics, import and export, offices, training, conference center, and
an international visitor complex all in a single location to promote innovation and go-to-market of plant-based products from wellness
to pharma.
The
center’s infrastructure and facilities will be focused on the development and production of wellness & pharma plant-based products,
including self-care products, botanical solutions, nutritional supplements, vitamins, healthy snacks and beverages, natural
cosmetics, medical cannabis and cannabinoid-based products, plant-based pharma products, botanical drugs and wellbeing solutions.
Green
Vision Center Israel: Planned Divisions and Internal Design
Figure
4: Green Vision Center Israel Internal Design
**All
image rights are reserved to the Company and are for illustration purposes only and do not bind the company
The
Green Vision Center is being planned to include:
| ● |
Manufacturing
botanicals & nutritional supplements |
| ● |
Manufacturing
pharma plant-based products & botanical drugs |
| ● |
Manufacturing
cannabis, cannabinoids, and related products |
| ● |
Manufacturing
natural cosmetics |
| ● |
Manufacturing
healthy snacks & beverages |
| ● |
Research
and development lab for product development, clinical trials, and testing. |
| ● |
Quality
control lab (QC) |
| ● |
Distribution
area for local and global distribution and logistics services |
| ● |
Management
& consultants’ offices |
| ● |
International
Visitor Complex training center and conference center |
The
center will be constructed by a professional project construction company and sub-contractors that will oversee all aspects of the
building including interfacing and obtaining all facilities and products relevant licenses and regulatory approvals, the requisite building permits and other required
authorizations.
Our
Business Model for the Green Vision Center includes:
| ● | Production
& sales of our branded products |
| ● | Production
& services to third parties |
| ● | Full
turnkey solutions for all the services that the center can provide, including R&D, QA,
production, market positioning, sales, and more |
| ● | Potential
partnerships and other collaborations with international companies in the wellness and pharma
industries that are interested in establishing an innovation and production infrastructure
in Israel |
| ● | Mergers
& acquisitions and strategic partnership activities |
| ● | Partnerships
based on models of profit sharing, and more |
Our
vision is to become a leading worldwide production and innovation center for natural plant-based products and health, wellness, and pharma
solutions and to bring partners, market leaders, companies, technologies, and scientific collaborations from Israel and around the world.
Israel
as a Source of Innovation
Our
presence in Israel combined with our close contacts with leading universities, researchers and companies empowers us to access the latest
technologies, talent, and innovations and bring them to the global market.
We
chose to focus on Israel for the following reasons:
| ● |
Israel is well positioned as a leader in technology
with a critical mass of technology companies, researchers, and scientists26. |
| ● |
Israel is considered a pharma powerhouse and a world
leader in clinical trials due to its advanced regulatory environment and local experience27. |
| ● |
The
Israeli government views technological innovation a major growth engine for the Israeli economy and supports it. |
| ● |
Our headquarters, top executives and strategic partners
are based in Israel, where we have been operating for years and have a strong network with Israeli companies, universities, labs,
entrepreneurs, and businesses. |
| ● |
We acquired land in the south of Israel, backed by government
support, to build the Green Vision Center™, a first-of-its-kind production and innovation center for plant-based wellness &
pharma products. |
Creating
a Global Network & Growth Strategy
A
core part of our strategy includes building a worldwide network with local teams, partners, subsidiaries, Green Vision Centers, strategic
partnerships, collaborations, and mergers & acquisitions of technology and distribution companies. Initially, we are planning
to build infrastructure for business development and sales with local teams in North America and Europe.
Our
growth strategy includes mergers & acquisitions of technology and distribution companies.
Our
IP Strategy and R&D Roadmap
Our IP strategy
and R&D roadmap include developing plant-based wellness and pharma solutions, building our patent portfolio, conducting clinical
trials, advancing products through regulatory approvals on a country-by-country basis, and bringing innovative products to market.
Our product roadmap includes
the development of plant-based products to improve quality of life and complementary solutions for balance selected side effects caused
by medicines, treatments, cannabis, aging, stress, and unbalanced lifestyle.
26
PwC-Startup Nation Central Report Explores Israel’s Multinational Innovation Ecosystem
27
Portfolio of Israeli companies Life science and Clean-tech sectors October 2020
Leveraging
technology and research, we are focused on developing products portfolio based on rigorous scientific research ranging from synergistic
botanicals, herbal extract tinctures, medicinal mushrooms together with plant extracts, botanical formulations from seeds, roots, bark,
fruits and a wide variety of plants that contain substances with health-supportive effects. Such supportive effects include, but aren’t
limited to, enhancing oral care, anti-inflammatory properties, relaxation, sleep enhancement, energizing, mood and body balancing, and
alleviating side effects.
Our research and development program includes:
| ● |
Developing
wellness plant-based product portfolio across the range from scientific and research-based plants, such as herbal extracts, medicinal
mushrooms, and other natural ingredients |
| ● |
Developing
complementary products portfolio for balancing selected side effects caused by medicines, treatments, cannabis, aging, stress, and
an unbalanced lifestyle |
| ● |
Expanding
the Green Side by Side TM product line |
| ● |
Researching
and developing pharma solutions with the mission of developing plant-based medicines and botanical drugs |
| ● |
Building
patent portfolio |
| ● |
Building
clinical trials program & portfolio |
| ● |
Registering
products for regulatory approval on a country-by-country basis |
| ● |
Building
the infrastructure for production and innovation centers to leverage IP & competitive advantage in developing and manufacturing
wellness to pharma plant-based products |
| ● |
Currently
the Green Side by Side product line does not include any cannabis, cannabinoid, or cannabis related components. However, pending
changes in the regulatory and market landscape, we may consider developing cannabis, cannabinoid, and related products. |
Provisional
Patent Application
Following
investigation of the side effects of medicines, cannabis, and treatments, in October 2021 we filed a provisional patent application for
“PHARMACEUTICAL COMPOSITIONS AND METHODS FOR THE TREATMENT OF SIDE-EFFECTS ASSOCIATED WITH THE USE OF CANNABIS, CANNABINOIDS AND
RELATED PRODUCTS”, patent No: 63/257,673 in the U.S. Patent & Trademark Office. The patent application describes certain
side effects of cannabis use, the needs, technologies and solutions to support medical cannabis patients who experience side effects
related to their cannabis treatment.
As
part of our IP strategy, we plan to continue developing and filing additional patents applications.
Go
to Market Strategy and Anticipated Revenue Sources
The
plant-based wellness & pharma market is booming, with health-conscious consumers spending more on natural products ranging from nutraceuticals,
natural superfoods, beverages, and cosmetics to legal cannabis and the evolving market of botanical and plant-derived drugs.
| |
● |
The
nutritional supplements market is expected to reach USD 624.7 billion by 203022. |
| |
● |
The
superfoods market is expected to reach USD 287.7 billion by 202723. |
| |
● |
The
legal cannabis market is expected to reach USD 70.6 billion by 202824. |
| |
● |
The
botanical and plant-derived drug market is expected to reach USD 53 billion by 202625. |
| |
● |
The
natural cosmetics market is expected to reach USD 20.8 billion by 202726. |
The
wellness products are sold through different distribution channels which include online digital direct sales, online retailer
websites, physical shops and retailers including food, drug, and mass merchandise retail networks.
Our strategy includes various business models that are intended to bring
new products to market leveraging and generating revenues. Our plan is to release to market several product lines and brands for the wellness
and pharma industry.
We
are currently focused on building a B2B distribution network worldwide with select local partners who will be handling import, distribution,
marketing, and sales while adhering with local regulations.
Our strategy for generating
revenue in the near term and future include:
●
Sales of our proprietary products including Green Side by Side product line
●
Commercialization and licensing our IP , products & brands.
●
Mergers & acquisitions and strategic partnership activities
Our
business model for generating revenues from the Green Vision Center includes:
| |
● |
Production
& sales of our branded products |
| |
● |
Production
& services to third parties |
| |
● |
Full
turnkey solutions for all the services that the center can provide, including R&D, QA, production, market positioning, sales,
and more |
| |
● |
Potential
partnerships and other collaborations with international companies in the wellness and pharma industries that are interested in establishing
an innovation and production infrastructure in Israel |
| |
● |
Mergers & acquisitions and strategic partnership
activities |
| |
● |
Partnerships
based on models of profit sharing, and more |
Competition
The
wellness and pharma industries are very crowded and competitive. Many companies, from startups to corporate giants, operate in these
spaces.
We
have differentiated ourselves through our end-to-end strategy of bringing to market innovative plant-based wellness and pharma products
covering the whole spectrum from research, product development, building the infrastructure, manufacturing, and marketing.
22
https://www.globenewswire.com/news-release/2021/11/03/2326982/0/en/Nutritional-Supplements-Market-to-Hit-US-624-7-Billion-by-2030.html
23https://www.globenewswire.com/news-release/2022/02/28/2393441/0/en/Global-Superfoods-Market-Size-is-Projected-To-Reach-US-287-75-Billion-by-2027
24
https://www.grandviewresearch.com/press-release/global-legal-marijuana-market
25
https://inkwoodresearch.com/reports/botanical-and-plant-derivative-drug-market/
26
https://www.mynewsdesk.com/brandessence/pressreleases/vegan-cosmetics-market-to-grow-3159575
We
built the following strategy and unique business model that can support our ability to remain competitive
| ● | We
are leveraging technology and research and focus on developing plant-based wellness and pharma
solutions to improve quality of life and complementary products for balancing selected side
effects caused by medicines and treatments, cannabis, aging, stress, and an unbalanced lifestyle |
| | | |
| ● | We
have the ability to develop innovative products and solutions that meet customer and market
needs |
| | | |
| ● | We
develop our IP strategy by building patent portfolio, clinical studies, and regulatory approvals |
| | | |
| ● | We
have a leading experienced team and partners with proven track record in technology, high-tech
and biotech and proven experience in bringing companies to global success |
| | | |
| ● | Our
presence in Israel combined with our close contacts with leading universities, researchers
and companies powers us with the latest technologies, talent, and innovation and to offer
innovative solutions to the global market. |
| | | |
| | ● | Potential
partnerships and other collaborations with international companies in the wellness and pharma
industries |
Regulatory
Environment
In
every jurisdiction in which we plan to operate, we will be subject to extensive governmental regulations on the formulation, manufacturing,
packaging, labeling, advertising, promoting, importing, distributing, shipping, and selling our products, may they be nutritional supplements,
cosmetics, foods, or any other category.
Prior
to commencing operations and/or permitting sales of our products in the market, we may be required to obtain an approval, license, or
certification from the relevant country’s ministry of health or another responsible agency. Prior to entering a new market, we
plan to work with local authorities, either directly or via our local partner, to obtain the requisite approvals. The approval process
usually requires us to present each product and product ingredients and, in some cases, arrange for testing of products by local technicians
for ingredient analysis
We
are aware that we or our local partners would need to obtain various regulatory approvals and licenses for our different product lines
and activities, including production of botanicals, nutritional supplements, natural snacks and beverages, natural cosmetics, and more.
We intend to obtain all regulatory approvals required for different product categories in the different countries in which we will operate
either directly or through our local partners.
We
describe in this section mainly the material regulations that are currently applicable to our products.
Regulatory
Environment for the Green Side by Side Products
While
the number of people using nutritional supplements and herbal medicine products continues to increase in many countries, the regulations
for these products vary from country-to-country. In some countries supplement use is limited to general health and well-being while in
other countries they are permitted for use as medicinal products. To date, there is little consensus from country to country on the scope,
requirements, definition, or even the terminology in which the nutritional supplement and herbal medicines categories could be classified.28
Our
Green Side by Side products are regulated in Israel as nutritional supplements and meet all regulatory compliance requirements for nutritional
supplements in Israel. iBOT Israel Botanicals, our manufacturing facility for the Green Side by
Side product line, is approved by the Israeli Ministry of Health and is GMP-certified.
The
Green Side by Side products will have all relevant regulatory approvals before being launched in other territories, such as European
countries and the US.
28
Thakkar, S., Anklam, E., Xu, A., Ulberth, F., Li, J., Li, B., Hugas, M., Sarma, N., Crerar,
S., Swift, S., Hakamatsuka, T., Curtui, V., Yan, W., Geng, X., Slikker, W. and Tong, W., 2020. Regulatory landscape of dietary supplements
and herbal medicines from a global perspective. Regulatory Toxicology and Pharmacology,
114, p.104647.
The
Israeli Ministry of Health maintains a comprehensive list of authorized nutritional supplements for marketing. This list includes over
a thousand different vitamins, minerals, amino acids, and herbs including their extracts. Items under this list can be legally marketed,
however, no medical claims can be made without adequate supporting information. The final products can be in various forms such as powders,
tablets, hard or soft capsules, liquids, including oils and tinctures. Each product must be manufactured under GMP conditions and be
approved by the Ministry of Health prior to selling.
Regulatory
Compliance for the Green Vision Center
We
Acquired 125,000 sq ft (11,687 sqm) of industrial land in the south of Israel upon which a 60,000 sq. ft. (5,500 sqm) facility will be
built comprised of manufacturing plants, laboratories, logistics, import and export, offices, training, conference center, and an international
visitor complex. The center will be constructed by a real estate professional project construction company and regulatory consultants
in the relevant fields that will obtain the required authorizations.
We
intend to obtain all necessary regulatory approvals and licenses for the Green Vision Center’s production and operation facilities
and products.
The
Health & Wellness Industries Market Size and Potential:
We
believe the health & wellness industries, which demonstrate high growth potential, and we are primarily focused on these industries.
The
global health and wellness market is expected to reach USD 7.6 trillion by 2030, growing at a CAGR of 5.5% from 2021 to 2030. The hectic,
unbalanced lifestyle has resulted in the prevalence of lack of proper diet and sleep, stress, depression, anxiety, cancer, diabetes,
and various other health related issues. Lack of proper diet has resulted in the reduced intake of essential nutrients and minerals required
for the healthy and active functioning of the human body. Precedence research identifies growth opportunities to the health and wellness
market players across the globe in the adoption of smart technologies and innovative ways in the manufacturing of various health and
wellness products, nutritional supplements, healthy snacks and beverages, the growing biopharmaceutical industry and development of botanical
drugs 29.
Health
and wellness have been found by Nielsen IQ researchers to be the most powerful consumer force of 2021. In contrast to the unpredictable
nature of COVID-19, consumers are being very deliberate with their choices. A survey conducted discovered that consumers emphasize having
meaningful and purposeful living, health management, strength and wellness, mental health and stability, happiness, social connections,
environmental betterment, balance, and fulfillment. We are witnessing a global movement of health and wellbeing becoming a priority for
the public, further emphasized by the recent global COVID-19 pandemic. There is increasing recognition that people need to take charge
of their own health, improve their quality of life, use natural products, and balance side effects caused by medicines and treatment30.
The
Plant-Based Market Size and Potential:
The
plant-based products market is booming with health-conscious consumers spending more on natural products, ranging from nutraceuticals,
natural superfoods, beverages, cosmetics to legal cannabis and the evolving market for botanical and plant-derived drugs. The COVID-19
pandemic has left a lasting impression on consumer behavior, particularly in relation to plant-based nutrition and natural immunity boosters31.
| |
● |
The
nutritional supplements market is expected to reach USD 624.7 billion by 203032. |
| |
● |
The
superfoods market is expected to reach USD 287.7 billion by 202733. |
| |
● |
The
legal cannabis market is expected to reach USD 70.6 billion by 202834. |
| |
● |
The
botanical and plant-derived drug market is expected to reach USD 53 billion by 202635. |
| |
● |
The
natural cosmetics market is expected to reach USD 20.8 billion by 202736. |
29
Research, P., 2022. Health and Wellness Market Size to Hit USD 7,656.7 Bn by 2030.
[online] GlobeNewswire News Room.
30
NielsenIQ. 2022. An inside look into the 2021 global consumer health and wellness
revolution. [online]
31
Research, P., 2022. Health and Wellness Market Size to Hit USD 7,656.7 Bn by 2030.
[online] GlobeNewswire News Room.
32
Research, P., 2022. Health and Wellness Market Size to Hit USD 7,656.7 Bn by 2030.
[online] GlobeNewswire News Room.
33
NielsenIQ. 2022. An inside look into the 2021 global consumer health and wellness
revolution. [online]
34
Grandviewresearch.com. 2022. Legal Marijuana Market Size Worth $70.6 Billion
By 2028. [online]
35
2018-2026, G. and 2018-2026, G., 2022. Botanical and Plant Derivative Drug
Market - Global Forecast 2018-2026. [online]
36
Mynewsdesk. 2022. Vegan Cosmetics Market is Growing at 6.9% CAGR, Market Size,
Share, Statistics, Cosmetics Industry Trends, Leading Company Profiles, Forecast & Estimations to 2027.
[online]
The
Global Nutritional Supplements Market
The
global nutritional supplements market is expected to reach USD 624.7 billion by 2030 and is expanding growth at a CAGR of 7.1% over the
forecast period 2021 to 2030 with plant-based supplements containing natural ingredients and extracts of plants and mushrooms that have
a beneficial biological effect37. The global superfoods market is expected to reach USD 214.95 billion by 2027 with
superfoods being foods that have a very high nutritional density. This means they provide a substantial amount of nutrients and very
few calories. They contain a high volume of minerals, vitamins, and antioxidants.
Growth
in the nutritional supplements is driven by growing awareness of health and safety in the traditional pharma, food, and beverage industries
as well as higher healthcare costs. Authentic consumption has become a major food and beverage trend as consumers increasingly seek non-artificial
and natural ingredients. Products such as ginseng, echinacea, ginkgo biloba, and garlic, the top selling botanical products are considered
natural remedies for inflammation and infections. This is further driven by the COVID-19 pandemic, with consumers looking to strengthen
the natural immune system. This is also driving growth of vitamins and minerals and moving towards natural colorant-based plant juice
products, since they provide better and long-lasting protection from viruses and bacteria. In addition, botanicals and nutritional supplements
are widely used by people who suffer from diseases related to weight management, clinical nutrition, digestive health (gut health problems),
immunity, diabetes, and cardio fitness, either as treatment or prevention38.
The
market demand for Nutritional Supplements is driven by39:
| |
● |
Increasing
attention to health and prevention by the consumers |
| |
● |
Greater
customization of needs for different segments of the population |
| |
● |
Increased
health care costs and search for alternatives to cure specific problems |
| |
● |
The
growth in demand for supplements is mainly driven by probiotic supplements, Fatty Acids (i.e. fish oils) and protein supplements |
| |
● |
Herbal/Botanical Supplements usage has emerged as a popular complementary
and alternative medicine or supplement to modern medicine |
| |
● |
Rising consumer awareness regarding the severity of digestive disorders,
stimulate the growth of the Enzymes segment. |
The
Botanical and Plant-derived Drug Market
The
global botanical and plant-derivative drug market is anticipated to grow to USD 53 billion by 2026 driven by growing applications in
diseases, an FDA botanical approval pathway, technological developments in manufacturing processes and a growing focus and demand for
naturally sourced medicines40.
Botanical
drugs are derived from natural sources, plants and mushrooms, and are considered to have fewer side-effects as compared to synthetic
drugs while showing high efficacy in helping to treat different medical conditions and chronic diseases41.
The
important driver for growth in the global botanical and plant-derivative drug market is its growing applications in diseases. Botanical
drugs are derivative of medicinal plants and may contain algae and vegetable substances, along with macroscopic fungi. These may assist
in the treatment of various diseases, such as central nervous system disorders, infectious diseases, cardiovascular diseases, and respiratory
diseases. Botanical and plant derivative drugs are available in various forms, such as pills, tablets, and injections42.
The
factors responsible for limited adoption of botanical drugs are regulations with governments across the globe having strict regulations
regarding the use and approval of botanical drugs. The use of botanical and plant derivative drugs is currently limited for curing only
a few diseases such as central nervous system disorders and respiratory and cardiovascular diseases. We can see some transformation of
the regulatory landscape in the US as one of the prime reasons driving the botanical and plant-derived drugs market growth 43.
The
Botanical and plant-derivative drug market is primarily driven by the following factors 44
| ● |
Growing
applications in diseases |
| ● |
Growing
FDA approvals |
| ● |
Technological
development in the manufacturing process |
| ● |
Rising
demand for traditional medicines |
| ● |
Growing
focus on natural source medicines |
The
Global Cannabis Market
The
global legal cannabis market size is expected to reach USD 70.6 billion by 2028 driven mainly by increased legalization of cannabis for
medical and adult-use and the growing adoption of these products for the treatment of chronic diseases45.
There
are currently over 200 million cannabis users worldwide and an increased interest in cannabis as a medicine in recent years46.
Cannabis was approved for medical use showing benefit in serious medical conditions including cancer, multiple sclerosis, Parkinson’s,
epilepsy, chronic pain, post trauma, and more. Research indicates that some medical cannabis users experience side effects during their
cannabis treatment, which may cause them to discontinue treatment despite good clinical outcomes achieved with the cannabis treatment
47.
The
Global Natural Cosmetics Market
The
global natural cosmetics market is projected to reach USD 24.26 billion by 2027 driven mainly by increasing demand for harmful chemical-free
cosmetics, rising awareness against the use of animal derivatives and growing social media movements endorsing naturally derived products48.
The
cosmetic and personal care segment of botanicals is also on the rise with companies increasingly discovering novel herbal ingredients
as consumers are seeking more natural products with ingredients that are of plant origin: extracts or oils obtained from raw plant materials.
Natural cosmetics are cosmetics that have ingredients of plant origin. The absence of chemical compounds and animal-by products are specifically
suited to sensitive skin people. The natural cosmetic products are biodegradable and environmentally friendly. Many companies in the
field focus on the production of natural cosmetics that are cruelty-free as these products have increasing demand49.
37
Research, P., 2022. Nutritional
Supplements Market to Hit US$ 624.7 Billion by 2030.
[online] GlobeNewswire News Room.
38
PwC “Vitamins and Dietary Supplements Market Overview Report, https://www.pwc.com/it/it/publications/assets/docs/Vitamins-Dietary-Supplements-Market-Overview.pdf
39
PwC “Vitamins and Dietary Supplements Market Overview Report, https://www.pwc.com/it/it/publications/assets/docs/Vitamins-Dietary-Supplements-Market-Overview.pdf
40
2018-2026, G. and 2018-2026, G., 2022. Botanical and Plant Derivative Drug
Market - Global Forecast 2018-2026. [online] Inkwood Research.
41
2018-2026, G. and 2018-2026, G., 2022. Botanical and Plant Derivative Drug
Market - Global Forecast 2018-2026. [online] Inkwood Research.
42
Sciences, L. and Discovery, D., 2022. Global Botanical and Plant-Derived Drugs
Market 2022-2026. [online] Marketresearch.com.
43
Sciences, L. and Discovery, D., 2022. Global Botanical and Plant-Derived Drugs
Market 2022-2026. [online] Marketresearch.com.
44
2018-2026, G. and 2018-2026, G., 2022. Botanical and Plant Derivative Drug
Market - Global Forecast 2018-2026. [online] Inkwood Research.
45
Research, P., 2022. Health and Wellness Market Size to Hit USD 7,656.7 Bn
by 2030. [online] GlobeNewswire News Room.
46
Statista. 2022. Cannabis users worldwide number by region 2011-2019 | Statista.
47
2017. The Health Effects of Cannabis and Cannabinoids.
48
Mynewsdesk. 2022. Vegan Cosmetics Market is Growing at 6.9% CAGR, Market Size,
Share, Statistics, Cosmetics Industry Trends, Leading Company Profiles, Forecast & Estimations to 2027.
[online]
49
Mynewsdesk. 2022. Vegan Cosmetics Market is Growing at 6.9% CAGR, Market Size,
Share, Statistics, Cosmetics Industry Trends, Leading Company Profiles, Forecast & Estimations to 2027.
Employees
We
currently engage 18 employees and service providers, working in various fields of management, research and development, product management,
marketing and regulatory advice. Most of our activities are done with external consultants and professional companies that provide
us the required services.
We
are subject to Israeli labor laws and regulations with respect to our employees located in Israel. These laws and regulations principally
concern matters such as pensions, paid annual vacation, paid sick days, length of the workday and workweek, minimum wages, overtime pay,
insurance for work-related accidents, severance pay and other conditions of employment. Our employees are not represented by a labor
union. We consider our relationship with our employees to be good. To date, we have not experienced any work stoppages.
ITEM
1A. RISK FACTORS
You
should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report
on Form 10-K. If any of the following risks are realized, our business, financial condition, results of operations and prospects could
be materially and adversely affected. The risks described below are not the only risks facing the Company. Risks and uncertainties not
currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition,
results of operations and prospects.
Risks
to Financial position
We
have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even
cease our ongoing business operations.
We
have a limited operating history. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise
and the uncertainties arising from the absence of a significant operating history. We have not generated revenues and there can be no
assurance that we will ever generate revenues and, even if we did, there is no guarantee that we will be profitable. If our business
plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.
We
expect to incur losses for the foreseeable future as we continue the implementation of our business plan. If we fail to generate revenue
and eventually become profitable, or if we are unable to fund our continuing losses, our shareholders could lose all or a substantial
part of their investment.
We
will need substantial additional funding to implement our business plan & operations, including building the Green Vision Center,
which could result in significant dilution or restrictions on our business activities. We may not be able to raise capital when needed,
if at all, which would force us to delay, reduce or eliminate our product development programs or commercialization efforts and curtail
our operations
Our
operations have consumed substantial amounts of cash since inception. We expect to need substantial additional funding to pursue the
clinical development of our drug candidates and launch and commercialize any drug candidates for which we receive regulatory approval.
We
raised gross proceeds to us of $1.7 million in loans from affiliated entities. All of these loans will come due in July 2023. We
require additional capital for the further development and commercialization of our product lines and may need to raise additional
funds sooner if we choose to and are able to expand more rapidly than we currently anticipate.
We
will also need significant funds to complete our planned 60,000 square foot Green Vision Center in Southern Israel. Under the agreement
with the Israel Lands Authority, our subsidiary Cannovation Ltd. committed to build and develop the Green Vision Center in accordance
with the time frames, terms and conditions of the agreement. Typically, the initial time frame for completing the development is four
(4) years, subject to extensions that the ILA may approve. Upon completion of the development within the time frames and other requirements
specified in the Agreement, then Cannovation Ltd. will be entitled subject to Israeli law to long term lease agreement (49 years) to
the Land (equivalent to ownership rights as most of the land in Israel is government owned and when marketed usually the developers are
granted with development/long lease rights).
Accordingly,
we expect our expenses to increase in connection with our ongoing activities.
To
date, we have financed our operations through a mix of debt and grant funding, and we expect to continue to utilize such means of financing
for the foreseeable future. Additional funding from those or other sources may not be available when or in the amounts needed, on acceptable
terms, or at all.
If
we raise capital through the sale of equity, or securities convertible into equity, it would result in dilution to our then existing
stockholders, which could be significant depending on the price at which we may be able to sell our securities.
If
we raise additional capital through the incurrence of indebtedness, we may become subject to covenants restricting our business activities,
and holders of debt instruments may have rights and privileges senior to those of our equity investors. In addition, servicing the interest
and principal repayment obligations under debt facilities could divert funds that would otherwise be available to support research and
development or commercialization activities.
If
we are unable to raise capital when needed on commercially reasonable terms, we could be forced to delay, reduce or eliminate our research
and development for our product candidates or any future commercialization efforts or ultimately cease operations. Any of these events
could significantly harm our business, financial condition and prospects.
Until
we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never achieve, we expect to finance
our cash needs primarily through public or private equity offerings, debt financings or through the establishment of possible strategic
alliances. We cannot be certain that additional funding will be available on acceptable terms, or at all. If we are not able to secure
additional equity funding when needed, we may have to delay, reduce the scope of, or eliminate one or more of our clinical studies, development
programs or future commercialization initiatives.
In
addition, any additional equity funding that we do obtain will dilute the ownership held by our existing security holders. The amount
of this dilution may be substantially increased if the trading price of our common stock is lower at the time of any financing. Regardless,
the economic dilution to shareholders will be significant if our stock price does not increase significantly, or if the effective price
of any sale is below the price paid by a particular shareholder. Any debt financing that we obtain in the future could involve substantial
restrictions on activities and creditors could seek a pledge of some or all of our assets. We have not identified potential sources for
such financing that we will require, and we do not have commitments from any third parties to provide any future debt financing. If we
fail to obtain funding as needed, we may be forced to cease or scale back operations, and our results, financial condition and stock
price would be adversely affected.
We
may never achieve profitability.
We
are unable to accurately predict the timing or amount of future revenue or expenses or when, or if, we will be able to achieve profitability.
We have financed our operations primarily through issuance and sale of equity and equity linked securities. The size of our future net
losses will depend, in part, on the rate of growth or contraction of our expenses and the level and rate of growth, if any, of our revenues.
We expect to continue to expend substantial financial and other resources on, among other things:
| |
● |
sales
and marketing, including expanding our indirect sales organization and marketing programs; |
| |
● |
planning
and conducting clinical trials to obtain regulatory approval/clearance for the commercialization of our products; |
| |
● |
expansion
of our operations and infrastructure, both domestically and internationally; and |
| |
● |
general
administration, including legal, accounting and other expenses related to being a public company. |
If
we are unable to successfully commercialize our products or if revenue from any of our products that receives marketing approval is insufficient,
we will not achieve profitability. Furthermore, even if we successfully commercialize our products, our planned investments may not result
in increased revenue or growth of our business. We may not be able to generate net revenues sufficient to offset our expected cost increases
and planned investments in our business. As a result, we may incur significant losses for the foreseeable future, and may not be able
to achieve and sustain profitability. If we fail to achieve and sustain profitability, then we may not be able to achieve our business
plan, fund our business or continue as a going concern.
Our
quarterly results may fluctuate significantly and period-to-period comparisons of our results may not be meaningful.
Our
quarterly results, including the levels of future revenue, if any, our operating expenses and other costs, and our operating margins,
may fluctuate significantly in the future, and period-to-period comparisons of our results may not be meaningful. This may be especially
true to the extent that we do not successfully establish our business model. Accordingly, the results of any one period should not be
relied upon as an indication of our future performance. In addition, our quarterly results may not fully reflect the underlying performance
of our business. Factors that may cause fluctuations in our quarterly results include, but are not limited to:
| |
● |
the
timing of regulatory commercial sale approvals for our products in various stages of development; |
| |
● |
our
ability to successfully establish our business model; |
| |
● |
our
ability to attract and retain distribution networks, customers and to expand our business; |
| |
● |
enacted
or pending legislation effecting our industry; |
| |
● |
changes
in our pricing policies or those of our competitors; |
| |
● |
the
timing of our recognition of revenue and the mix of our revenues during the period; |
| |
● |
the
amount and timing of operating expenses and other costs related to the maintenance and expansion of our business, infrastructure
and operations; |
| |
● |
the
amount and timing of operating expenses and other costs related to the development or acquisition of businesses, services, technologies
or
intellectual
property rights; |
| |
● |
the
timing and costs associated with legal or regulatory actions; |
| |
● |
changes
in the competitive dynamics of our industry, including consolidation among competitors or customers; |
| |
● |
loss
of our executive officers or other key employees;) |
| |
● |
industry
conditions and trends that are specific to the vertical markets in which we sell or intend to sell our devices; and |
| |
● |
general
economic and market conditions. |
Fluctuations
in quarterly results may negatively impact the value of our common stock, regardless of whether they impact or reflect the overall performance
of our business. If our quarterly results fall below the expectations of investors or any securities analysts who follow our shares,
or below any guidance we may provide, the price of our ordinary shares could decline substantially.
Currency
exchange rate fluctuations affect our results of operations, as reported in our financial statements.
We
incur expenses in U.S. dollars and in NIS but our functional currency is the U.S. dollar However, a significant portion of our
headcount related expenses, consisting principally of salaries and related personnel expenses as well as and R&D consulting services,
leases and certain other operating expenses, are denominated in NIS. This foreign currency exposure gives rise to market risk associated
with exchange rate movements of the U.S. dollar against the NIS. Furthermore, we anticipate that a material portion of our expenses will
continue to be denominated in NIS.
In
addition, increased international sales in the future may result in greater foreign currency denominated sales, increasing our foreign
currency risk. If we are not able to successfully hedge against the risks associated with currency fluctuations, our financial condition
and results of operations could be adversely affected. which could adversely affect our financial condition and results of operations
Risks
Related to Our Business and Industry and Regulatory Process
Our
failure to manage growth effectively could impair our business.
Our
business strategy envisions a period of rapid growth that may put a strain on our administrative and operational resources and funding
requirements. Our ability to effectively manage growth will require us to continue to expand the capabilities of our operational and
management systems and to attract, train, manage, and retain qualified personnel. There can be no assurance that we will be able to do
so, particularly if losses continue and we are unable to obtain sufficient financing. If we are unable to successfully manage growth,
our business, prospects, financial condition, and results of operations could be adversely affected.
Our
plans are dependent upon key individuals and the ability to attract qualified personnel.
In
order to execute our business plan, we will be dependent on Ora Meir Soffer, our Chief Executive Officer and Director. The loss of Ms.
Meir Soffer could have a material adverse effect upon our business prospects. Moreover, our success continues to depend to a significant
extent on our ability to identify, attract, hire, train and retain qualified professional, creative, technical and managerial personnel.
Competition
for such personnel is intense, and there can be no assurance that we will be successful in identifying, attracting, hiring, training,
and retaining such personnel in the future. If we are unable to hire, assimilate and retain qualified personnel in the future, our business,
operating results, and financial condition could be materially adversely effected. We may also depend on third party contractors and
other partners to assist with the execution of our business plan. There can be no assurance that we will be successful in either attracting
and retaining qualified personnel, or creating arrangements with such third parties. The failure to succeed in these endeavors would
have a material adverse effect on our ability to consummate our business plans.
Failure
in the Company’s information technology systems, including by cybersecurity attacks or other data security incidents, could significantly
disrupt its operations.
Our
operations depend, in part, on the continued performance of our information technology systems. Our information technology
systems are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptions. Failure of our
information technology systems could adversely affect our business, profitability, and financial condition. Although we have information
technology security systems, a successful cybersecurity attack or other data security incident could result in the misappropriation and/or
loss of confidential or personal information, create system interruptions, or deploy malicious software that attacks the Company’s
systems. It is possible that a cybersecurity attack might not be noticed for some period. The occurrence of a cybersecurity attack or
incident could result in business interruptions from the disruption of the Company’s information technology systems, or negative
publicity resulting in reputational damage with its shareholders and other stakeholders and/or increased costs to prevent, respond to
or mitigate cybersecurity events. In addition, the unauthorized dissemination of sensitive personal information or proprietary or confidential
information could expose the Company or other third parties to regulatory fines or penalties, litigation, and potential liability, or
otherwise harm its business.
We
may grow through mergers or acquisitions, which strategy may not be successful or, if successful, may produce risks in successfully integrating
and managing the merged companies or acquisition and may dilute our stockholders.
As
part of our growth strategy, we may pursue mergers and acquisitions of entities and/or assets that we believe will have synergistic and/or
other value to us. We currently have no agreements or understandings to merge with or acquire any entity and/or assets, and may not find
suitable merger or acquisition opportunities. Mergers and acquisitions involve numerous risks, any of which could harm our business,
including, without limitation:
●
difficulties in integrating the operations, technologies, existing contracts, accounting processes and personnel of the target and realizing
the anticipated synergies of the combined businesses;
●
difficulties in supporting and transitioning customers of the target company;
●
diversion of financial and management resources from existing operations;
●
the price we pay or other resources that we devote may exceed the value we realize, or the value we could have realized if we had allocated
the purchase price or other resources to another opportunity;
●
entering new markets or areas in which we have limited or no experience;
●
potential loss of key associates and customers from either our business or the target’s business;
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assumption of unanticipated problems or latent liabilities of the target; and
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the inability to generate sufficient revenue to offset acquisition costs.
Mergers
and acquisitions also frequently result in the recording of goodwill and other intangible assets, which are subject to potential impairments
in the future and that could harm our financial results. In addition, if we finance acquisitions by issuing convertible debt or equity
securities, our existing stockholders may be diluted, which could affect the market price of our common shares. As a result, if we fail
to properly evaluate mergers, acquisitions or investments, we may not achieve the anticipated benefits of any such merger or acquisition,
and we may incur costs in excess of what we anticipate. The failure to successfully evaluate and execute mergers, acquisitions or investments
or otherwise adequately address these risks could materially harm our business, financial condition and results of operations.
We
may be subject to product liability claims which may have a material adverse effect on our business.
Through
our subsidiary Cannovation Center Israel, we manufacture and distribute the ‘Green Side by Side’ product line containing
natural and herbal formulas based on researched and science-based plants, herbal extracts, mushrooms and other natural ingredients. As
a manufacturer and distributor of products designed to be ingested by humans, we face an inherent risk of exposure to product liability
claims, regulatory action and litigation if our products are alleged to have caused significant loss or injury. In addition, the manufacture
and sale of cannabis products involve the risk of injury to consumers due to tampering by unauthorized third parties or product contamination.
Previously unknown adverse reactions resulting from human consumption of cannabis products alone or in combination with other medications
or substances could occur. We may be subject to various product liability claims, including, among others, that the products produced
by us caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning possible side effects
or interactions with other substances. A product liability claim or regulatory action against us could result in increased costs, could
adversely affect our reputation with our clients and consumers generally, and could have a material adverse effect on the business,
financial condition and operating results of the Company. There can be no assurances that we will be able to obtain or maintain product
liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may
not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms
or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of products.
Product
recalls may also harm our reputation
Manufacturers
and distributors of products are sometimes subject to the recall or return of their products for a variety of reasons, including product
defects, such as contamination, unintended harmful side effects or interactions with other substances, packaging safety and inadequate
or inaccurate labeling disclosure. If any of our products are recalled due to an alleged product defect or for any other reason, we could
be required to incur the unexpected expense of the recall and any legal proceedings that might arise in connection with the recall. We
may lose a significant amount of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product
recall may require significant management attention. Although we have detailed procedures in place for testing finished products, there
can be no assurance that any quality, potency or contamination problems will be detected in time to avoid unforeseen product recalls,
regulatory action or lawsuits. Additionally, if one of the products produced by the Company were subject to recall, the image of that
product and the Company could be harmed. A recall for any of the foregoing reasons could lead to decreased demand for products produced
by the Company and could have a material adverse effect on the results of operations and financial condition of the Company. Additionally,
product recalls may lead to increased scrutiny of the operations of the Company by the U.S. Food and Drug Administration or other
regulatory agencies, requiring further management attention and potential legal fees and other expenses.
Our
Officers and Directors may be subject to conflict of interest
The
Company may be subject to various potential conflicts of interest because of the fact that some of its officers and directors may be
engaged in a range of business activities. In addition, the Company’s executive officers and directors may devote time to their
outside business interests, so long as such activities do not materially or adversely interfere with their duties to the Company. In
some cases, the Company’s executive officers and directors may have fiduciary obligations associated with these business interests
that interfere with their ability to devote time to the Company’s business and affairs and that could adversely affect the Company’s
operations. These business interests could require significant time and attention of the Company’s executive officers and directors.
In
addition, the Company may also become involved in other transactions which conflict with the interests of certain directors and the officers
who may from time to time deal with persons, firms, institutions or companies with which the Company may be dealing, or which may be
seeking investments similar to those desired by it. The interests of these persons could conflict with those of the Company. In addition,
from time to time, these persons may be competing with the Company for available investment opportunities. Conflicts of interest, if
any, will be subject to the procedures and remedies provided under applicable laws. In particular, in the event that such a conflict
of interest arises at a meeting of the Company’s directors, a director who has such a conflict will abstain from voting for or
against the approval of such participation or such terms. In accordance with applicable laws, the directors of the Company are required
to act honestly, in good faith and in the best interests of the Company.
We
face significant competition in the market.
There
is potential that we will face intense competition from other companies, some of which can be expected to have more financial resources
and manufacturing and marketing experience than the Company. Increased competition by larger and better financed competitors could materially
and adversely affect the business, financial condition and results of operations of the Company.
We
may not be able to obtain adequate insurance coverage and in the case of liability the lack of adequate insurance may have a material
adverse effect on our business.
We
have insurance to protect our assets, operations and employees. While we believe our insurance coverage addresses all material risks
to which the Company may be exposed and is adequate and customary in its current state of operations, such insurance is subject
to coverage limits and exclusions and may not be available for the risks and hazards to which the Company is exposed. In addition, no
assurance can be given that such insurance will be adequate to cover the Company’s liabilities or will be generally available in
the future or, if available, that premiums will be commercially justifiable. If the Company were to incur substantial liability and such
damages were not covered by insurance or were in excess of policy limits, or if the Company were to incur such liability at a time when
it is not able to obtain liability insurance, its business, results of operations and financial condition could be materially adversely
affected.
Epidemics,
such as the COVID-19 pandemic, or natural disasters, terrorist attacks or acts of war may harm our business.
Epidemics,
natural disasters, terrorist attacks or acts of war may cause damage or disruption to us, our employees, our facilities, and our customers,
and may negatively impact our revenues, results of operations and financial condition in ways that we currently cannot predict.
Failure
of new products to gain market acceptance could harm our revenues.
An
important aspect of our competitive edge is our ability to develop new products. If we fail to introduce new products on a timely basis
and if the new products fail to gain market acceptance or become restricted by regulatory requirements, or have quality problems, we
will face adverse results. Factors that could affect our ability to continue launching new products include, among others, limited capital
and human resources, government regulations, proprietary protections of competitors and failure to anticipate changes in the market.
We
rely on third party to manufacturers to supply our products on a timely basis.
Our
products are manufactured by a third-party company, and we have no assurance that our current manufacturer will continue to supply products
on a timely basis and according to needed quality and regulatory requirements. Our third-party manufacturer may experience delays in
sourcing product ingredients or components on a timely basis, which would result in delays. Operational and liquidity issues of the manufacturer
may adversely influence our results. In the case our manufacturer faces any problems or is unable to continue, we will be required to
identify and obtain an acceptable replacement.
Research
and development and product obsolescence may impair our ability to compete in our target market.
Rapidly
changing markets, technology, emerging industry standards and frequent introduction of new products characterize our business. The
introduction of new products embodying new technologies, including new manufacturing processes, and the emergence of new industry
standards may render our planned product offerings obsolete, less competitive or less marketable. The process of developing our
planned products is complex and requires significant continuing costs, development efforts and third party commitments The
Company’s failure to develop new technologies and products and the obsolescence of existing technologies could adversely
affect our business, financial condition and operating results. The Company’s success will depend, in part, on its ability to
continue to enhance its existing technologies, develop new technology that addresses the increasing sophistication and varied needs
of the market, and respond to technological advances and emerging industry standards and practices on a timely and cost-effective
basis. The development of the Company’s proprietary technology entails significant technical and business risks. The Company
may not be successful in using its new technologies or exploiting its niche markets effectively or adapting its businesses to
evolving customer or medical requirements or preferences or emerging industry standards.
It
may be difficult to enforce a judgment of a U.S. court against us and our executive officers and directors and the Israeli experts named
in this prospectus in Israel or the United States, to assert U.S. securities laws claims in Israel or to serve process on our executive
officers and directors and these experts.
While
we were incorporated in Delaware, substantially all of our executive officers and directors reside outside of the United States, and
all of our assets and most of the assets of these persons are located outside of the United States. Therefore, a judgment obtained against
us, or any of these persons, including a judgment based on the civil liability provisions of the U.S. federal securities laws, may not
be collectible in the United States and may not be enforced by an Israeli court. It also may be difficult to effect service of process
on these persons in the United States or to assert U.S. securities law claims in original actions instituted in Israel. Additionally,
it may be difficult for an investor, or any other person or entity, to initiate an action with respect to U.S. securities laws in Israel.
Israeli courts may refuse to hear a claim based on an alleged violation of U.S. securities laws reasoning that Israel is not the most
appropriate forum in which to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that
Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must
be proven as a fact by expert witnesses, which can be a time consuming and costly process. Certain matters of procedure will also be
governed by Israeli law. There is little binding case law in Israel that addresses the matters described above. As a result of the difficulty
associated with enforcing a judgment against us in Israel, investors may not be able to collect any damages awarded by either
a U.S. or foreign court.
The
continuing prevalence of the COVID-19 pandemic may adversely affect our operations and our capital raising efforts.
In late 2019, a novel strain
of Coronavirus, also known as COVID-19, was reported in Wuhan, China. While initially the outbreak was largely concentrated in China,
it has now spread globally. Many countries around the world, have significant governmental measures implemented to control the spread
of the virus, including temporary closure of businesses, severe restrictions on travel and the movement of people, limited access to
nursing homes, hospitals and other medical institutes and other material limitations on the conduct of business. These measures
have resulted in work stoppages and other disruptions. Our research and development activities, sales and marketing efforts, as well
as our ability to perform clinical trials (if needed) depend, in part, on attendance at in-person meetings, industry conferences and
other events, facility visiting, and as a result some of our sales and marketing activities may be halted.
The
extent to which the coronavirus impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted
with confidence, including the duration and severity of the outbreak, and the actions that may be required to contain the coronavirus
or treat its impact. In particular, the continued spread of the coronavirus globally, could have a material adverse impact on our operations
and workforce, including our marketing and sales activities and ability to raise additional capital, and our ability to perform clinical
trials, which in turn could have a material adverse impact on our business, financial condition and results of operation.
We
intend to rely on third parties to conduct clinical trials (if needed). If these third parties do not meet our deadlines or otherwise
conduct the trials as required, our clinical trials programs could be delayed or unsuccessful and we may not be able to obtain regulatory
approval for or commercialize our product candidates when expected or at all.
We
may conduct clinical studies on our Green Side by Side product line. We do not have the ability to conduct all aspects
of our clinical trials ourselves. We intend to use Contract Research Organizations (CROs) to conduct clinical trials that we may be required
to conduct and will rely upon medical institutions, clinical investigators and CRO’s and consultants to conduct these trials in
accordance with our clinical protocols. Our future CROs, investigators and other third parties play a significant role in the conduct
of these trials and the subsequent collection and analysis of data from the clinical trials.
There
is no guarantee that any CROs, investigators and other third parties upon which we rely for administration and conduct of clinical trials
will devote adequate time and resources to such trials or perform as contractually required. If any of these third parties fail to meet
expected deadlines, fail to adhere to our clinical protocols or otherwise perform in a substandard manner, our clinical trials may be
extended, delayed or terminated. If any of these clinical trial sites terminate for any reason, we may experience the loss of follow-up
information on patients enrolled in our ongoing clinical trials unless we are able to transfer the care of those patients to another
qualified clinical trial site. In addition, principal investigators for any clinical trials we conduct may serve as scientific advisors
or consultants to us from time to time and receive cash or equity compensation in connection with such services. If these relationships
and any related compensation result in perceived or actual conflicts of interest, the integrity of the data generated at the applicable
clinical trial site may be jeopardized.
Regulation
of the Wellness, Botanicals, Cannabis and Pharma Industry
The
Green Vision Center activities are subject to different rules and regulations pertaining to the center activity and
different products categories, such as manufacturing nutritional supplements, manufacturing pharma products, manufacturing cannabis products,
operating laboratories, and more. The company cannot predict the time required to secure all appropriate regulatory approvals or
the extent of testing and documentation that may be required by governmental authorities. Any delays in obtaining, or failure to obtain
regulatory approvals would significantly delay the development of markets and products and could have a material adverse effect on the
business, results of operations and financial condition of the Company.
Results
of clinical studies are unpredictive.
We
may suffer significant setbacks in our clinical studies, and we cannot be certain nor predict such setbacks. This may result from
the fact that clinical data may be susceptible to varying interpretations and analyses, some products may perform in
clinical trials but fail regulatory approval. This may lead to prolonged development time and adverse effect on commercialization.
We
may fail to implement strategic alliances
Cyber-attacks
or other privacy or data security incidents may result in unintentional dissemination of protected personal information or proprietary
or confidential information and result in loss of revenue and increased costs, exposure to liability lawsuits, reputational harm and
adverse consequences.
Risks
Related to our Intellectual Property
If
we are unable to obtain and maintain intellectual property protection for our product offerings, or if the scope of the intellectual
property protection we obtain is not sufficiently broad, our competitors could develop and commercialize products similar or identical
to ours, and our ability to successfully commercialize our products may be impaired.
Our
ability to compete successfully will depend in part on our ability to obtain and enforce patent protection for our products, preserve
our trade secrets and operate without infringing the proprietary rights of third parties. Filing, prosecuting, and defending patents
on our products and other technologies in all countries throughout the world would be prohibitively expensive and time-consuming, and
the laws of some foreign countries may not protect our rights to the same extent as the laws of the United States. We may not be able
to file, prosecute, maintain, enforce, or license all necessary or desirable patents or patent applications at a reasonable cost or in
a timely manner, or in all jurisdictions, or at all, or may choose not to do any of the foregoing.
In
October 2021 we filed a provisional patent application on certain aspects of our green product line and this provisional patent
application, or any future provisional patent application on certain aspects of our products, may not be eligible to become
an issued patent until, among other things, we file a non-provisional patent application within 12 months of the filing date of the applicable
provisional patent application. In cases where we have not obtained, or decided not to obtain, patent protection for certain of our inventions,
we may not be able to prevent third parties from practicing our inventions or from selling or importing products made using our
inventions in and into the United States or other jurisdictions.
Moreover,
while we have applied for a patent that protect aspects of our products in the United States, we cannot assure that our intellectual
property position, will not be challenged or that all patents for which we have applied will be issued on a timely basis or at all, or
that such patents will protect our technology, in whole or in part, or be issued in a form that will provide us with meaningful protection,
prevent competitors from competing with us, or otherwise provide us with any competitive advantage. Although patents are presumed valid
and enforceable upon issuance, a patent may be challenged as to its inventorship, scope, validity, or enforceability, and certain of
our owned or exclusively in-licensed patents have been, and others in the future may be, challenged in the courts or patent offices in
the United States and abroad. Our competitors may be able to circumvent our owned patents by developing similar or alternative solutions
in a non-infringing manner. Competitors could also set up laboratories outside the countries in which we have filed patent applications
in order to compete without infringing upon our intellectual property, even if they process samples from countries in which we do have
patent protection. In addition, to the extent we have granted, or may grant in the future, licenses or sublicenses of our intellectual
property rights to third parties, we cannot provide any assurance that such intellectual property rights will not be used by those third
parties in a manner that could compete with our business or otherwise negatively impact any competitive advantage provided by such intellectual
property rights.
Patent
applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases
not at all. Therefore, we cannot know with certainty whether we were the first to make the invention claimed in our pending patent application,
or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability,
and commercial value of our patent rights are uncertain. Given the amount of time required for the development, testing, and regulatory
review of new products, patents protecting such products might expire before or shortly after such products are commercialized. As a
result, any patent portfolio we develop may not provide us with sufficient rights to exclude others from commercializing products similar
or identical to ours.
We
may be sued by third parties for alleged infringement of their proprietary rights, which could adversely affect our business, results
of operations and financial condition.
There
is often litigation between competing companies relying on their respective technologies based on allegations of infringement or other
violations of intellectual property rights. Our future success depends, in part, on not infringing the intellectual property rights of
others. We may be unaware of the intellectual property rights of others that may cover some or all of our technology. Any such claims
or litigation could cause us to incur significant expenses and, if successfully asserted against us, could require that we pay substantial
damages or ongoing royalty payments, prevent us from offering some portion of our products, or require that we comply with other unfavorable
terms. We may also be obligated to indemnify our customers or channel partners in connection with any such litigation and to obtain licenses
or modify our products, which could further exhaust our resources. Patent infringement, trademark infringement, trade secret misappropriation
and other intellectual property claims and proceedings brought against us, whether successful or not, could harm our brand, business,
results of operations and financial condition. Litigation is inherently uncertain, and any judgment or injunctive relief entered against
us or any adverse settlement could negatively affect our business, results of operations and financial condition. In addition, litigation
can involve significant management time and attention and be expensive, regardless of the outcome. During the course of litigation, there
may be announcements of the results of hearings and motions and other interim developments related to the litigation. If securities analysts
or investors regard these announcements as negative, the trading price of our ordinary shares may decline.
We
may become involved in lawsuits to protect or enforce our patents, which could be expensive, time consuming and unsuccessful.
If
we attempt enforcement of our patents or other intellectual property rights, we may be subject or party to claims, negotiations or complex,
protracted litigation. These claims and any resulting lawsuits, if resolved adversely to us, could subject us to significant liability
for damages, impose temporary or permanent injunctions against our solutions or business operations, or invalidate or render unenforceable
our intellectual property.
Intellectual
property disputes and litigation, regardless of merit, can be costly and disruptive to our business operations by diverting attention
and energies of management and key technical personnel, and by increasing our costs of doing business. Such litigation, regardless of
its success, could seriously harm our reputation with our channel partners, business partners and patients and in the industry at large.
Some of our competitors may be able to sustain the costs of complex patent or intellectual property litigation more effectively than
we can because they have substantially greater resources. Any of the foregoing could adversely affect our operating results.
Risks
Relating to Our Israel Operations
Our
development efforts are headquartered in Israel and, therefore, our results may be adversely affected by economic restrictions imposed
on, and political and military instability in, Israel.
Our development headquarters,
which houses substantially all of our research and development team, including engineers, machinists, researchers, and clinical and
regulatory personnel as well as the facility of our contract manufacturer and final assembly are located in Israel. Our employees,
service providers, directors and officers are residents of Israel. Accordingly, political, economic and military conditions in Israel
and the surrounding region may directly affect our business. Any hostilities involving Israel or the interruption or curtailment of trade
within Israel or between Israel and its trading partners could materially and adversely affect our business, financial condition and
results of operations and could make it more difficult for us to raise capital. Although we plan to maintain inventory in the United
States and Germany, an extended interruption could materially and adversely affect our business, financial condition and results
of operations.
Recent
political uprisings, social unrest and violence in various countries in the Middle East and North Africa, including Israel’s neighbors
Egypt and Syria, are affecting the political stability of those countries. This instability may lead to deterioration of the political
relationships that exist between Israel and these countries and has raised concerns regarding security in the region and the potential
for armed conflict. Our commercial insurance does not cover losses that may occur as a result of an event associated with the security
situation in the Middle East. Any losses or damages incurred by us could have a material adverse effect on our business. In addition,
Iran has threatened to attack Israel and is widely believed to be developing nuclear weapons. Iran is also believed to have a strong
influence among parties hostile to Israel in areas that neighbor Israel, such as the Syrian government, Hamas in Gaza and Hezbollah in
Lebanon. Any armed conflicts, terrorist activities or political instability in the region could materially and adversely affect our business,
financial condition and results of operations.
Our
operations and the operations of our contract manufacturer may be disrupted as a result of the obligation of Israeli citizens to perform
military service.
Many
Israeli citizens are obligated to perform one month, and in some cases more, of annual military reserve duty until they reach the age
of 45 (or older, for reservists with certain occupations) and, in the event of a military conflict, may be called to active duty. In
response to terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will
be additional military reserve duty call-ups in the future in connection with this conflict or otherwise. Some of our employees, consultants
and employees of the manufacturer of our products, are required to perform annual military reserve duty in Israel and may be called to
active duty at any time under emergency circumstances. Our operations and the operations of our manufacturer could be disrupted by such
call-ups.
Our
sales may be adversely affected by boycotts of Israel.
Several
countries, principally in the Middle East, restrict doing business with Israel and Israeli companies, and additional countries may impose
restrictions on doing business with Israel and Israeli companies whether as a result of hostilities in the region or otherwise. In addition,
there have been increased efforts by activists to cause companies and consumers to boycott Israeli goods based on Israeli government
policies. Such actions, particularly if they become more widespread, may adversely impact our ability to sell our products.
Risks
Related Ownership of Our Securities
A
certain group of the Company’s stockholders may exert significant influence over its affairs, including the outcome of matters
requiring stockholder approval.
Currently,
a certain group of stockholders, including Ora Elharar Soffer (directly and through Beezz Home Technologies Ltd and Citrine S A L Investment
& Holdings Ltd) and others, collectively own a majority of the issued and outstanding shares of the Company. As a result, such individuals
will have the ability, acting together, to control the election of the Company’s directors and the outcome of corporate actions
requiring stockholder approval, such as: (i) a merger or a sale of the Company, (ii) a sale of all or substantially all of its assets,
and (iii) amendments to its certificate of incorporation and bylaws. This concentration of voting power and control could have a significant
effect in delaying, deferring or preventing an action that might otherwise be beneficial to the Company’s other stockholders and
be disadvantageous to the Company’s stockholders with interests different from those individuals. Certain of these individuals
also have significant control over the Company’s business, policies and affairs as officers or directors of the Company. Therefore,
investors should not invest in reliance on their ability to have any control over the Company.
Our
executive officers, directors and current beneficial owners of 5% or more of our common stock and their respective affiliates, in the
aggregate, beneficially own approximately 83% of our outstanding common stock as of October, 2021, and as of the date of this filing.
As a result, these persons, acting together, would be able to significantly influence all matters requiring stockholder approval, including
the election and removal of directors, any merger, consolidation, sale of all or substantially all of our assets, or other significant
corporate transactions.
You
may experience future dilution as a result of future equity offerings.
Our
Amended and Restated Articles of Incorporation authorize the issuance of a maximum 1,500,000 shares of common stock. Any additional
financings effected by us may result in the issuance of additional securities without stockholder approval and the substantial dilution
in the percentage of common stock held by our then existing stockholders. In addition, we have reserved 90,000,000 shares
of common stock for issuance pursuant to future awards under the 2018 Equity Incentive Plan. The issuance of such additional shares
of common stock, or securities convertible or exchangeable into common stock, may cause the price of our common stock to decline. Additionally,
if all or a substantial portion of these shares are resold into the public markets then the trading price of our common stock may decline.
If
securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price
and trading volume could decline.
We
currently do not have and may never obtain research coverage by securities analysts. If no securities analysts commence coverage
of our company, or if industry analysts cease coverage of our company, the trading price for our stock could be materially and adversely
impacted. In the event we obtain securities analyst coverage, if one or more of the analysts who cover us downgrade our stock or publish
inaccurate or unfavorable research about our business, our stock price may be materially and adversely impacted. If one or more of these
analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause
our stock price and trading volume to decline.
If
the price of our common stock fluctuates significantly, your investment could lose value.
Our
common stock is quoted on the OTCQB, under the symbol “CTGL,” and, to date, has traded on a limited basis. We have applied
to list our common stock on Nasdaq under the symbol “CTGL.” We cannot assure you that an active public market will continue
for our common stock. If an active public market for our common stock does not continue, the trading price and liquidity of our common
stock will be materially and adversely affected. If there is a thin trading market or “float” for our stock, the market price
for our common stock may fluctuate significantly more than the stock market as a whole. Without a large float, our common stock would
be less liquid than the stock of companies with broader public ownership and, as a result, the trading prices of our common stock may
be more volatile. In addition, in the absence of an active public trading market, investors may be unable to liquidate their investment
in us. Furthermore, the stock market is subject to significant price and volume fluctuations, and the price of our common stock could
fluctuate widely in response to several factors, including, but not limited to:
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The
stock market has experienced extreme price and volume fluctuations in recent years that have significantly affected the quoted prices
of the securities of many companies, including companies in our industry. The changes may not be possible to predict and often appear
to occur without regard to specific operating performance. The price of our common stock could fluctuate based upon factors that have
little or nothing to do with our company and these fluctuations could materially reduce our stock price.
Delaware
law contains provisions that could discourage, delay, or prevent a change in control of the Company, prevent attempts to replace or remove
current management and reduce the market price of its common stock.
Provisions
in the Company’s certificate of incorporation and bylaws may discourage, delay or prevent a merger or acquisition involving the
Company that its stockholders may consider favorable. For example, the Company is subject to the anti-takeover provisions of the Delaware
General Corporation Law (“DGCL”). Under these provisions, if anyone becomes an “interested stockholder,” the
Company may not enter into a “business combination” with that person for three years without special approval, which could
discourage a third party from making a takeover offer and could delay or prevent a change in control of the Company. An “interested
stockholder” is, generally, a stockholder who owns 15% or more of the Company’s outstanding voting stock or an affiliate
of the Company who has owned 15% or more of the Company’s outstanding voting stock during the past three years, subject to certain
exceptions as described in the DGCL.
We
do not intend to pay dividends for the foreseeable future.
We
have never declared or paid cash dividends on our capital stock nor are we under any obligation to declare or pay such cash dividends.
We currently intend to retain any future earnings to fund our operations and the development and growth of our business, and we do not
expect to declare or pay any dividends in the foreseeable future. Our future ability to pay cash dividends on our capital stock may be
limited by any future debt instruments or preferred securities. As a result, investors may only receive a return on their
investment in our common stock if the market price of our common stock increases to a price above the price paid for them and then
sell such shares.