UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period endedfrom January 1, 2022 to June 30, 20212022.

Commission file number: 333-208814

SEEDOSATIVUS TECH CORP.

(Exact name of registrant as specified in its charter)

800 608-6432

Registrant’s telephone number, including area code

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 day. Yes ☒  YesNo ☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐  No ☒

(Does not currently apply to the Registrant)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 if the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐   No ☒

As of August 16, 2021,12, 2022, the registrant had 37,995,8164,194,385 shares of its Common Stock, $0.0001$0.001 par value, outstanding.

When used in this quarterly report, the terms “Seedo“Sativus Tech Corp.” “the Company,” “we,” “our,” and “us” refer to SeedoSativus Tech Corp.

TABLE OF CONTENTS

PART I. Financial Information

SATIVUS TECH CORP.

SEEDO CORP.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 20212022 

SATIVUS TECH CORP.

SEEDO CORP.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 20212022

IN THOUSANDS OF U.S. DOLLARS

INDEX

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SEEDOSATIVUS TECH CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except share and per share data

The accompanying notes are an integral part of these condensed consolidated financial statements.

SEEDOSATIVUS TECH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)LOSS (Unaudited)

U.S. dollars in thousands, except share and per share data

The accompanying notes are an integral part of these condensed consolidated financial statements.

SEEDOSATIVUS TECH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIT

U.S. dollars in thousands, except share and per share data

The accompanying notes are an integral part of these condensed consolidated financial statements.

SEEDO CORP.

SATIVUS TECH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)CHANGES IN SHAREHOLDERS’ DEFICIT

U.S. dollars in thousands, except share and per share data

The accompanying notes are an integral part of these condensed consolidated financial statements.

SATIVUS TECH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

U.S. dollars in thousands

The accompanying notes are an integral part of these condensed consolidated financial statements.

During the third quarter of 2019, Eroll was experiencing financial and operational difficulties and during 2020, entered liquidation proceedings through the Nazareth District Court of the State of Israel (the “Court”). On March 25, 2020, the Court approved the purchase of all of Eroll’s assets by a non-related third-party and therefore, the Company no longer has any legal ties nor privity with Eroll.

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

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

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

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

On December 9, 2021, we implemented a 1-for-10 consolidation, or reverse split, of our issued and outstanding common shares. Except where otherwise indicated, all share and per share data in these financial statements have been retroactively restated to reflect the reverse stock split.

The Company intends to finance operating costs over the next twelve months with existing cash on hand, reducing operating spend, and future issuances of equity and debt securities, or through a combination of the foregoing. However, the Company will need to seek additional sources of financing if the Company requires more funds than anticipated during the next 12 months or in later periods.

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business.

The consolidated financial statements for the six and three months ended June 30, 2021,2022, do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company’s ability to continue as a going concern.

Basis of Presentation and Principles of Consolidation:

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary and were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)

All intercompany accounts and transactions have been eliminated in consolidation.

Unaudited Interim Financial Information

The Company’s unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report, as is permitted by such rules and regulations. Accordingly, these condensed consolidated financial statements should be read in conjunction with the audited financial statements as of and for the year ended December 31, 20202021 and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20202021 filed with the SEC on March 17, 202131, 2022 (the “2020“2021 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented .Thepresented. The results for the six and three months ended June 30, 20212022 are not necessarily indicative of the results for the year ending December 31, 2021,2022, or for any future period.

As of June 30, 2021,2022, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 20202021 Annual Report.

Fair value of financial instruments

ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the inputs as follows:

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The carrying amounts of cash and cash equivalents, short term deposits, trade receivables, trade payables and short-term loan approximate their fair value due to the short-term maturity of such instruments.

The Company elected to measure some of the convertible loans under the fair value option. Under the fair value option the convertible loans will be measured at fair value in each reporting period until they will be converted, with changes in the fair values being recognized in the Company’s consolidated statement of operations as financial income or expense. The proceeds received for the issuance of the convertible loans were allocated at fair value conducted on an arm’s-length basis.

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:

On February 20, 2021, the Company and the third party extended the February 2019 loan to August 20, 2021.

The Company at its option shall have the right to redeem, in part or in whole, outstanding principal amount and interest under this loan agreement prior to the maturity date. The Company shall pay an amount equal to the principal amount being redeemed plus a redemption premium equal to 20% of the outstanding principal amount being redeemed plus outstanding and accrued interest.

The February 2019 Lender isshall be entitled to convert at its option any portion of the outstanding and unpaid principal or accrued interest into fully paid and nonassessable of shares of common stock, at the lower of the fixed conversion price then in effect or the market conversion price. The number of shares of common stock issuable upon conversion of any conversion amount shall be determined by dividing (x) such conversion amount by (y) the fixed conversion price of $2$20.00 or (z) 80% of the lowest the volume-weighted average price of the Company’s shares of common stock during the 10 trading days immediately preceding the conversion date.

The As of December 31, 2021, the Company accountedhas defaulted on the February 2019 Loan and the February 2019 Loan was presented in fair value in the financial statements for the year ended December 31, 2021.

On January 18, 2022, the Company paid accrued interest of the February 2019 Loan in the amount of $20. In concurrence with the payment of accrued interest, the February 2019 Loan was extended to August 31, 2022. In the event that the Company completes a capital raise of at least $500 during the period through to August 31, 2022, the February 2019 Loan will be extended to December 31, 2022.

Conversion feature

In accordance with ASC 470-20, Debt815-15-25 the conversion feature was considered an embedded derivative instrument, and is to be recorded at its fair value separately from the convertible notes, within current liabilities in the Company’s balance sheet. The conversion component is then marked to market at each reporting period with conversion and other Options. In 2019, the intrinsicresulting gains or losses shown in the statements of operations.

The fair value of the BCF was calculated and the Company allocated $550 to the BCF as additional paid in capital.

On May 12, 2021, the Company repaid a portion of the February 2019 loan and the accrued interestconversion feature (hereafter “Convertible Component”) in the amount of $74.$279 ($264 at March 31, 2022) was estimated using the Monte Carlo Simulation Model to compute the Convertible Component’s fair value. The assumptions used to perform the Monte-Carlo simulation model below:

The February 2019 Loan is included in the convertible loans in current liabilities as of June 30, 20212022, in the amount of $304,$185, and $350$506 as of December 31, 2020.2021.

During the six months ended June 30, 2021 and 2020,2022, the Company recorded interest and financial expensesincome related to February 2019 Loan in the amount of $301, and interest and financial expenses in the amount of $38 and $216, respectively.in the six months ended June 30, 2021.

The October 2019 Lender isshall be entitled to convert the principal loan and the outstanding interest (the “Conversion Amount”) into such number of ordinary shares determined by dividing (x) such Conversion Amount by (y) the fixed conversion price of $1.25$12.50 or (z) 80% of the lowest the volume-weighted average price of the Company’s ordinary shares during the 10 trading days immediately preceding the conversion date.

As of June 30, 2021 and December 31, 2020, the BCF was revalued at $604 and $610, respectively.

As of December 31, 2021, the Company has defaulted on the October 2019 Loan and the October 2019 Loan is presented in fair value in the financial statements for the year ended December 31, 2021.On January 18, 2022, the Company paid accrued interest of the October 2019 Loan in the amount of $55. In concurrence with the payment of accrued interest, the October 2019 Loan was extended to August 31, 2022. In the event that the Company completes a capital raise of at least $500 during the period through to August 31, 2022, the October 2019 Loan will be extended to December 31, 2022.

Conversion feature

In accordance with ASC 815-15-25 the conversion feature was considered an embedded derivative instrument, and is to be recorded at its fair value separately from the convertible notes, within current liabilities in the Company’s balance sheet. The conversion component is then marked to market at each reporting period with the resulting gains or losses shown in the statements of operations.

The fair value of the conversion feature (hereafter “Convertible Component”) in the amount of $698 ($725 at March 31, 2022) was estimated using the Monte Carlo Simulation Model to compute the Convertible Component’s fair value. The assumptions used to perform the Monte-Carlo simulation model below:

The Company estimated the fair value of BCF using the Monte Carlo option pricing model using the following weighted average assumptions:

The October 2019 Loan is included in the convertible loans in current liabilities as of June 30, 20212022, in the amount of $1,111,$987, and $754$2,142 as of December 31, 2020.2021.

During the six months ended June 30, 2021 and 2020,2022, the Company recorded interest and financial expensesincome related to the October 2019 Loan in the amount of $1,101, and interest and financial expenses in the amount of $324 and $393, respectively.in the six months ended June 30, 2021.

The August 2020 Loans areLoan is convertible by the August 2020 LendersLender into Shares, at their discretion, at the lower of a fixed price of $0.102$1.02 (the “Fixed Conversion Price”) or 80% of the lowest volume weighted average price (“VWAP”) of the Company’s common stock during the 10 trading days immediately preceding the conversion date (the “Market Conversion Price”).

The Company also granted the August 2020 Investor warrants to purchase 50,000 shares of common stock of the Company at an exercise price of $2.00 per share, such exercise price is subject to any future price-based anti-dilution adjustments. Accordance with ASU 2017-11 the warrants were classified in shareholders equity. The fair value of the warrants granted was $35 using the Black-Scholes-Merton option pricing model.

The fair value of the conversion feature (hereafter “Convertible Component”) in the amount of $128 was estimated using the Monte Carlo Simulation Model to compute the Convertible Component’s fair value. The assumptions used to perform the Monte-Carlo simulation model below:

The Company accounted for the August 2020 Loan in accordance with ASC 470-20, Debt with conversion and other Options. As of June 30, 2021 and December 31, 2020, the BCF was revalued at $714 and $502, respectively.

The Company estimated the fair value of BCF using the Monte Carlo option pricing model using the following weighted average assumptions:

The August 2020 Loan is included in the convertible loans in longshort term liabilities as of June 30, 20212022, in the amount of $163,$229, and $73$168 as of December 31, 2020.2021.

During the six months ended June 30, 2021 and 2020,2022, the Company recorded interest and financial expenses related to the August 2020 Loan in the amount of $303$44, and nilduring the six months ended June 30, 2021, the Company recorded interest and financial income related to the August 2020 Loan in the amount of $73., respectively.

From January 2021 through to February 16, 2021,The Director Loan is convertible into Shares, at his discretion, at the Company received an additional $530 from third party investors from the issuancelower of Promissory Notes (“2021 Promissory Notes). Onea fixed price of $1.02 (the “Fixed Conversion Price”) or 80% of the investors received 330,000 warrantslowest volume weighted average price (“2021 Promissory Warrants”VWAP”) of the Company’s common stock during the 10 trading days immediately preceding the conversion date (the “Market Conversion Price”). The 2021 Promissory Warrants have the same terms as the 2020 Promissory Notes and expire on January 3, 2022.

The Company estimatedalso granted the Mr. Yannay warrants to purchase 25,000 shares of common stock of the Company at an exercise price of $2.00 per share, such exercise price is subject to any future price-based anti-dilution adjustments. Accordance with ASU 2017-11 the warrants were classified in shareholders equity. The fair value of the warrants granted was $18 using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:model.

The fair value of the conversion feature (hereafter “Convertible Component”) an amount of $64 was estimated using the Monte Carlo Simulation Model to compute the Convertible Component’s fair value. The assumptions used to perform the Monte-Carlo simulation model below:

The Director Loan is included in the convertible loans in short term liabilities as of June 30, 2022, in the amount of $115, and $85 as of December 31, 2021.

During the six months ended June 30, 2022, the Company recorded interest and financial expenses related to the Director Loan in the amount of $18, and during the six months ended June 30 ,2021, the Company recorded interest and financial income related to the Director Loan in the amount of $27.

The fair value of the 2020 Promissory Warrants was $41 and is included in additional paid in capital for the year ended December 31, 2020.

The fair value of the 2021 Promissory Warrants was $39 and is included in additional paid in capital for the six months ended June 30, 2021.

The Company accounted for the 2020 and 2021 Promissory Notes in accordance with ASC 470-20, Debt with conversion and other Options. The intrinsic value of the BCF for the 2020 Promissory Notes was calculated and the Company allocated $425 to the BCF as additional paid in capital in 2020. The intrinsic value of the BCF for the 2021 Promissory Notes was calculated and the Company allocated $530 to the BCF as additional paid in capital in 2021.

During June 2021, Promissory Notes in the amount of $260 were converted into 2,600,000 shares of the Company.

The 2020 and 2021 Promissory Notes are included in convertible loans in current liabilities as of June 30, 2021 in the amount of $307, and $24 as of December 31, 2020.

During the six months period ended June 30, 2021 and 2020, the Company recorded interest and financial expenses related to 2021 and 2021 Promissory Notes in the amount of $255 and nil, respectively.

A summary of warrant activity during the six months period ended June 30, 2022, and year ended December 31, 2021 is as follows:

The following warrants and are outstanding as of December 31, 2021:

The following warrants and are outstanding as of June 30, 2022:

A summary of warrant activity during the six months period ended June 30, 2021 and year ended December 31, 2020 is as follows:

The following warrants are outstanding and exercisable as of June 30, 2021: