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

for the quarterly period ended ORMarch 31, 2023

OR

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

For the period from January 1, 2022to June 30, 2022.

Commission file number: 333-208814

SATIVUS 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 ☒   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 12, 2022,May 15, 2023, the registrant had 4,194,3854,215,571 shares of its Common Stock, $0.001 par value, outstanding.

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

TABLE OF CONTENTS

PART I. Financial Information

SATIVUS TECH CORP.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
As of June 30, 2022 March 31, 2023

SATIVUS TECH CORP.

SATIVUS TECH CORP.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of June 30, 2022March 31, 2023

IN THOUSANDS OF U.S. DOLLARS

INDEX

- - - - - - - - - - - -

SATIVUS 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.

SATIVUS TECH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSSINCOME (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.

SATIVUS 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.

SATIVUS TECH CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICITCASH FLOWS (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.

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.

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

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

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

Saffron is used in many industries, such as the food industry, particularly by famous chefs and Michelin starred restaurants, the natural cosmetics industry and the natural medicinefood supplements 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, 2022,March 31, 2023, 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 acceptedGenerally Accepted Accounting Principles 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, 20212022, and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 20212022, filed with the SEC on March 31, 20222023 (the “2021“2022 Annual Report”). The results for any interim period are not necessarily indicative of results for any future period.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments that are necessary to present fairly the Company’s financial position and results of operations for the interim periods presented. The results for the six and three months ended June 30, 2022March 31, 2023, are not necessarily indicative of the results for the year ending December 31, 2022,2023, or for any future period.

As of June 30, 2022,March 31, 2023, there have been no material changes in the Company’s significant accounting policies from those that were disclosed in the 20212022 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:

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 shall be entitled to convert at its option any portion of the outstanding and unpaid principal or accrued interest into fully paid and nonassessable of shares of common stock, at the lower of the fixed conversion price then in effect or the market conversion price. The number of shares of common stock issuable upon conversion of any conversion amount shall be determined by dividing (x) such conversion amount by (y) the fixed conversion price of $20.00 or (z) 80% of the lowest the volume-weighted average price of the Company’s shares of common stock during the 1030 trading days immediately preceding the conversion date.

The Company accounted for the February 2019 Loan in accordance with ASC 470-20, Debt with conversion and other Options. As of December 31, 2021,2022, the Company has defaulted on the February 2019 Loan and the February 2019 LoanBCF was presented in fair value in the financial statements forrevalued at $326.

During the year ended December 31, 2021.2020, a portion of the February 2019 Loan in the amount of $190 and accrued interest of $87 was converted into 1,045,521 Shares.

On February 20, 2021, the Company and the February 2019 Lender extended the February 2019 Loan to November 10, 2021.

On May 12, 2021, a portion of the February 2019 Loan in the amount of $60 and accrued interest of the February 2019 Loan in the amount of $14 was paid by the Company.

On January 18,26, 2022, the Company paid accrued interest of the February 2019 Loan in the amount of $20. In concurrence with the payment of accrued interest,$20, and the February 2019 Loan agreement was extended to Augustuntil December 31, 2022. In the event that the Company completes a capital raise of at least $500 during the period through to August 31,On December 10, 2022, the February 2019 Loan will beagreement as extended to December 31, 2022.until June 30, 2023.

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 $279 ($264 at March 31, 2022)$316 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, 2022,March 31, 2023, in the amount of $185,$339, and $506$332 as of December 31, 2021.2022.

During the sixthree months ended June 30, 2022,March 31, 2023, the Company recorded financial income related to February 2019 Loan in the amount of $301, and interest$3, and financial expensesincome in the amount of $38$111 in the sixthree months ended June 30, 2021.March 31, 2022.

The October 2019 Lender shall be entitled to convert the principal loan and the outstanding interest (the “Conversion Amount”) into such number of ordinary shares determined by dividing (x) such Conversion Amount by (y) the fixed conversion price of $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 December 31, 2021, the Company has defaulted on the October 2019 Loan and the October 2019 Loan iswas presented in fair value in the financial statements for the year ended December 31, 2021.On2021.

On January 18,26, 2022, the Company paid accrued interest of the October 2019 Loan in the amount of $55. In concurrence with the payment of accrued interest,$55, and the October 2019 Loan agreement was extended to Augustuntil December 31, 2022. In the event that

On December 20, 2022, the Company completes a capital raisepaid accrued interest of at least $500 during the period through to August 31, 2022, the October 2019 Loan will bein the amount of $100, and the October 2019 Loan agreement as extended to December 31, 2022.until June 30, 2023.

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)$666 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, 2022,March 31, 2023, in the amount of $987,$1,231, and $2,142$778 as of December 31, 2021.2022.

During the sixthree months ended June 30, 2022,March 31, 2023, the Company recorded financial income related to October 2019 Loan in the amount of $1,101, and interest$39, and financial expensesincome in the amount of $324$584 in the sixthree months ended June 30, 2021.March 31, 2022.

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

The Company also granted the August 2020 Investor warrants to purchase 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.model using the following assumptions:

The Company accounted for the August 2020 Loan in accordance with ASC 470-20, Debt with conversion and other Options. The combined intrinsic value of the BCF for the August 2020 Loan was calculated and valued at $249 as of August 7, 2020, and the Company allocated $249 to the BCF as a liability. As of December 31, 2021, the BCF was revalued at $146 ($339 as of December 31, 2020).

The Company used an independent appraiser to estimate the fair value of BCF which used the conversion feature (hereafter “Convertible Component”)Monte Carlo option pricing model using the following weighted average assumptions:

The August 2020 Loan is included in the convertible loans in short term liabilities as of March 31, 2023 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:$254, and $249 as of December 31, 2022.

During the three months ended March 31, 2023, the Company recorded financial income related to August 2020 Loan in the amount of $30, and interest and financial expenses in the amount of $30 in the three months ended March 31, 2022.

F-11From January 2021 through to February 16, 2021, the Company received an additional $530 from third party investors from the issuance of Promissory Notes (“2021 Promissory Notes). One of the investors received 33,000 warrants (“2021 Promissory Warrants”). The 2021 Promissory Warrants have the same terms as the 2020 Promissory Notes. During December 2021 the 2020 Promissory Warrants and the 2021 Promissory Warrants were extended to December 31, 2022.

During the year ended December 31, 2021, Promissory Notes in the amount of $830 have been converted into shares. On December 14, 2022, Promissory Notes in the amount of $100 were repaid to the investors.

The August 2020 Loan is included in the convertible loans in short term liabilities as of June 30, 2022, in the amount of $229, and $168 as of December 31, 2021.

During the six months ended June 30, 2022, the Company recorded interest and financial expenses related to the August 2020 Loan in the amount of $44, and during 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.

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

The Company also granted the 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.model using the following assumptions:

The Company accounted for the director’s loan in accordance with ASC 470-20, Debt with conversion and other Options. The combined intrinsic value of the BCF for the August 2020 Loan was calculated and valued at $129 as of July 31, 2020, and the Company allocated $129 to the BCF as a liability. As of March 31, 2023, the BCF was revalued at $59 ($88 as of December 31, 2022).

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

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 sixthree months ended June 30, 2022,March 31, 2023, the Company recorded interest and financial expensesincome related to the Director Loan in the amount of $18,$27, and during the six months ended June 30 ,2021, the Company recorded interest and financial income related to the Director Loanexpenses in the amount of $27.$15 in the three months ended March 31, 2022.

The following transactions arose with related parties:

A summary of warrant activity during the sixthree months period ended June 30, 2022,March 31, 2023, and year ended December 31, 20212022 is as follows:

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

The following warrants are outstanding as of December 31, 2022:

The following warrants and are outstanding as of June 30, 2022:March 31, 2023:

On April 1, 2019, the Company’s board of directors adopted the SeedoSativus Tech Corp. 2018 Share Options Plan (the “2018 Plan”).

Awards granted under the 2018 Plan are subject to vesting schedules and unless determined otherwise by the administrator of the 2018 Plan, generally vest following a period of four years from the applicable vesting commencement date, such that the awards vest in four annual equal installmentsinstalments and/or generally vest following a period of one year from the applicable vesting commencement date, such that the awards vest in four quarterly equal installments.instalments.

Subject to the discretion of the 2018 Plan administrator, if an award has not been exercised within seven years after the date of the grant, the award expires.

(i) A summary of employee share options activity during the six-monththree-month period ended June 30, 2022March 31, 2023, and for the year ended December 31, 20212022, is as follows:

The following options are outstanding as of June 30,March 31, 2022: