UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

For the Quarterly Period Ended: September 30, 20192020

or

For the transition period from ________________ to ________________

Commission file number: 000-55680

TECHCARECITRINE GLOBAL, CORP.

(Exact Name Of Registrant As Specified In Its Charter)

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

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). [X] Yes [  ] No

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with 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 [X]

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

On November 17, 2019,13, 2020, the registrant had 35,449,398942,568,006 shares of common stock, par value $0.0001 per share, outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CITRINE GLOBAL CORP.

TechCare Corp.CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

Condensed Consolidated Balance Sheets

As of September 30, 2019(U.S. dollars except share and December 31, 2018

(Unaudited)per share data)

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

CITRINE GLOBAL CORP.

TechCare Corp.CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

Condensed Consolidated Statements of Operations(U.S. dollars except share and Comprehensive loss

For the Nine and Three Month Periods ended September 30, 2019 and 2018

(Unaudited)per share data)

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

CITRINE GLOBAL CORP.

TechCare Corp.CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (UNAUDITED)

Condensed Consolidated Statements of changes in Stockholders’ Equity

(Unaudited)(U.S. dollars, except share and per share data)

Consolidated statements of stockholders’ equity for nine months ended September 30, 2019:

Consolidated statements of stockholders’ equity for nine months ended September 30, 2018:

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

CITRINE GLOBAL CORP.

TechCare Corp.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Condensed Consolidated Statements of changes in Stockholders’ Equity

(Unaudited)(U.S. dollars except)

Consolidated statements of stockholders’ equity for three months ended September 30, 2019:

Consolidated statements of stockholders’ equity for three months ended September 30, 2018:

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

TechCare Corp.CITRINE GLOBAL CORP.

Condensed Consolidated Statements of Cash FlowsCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Month Periods ended September 30, 2019 and 2018

(Unaudited)(U.S. dollars except)

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

CITRINE GLOBAL CORP.

TechCare Corp.NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES1 - GENERAL

A. Nature of operations

TechCareCitrine Global, Corp. (“Techcare”Citrine Global” or the “Company”) (which changed its name from TechCare Corp. effective August 26, 2020) was incorporated under the laws of the State of Delaware on May 26, 2010. The Company’s common stock is traded in the United States on the OTCQB market under the ticker symbol “TECR.“CTGL.”

On February 8, 2016,As reported in the Company’s annual report on Form 10-K for the year ended December 31, 2019, the Company’s board of directors explored during 2019 strategic alternatives to enhance stockholder value, which the Company signedhad previously reported might include future acquisitions, a Merger Agreementmerger with another company, the sale of the Company, or a potential sale of certain assets, including the Company’s then wholly-owned subsidiary Novomic Ltd. (“Novomic”), a private company incorporated under the laws of the state of Israel. The closing of the merger took place on August 9, 2016, pursuant to which Novomic became a wholly-owned subsidiary of the Company.

Novomic was incorporated as a private company in Israel in 2009. Since inception, Novomic has been a technology company engaged in the design, development, and commercialization of a unique proprietary and patented delivery platform utilizing vaporization of various natural compounds for multiple health, beauty and wellness applications. Novomic’s delivery platform is proprietary and patented.

Novomic’s first product is Novokid® - an innovative home use device which vaporizes a natural, plant-based, pesticides and silicone-free compound that effectively treats head lice and eggs. The Novokid® kit includes a vaporizer, treatment capsules and treatment cap alongside ancillary components. Novokid® is currently being sold in Israel and the Netherlands.

Novomic is currently working on the research and developmentAs of future product offerings for its delivery platform, including Shine, a revolutionary cosmetic device for the treatment and rejuvenation of the hair and scalp.

The Company operates in one operating segment and substantially all assets of the Company and subsidiary are located in Israel.

Going Concern

During the period ended September 30,December 31, 2019, the Company had a total comprehensive loss of $1.3 million and had incurred $1 million loss from operating cash flow. As of September 30, 2019, the Company incurred accumulated losses of approximately $10 million. Based$10.6 million, and based on the projected cash flows, and Company’s cash balance, as of September 30, 2019, the Company’s management iswas of the opinion that without further fundraising, it willwould not have sufficient resources to enable it to continue advancing its activities, including the development, manufacturing, and marketing of its products, for a period of at least 12 months from the date of issuance of these financial statements. As a result, there iswhich cast substantial doubt abouton the Company’sentity’s ability to continue as a going concern.

Management’s plans includeOn November 21, 2019, in light of the continued commercializationabove, and after the board of theirdirectors of the Company concluded that the Company would not be able to commercialize any products to continue taking cost reduction steps and securingor secure sufficient financing throughsuccessfully, the Company entered into a memorandum of understanding with Citrine S A L Investment & Holdings Ltd., which provided for the issuance and sale of a number of shares resulting in Citrine S A L Investment & Holdings Ltd. and/or its designee(s) holding 95% of the fully diluted capital stock of the Company, and the sale by the Company of 90% of its shares in Novomic.

On January 6, 2020, definitive agreements were executed for the sale of additional equity securities, debt or capital inflows from strategic partnerships90% of the shares in Novomic to Traistman Radziejewski Fundacja Ltd., which was completed on May 14, 2020, and exploring strategic alternatives to enhance stockholder value, which may include future acquisitions, a merger with another company, a potentialfor the issuance and sale of certain assets, including Novomic, ora number of shares equal after the issuance to 95% of the fully diluted capital stock of the Company to Citrine S A L Investment & Holdings Ltd. and a group of related persons and entities (the “Citrine Global Transaction”). Traistman Radziejewski Fundacja Ltd. is controlled by Oren Traistman, who was a holder of over 5% of the Company’s issued share capital and a director of the Company until February 27, 2020. See additional information in Note 4 below.

On February 23, 2020, the Company entered into an agreement amending and restating the January 6, 2020 agreement concerning the Citrine Global Transaction, which provided for the issuance and sale of the Company as a public shell company. There are no assurances, however, thatshares in stages. Pursuant to this agreement, on February 27, 2020 and March 5, 2020, 432,996,555 shares of common stock of the Company will be successfulwere issued to Citrine S A L Investment & Holdings Ltd. and its group of related persons and entities, resulting in obtaininga change of control of the levelCompany. The amended and restated agreement provided for the issuance of financing needed893,699,276 shares of common stock in total in consideration for its operations. If$150 thousand, however, the Company is unsuccessful in commercializing its products and securing sufficient financing, it may needwas unable to reduce activities, or curtail or cease operations. The financial statements do not include any adjustments relating tocomplete the recoverability and classificationissuance of recorded assets and the amounts and classification of liabilitiesall these shares at that might be necessary shouldtime because the Company be unabledid not have sufficient authorized capital to continue as a going concern.issue such shares of common stock. The Company’s certificate of incorporation was amended on May 14, 2020, increasing its authorized share capital by one billion shares of common stock, after filing an information statement on Form 14C.

TechCare Corp.

Notes to Condensed Consolidated Financial Statements

As of September 30, 20192020, the Company received the aforementioned $150 thousand mentioned above. Out of such $150 thousand, an amount of approximately $105 thousand is presented as a current liability within the Company’s condensed consolidated balance sheet as of September 30, 2020, as the shares related to this amount were not yet issued, and legally can be called back by the investors.

(Unaudited)

On November 12, 2020, the Company issued the remaining shares of common stock (refer also to Note 10 below).

Until May 14, 2020, the date on which the sale of 90% of Novomic’s shares was completed (refer to Note 4 below), the Company continued selling the Novokid® product produced by Novomic both online and physical sales channels, including through its own website. Novomic was not presented as held for sale, although the held-for-sale criteria were met, because the Company concluded that the disposal of 90% of Novomic’s shares is comprised of substantially almost all of the Company’s net assets and operations and since the separate presentation of such a significant portion of the entity’s net assets as a single line item on the balance sheet would not be meaningful to financial statement users.

Also, starting Q1 2020, the Company began its plans for new business activities. The Company’s new business activity comprises creating value and implementing expansion strategies for growth-stage technology companies. The Company believes the health, wellness, food tech and Israeli medical cannabis fields are demonstrating high growth potential, and, therefore, the Company has begun by focusing on these sectors. The Company aims to empower innovative companies to become global leaders and improve the health and quality of life of as many people as possible worldwide. The Company aims to support local and global expansion of such target companies via an array of services customized to each company’s needs, from assistance with strategic business planning to solving real estate-related and finance issues. The Company plans to offer multi-strategy solutions combining strategic marketing, business development, real estate and site management services and financing solutions. By offering such a wide spectrum of services, the Company aims to help create an integrated strategy that supports its target companies in achieving their local and global expansion ambitions. The Company seeks to work proactively and collaboratively with the target companies in order to allow them to scale quickly and achieve their milestones.

As part of this process, the Company established a new Israeli subsidiary, CTGL – Citrine Global Israel Ltd, which was incorporated on June 3, 2020 (the “Israeli Subsidiary”).

On July 21, 2020, the Israeli Subsidiary began to work with certain shareholders of the Company who have been working towards establishing a innovation Center which focuses on the medical cannabis industry, cannabidiol (CBD), hemp, botanical, food supplements and cosmetics products The Company’s board of directors approved for the Israeli Subsidiary to proceed with preparations for entering into an agreement with certain shareholders of the Company pursuant to which (1) the Israeli Subsidiary would hold approximately 60% of the shares in the Cannovation Center, and certain shareholders of the Company would hold approximately 40% of the shares; and (2) the Israeli Subsidiary would accept limitations on its rights in the Cannovation Center if and as mandated under Israeli regulations on the involvement of foreign entities.

As part of this process, the Israeli Subsidiary established a new Israeli subsidiary Cannovation Center Israel Ltd, which was incorporated on August 20, 2020 (the “Cannovation Center”) and the Company’s Israeli Subsidiary holds 60% of the shares in the Cannovation Center.

Based on the Company’s current cash balances, capital raised during the nine months ended September 30, 2020 and the irrevocable letter it has received (as further noted below), the Company has sufficient funds for its plans for the next twelve months from the issuance of these financial statements. As the Company is embarking on its new activity as detailed herein, it is incurring losses. It cannot determine with reasonable certainty when and if it will have sustainable profits.

Citrine S A L Investment & Holdings Ltd., on behalf of itself and its affiliates and related parties, has furnished the Company with an irrevocable letter of obligation to financially support the Company until December 31, 2021 that will allow it to be operational as planned and budgeted through this period.

On March 11, 2020, the World Health Organization declared the outbreak of a novel coronavirus (SARS-CoV-2) to be a global pandemic (COVID-19), which continues to spread throughout the world. The COVID-19 pandemic is having significant effects on global markets, supply chains, businesses, and communities. Specific to the Company, COVID-19 may impact various parts of its 2020 plans, operations and financial results, including but not limited to difficulties in obtaining additional financing. The Company believes it is taking appropriate actions to mitigate the negative impact, including by focusing its activities initially only within the country of Israel. However, the full impact of COVID-19 is unknown and cannot be reasonably estimated as these events are still developing.

On May 26, 2020, the board of directors of the Company appointed Ms. Ilanit Halperin as Chief Financial Officer of the Company, replacing Mr. Zviel Gedalihou, effective from May 27, 2020. The board of directors also appointed Ms. Halperin as Chief Financial Officer of the Company’s wholly-owned Israel subsidiary, effective once incorporated.

While management believes the Company will be successful in its current and planned operating activities, the Company intends to raise capital, through the issuance of equity or debt instruments, from other sources to grow our business and sustain our operations.

NOTE 1: NATURE OF OPERATIONS AND2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.):AND BASIS OF PRESENTATION

B. Summary of significant accounting policies

The accounting policies adopted are consistent with those of the previous financial year.

Basis of PresentationUnaudited Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and condensed footnotes have beenits subsidiaries, prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America (“U.S. GAAP”), for complete financial statements. and with the instructions to Form 10-Q. In the opinion of management, the financial statements presented herein include all material adjustments (consisting of normal recurring items) consideredadjustments) which are, in the opinion of management, necessary for a fair statement of results for the interim periods presented have been included. Thefinancial condition, results of operations, and cash flows for nine monthsthe three and nine-month ended September 30, 20192020, and 2019. However, these results are not necessarily indicative of the results to be expected for theany other interim period or for future years. The consolidated balance sheet as ofthe year ended December 31, 2018 is derived from audited2020.

Certain information and footnote disclosures normally included in financial statements as of that date; however, it does not include allin accordance with generally accepted accounting principles have been omitted pursuant to the rules of the informationU.S. Securities and footnotes required by U.S. GAAP for complete financial statements.Exchange Commission (“SEC”). These consolidatedunaudited interim financial statements should be read in conjunction with the audited consolidated financial statements and related notes includedthereto contained in the Company’s Annual Report on Form 10-K filed with the SEC on May 11, 2020, for the year ended December 31, 2018, which was filed with the SEC on March 28, 2019.2019

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of TechCare,the Company and its subsidiary, Novomic.subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant estimates include fair value estimates of derivative liabilities discussed in Notes 5 and 8, as well as the estimated service period related to share based payment to the Company’s legal advisor (refer to Note 6). Actual results could differ from those estimates.

Functional Currency and Foreign Currency Translation and Transactions.

The currency of the primary economic environment in which the operations of the Company and its subsidiarysubsidiaries are conducted is the New Israeli Shekel (“NIS”).

The presentation currency of the financial statements is the U.S. dollar. Assets and liabilities are translated at year-end exchange rates, while revenues and expenses are translated at actual exchange rates during the year. Differences resulting from translation are presented in equity, under accumulated other comprehensive income (loss). Gains and losses arising from foreign currency transactions of monetary balances denominated in non-functional currencies are reflected in financial income (expense), net in the consolidated statements of operations and comprehensive loss.

FinancialOther financial expenses (income), net in the consolidated statements of operations and comprehensive loss comprised mainly of exchange rate differentials.

Trading securities and short-term loan measured at fair value

TechCare Corp.

NotesThe Company accounts for its investments in trading securities in accordance with Accounting Standard Codification (“ASC”) No. 320, “Investments—Debt and Equity Securities.” The Company determines the appropriate classification of its investments in trading securities at the time of purchase and re-evaluates the fair value at each balance sheet date. The Company’s trading securities are recorded at fair value on the balance sheet as well as the short-term loan according to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)the Company’s election (see also Note 8). Changes in fair value of trading securities and short-term loans are recorded in financing income (expenses), net in the consolidated statement of operations. The Company classifies its trading securities as either short-term or long-term based on the Company’s expectations regarding the trading securities sale.

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.):Investments valued under the measurement alternative

B. SummaryThe Company’s investments, as described in Notes 3 and 4, are valued under the measurement alternative include equity securities in other proprietary investments for which the Company does not have significant influence, and fair value is not readily determinable. Accounting Standard Update (“ASU”) 2016-01 requires equity securities to be recorded at cost and adjusted to fair value at each reporting period. However, the guidance allows for a measurement alternative, which is to record investments at cost, less impairment, if any, and subsequently adjust for observable price changes of identical or similar investments of the same issuer.

Due to the lack of readily determinable fair values for such investments, for which the Company does not have significant accounting policies (Cont.):influence, the Company accounts for these investments under the measurement alternative at cost, less impairment.

The Company performs qualitative impairment assessments on its investments recorded under the measurement alternative.

Impairment of long-lived assetsDerivatives

Long-lived assets held and used byDerivative instruments are recognized on the Company are reviewed for impairment whenever events orbalance sheet at their fair value, with changes in circumstances indicate that the carrying amountfair value recognized as a component of financial expenses, net in the assets may not be recoverable. Instatements of income.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in the event that the sumfair value being recorded in results of the expected future undiscounted cash flows expectedoperations as an adjustment to be generated by the long-lived assets is less than the carrying amountfair value of such assets, an impairment charge would be recognized and the assets would be written down to their estimated fair values. During the periods ended September 30, 2019, and 2018, no impairment was recorded.derivatives.

Fair Value Measurementsvalue

Fair value isof certain of the Company’s financial instruments including cash, accounts receivable, accounts payable, accrued expenses, notes payables, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with (“ASC 820”), “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.

Fair value, as defined asin ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A hierarchy has been established for inputs used in measuringThe fair value that maximizesof an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of non-performance, which includes, among other things, the Company’s credit risk.

Valuation techniques are generally classified into three categories: the market approach; the income approach; and the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimizesminimize the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that are developed using market data, such as publicly available information about actual events or transactions, and that reflect the assumptions that market participants would use when pricing the asset or liability. Unobservable inputs are inputs for which market data are not available and that are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability. Theinputs. ASC 820 also provides fair value hierarchy categorizes into three levels. for inputs and resulting measurement as follows:

Level 1 inputs are quoted1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that the reporting entity can access at the measurement date. Level 2 inputs includeare not active; inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directlyliability; and inputs that are derived principally from or indirectly. corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3 inputs are unobservable3: Unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assetsliability that are supported by little or liabilities (Level 1 inputs)no market activity, and the lowest priority to unobservable inputs (Level 3 inputs). Categorization within the valuation hierarchy is based upon the lowest level of input that isare significant to the fair value measurement.values.

Preferred stockFair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to possible redemptionexpanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earnings are reported in the statement of income.

The Company’s Series A convertible preferred stock includes certain redemption rightsfinancial assets and liabilities that are not considered to be solelymeasured at fair value on a recurring basis by level within the Company’s control. The Company accounted for its contingently redeemable preferred stock in accordance with Accounting Standard Codification Topic 480, “Distinguishing Liabilities from Equity, and classified them accordinglyfair value hierarchy are as temporary equity (mezzanine equity).” The Series A convertible preferred stock are presented at their redemption value, outside of stockholders’ equity. The Company classified the call options that permits the holder of Series A convertible preferred stock to compel the purchase its contingently redeemable preferred stock as a liability.follows:

TechCare Corp.

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

Recent Accounting Pronouncements Adopted in Current Period

In FebruaryJune 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update 2016-02 “Leases.” TheASU 2016-13, Financial Instruments-Credit Losses (Topic 326) - Measurement of Credit Losses on Financial Instruments. This guidance establishes a right-of-use (“ROU”) model that requires a lesseereplaces the current incurred loss impairment methodology. Under the new guidance, on initial recognition and at each reporting period, an entity is required to recognize an ROU assetallowance that reflects its current estimate of credit losses expected to be incurred over the life of the financial instrument based on historical experience, current conditions and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the patternreasonable and classification of expense recognition in the income statement. supportable forecasts.

The guidance became effective on January 1, 2019. A2020, including interim periods within that year and requires a modified retrospective transition approach is required, applyingthrough a cumulative-effect adjustment to retained earnings as of the new standard to all leases existing atbeginning of the dateperiod of initial application.adoption. Under the modified retrospective method of adoption, prior year reported results are not restated. The adoptionCompany has performed its analysis of the impact on its financial instruments that are within the scope of this standard did not have aguidance and has concluded that there was no material effect on the Company’simpact to its consolidated financial statements.

The Company adoptedIn August 2018, the new accounting standard Accounting Standards Codification 842 “Leases,”FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU No. 2018-13”) as part of the FASB’s broader disclosure framework project. ASU No. 2018-13 removes, modifies and alladds certain disclosures, providing greater focus on requirements that clearly communicate the related amendments, on January 1, 2019 and usedmost important information to the standard’s effective date asusers of the Company’s date of initial application. Consequently, financial information was not updated and the disclosures required under the new standard are not provided for dates and periods before January 1, 2019. The new standard also provides practical expedients for an entity’s ongoing accounting.statements with respect to fair value measurements. The adoption of this standard did not have a material effect on the Company’s financial statements. OnASU No. 2018-13 as of January 1, 2019, the Company recognized ROU assets of approximately $113 thousand and lease liabilities of approximately $113 thousand for its operating leases of real estate and vehicles. The adoption of this standard2020 did not have a material impact on the Company’s consolidated statements of income and consolidated statements of cash flows.financial statements.

NOTE 3: INCOME TAXES3 - INVESTMENT VALUED UNDER THE MEASUREMENT ALTERNATIVE

a. BasisOn June 22, 2020, the Company 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 taxationan 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. The Company 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 Investment & Holdings Ltd 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 Meir Soffer, chairperson and CEO of the Company, 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.

The Company accounts for the investment in Nanomedic in accordance with the provisions of ASC 321, “Investments - Equity Securities”, and its subsidiary are taxed underelected to use the domestic tax laws of the jurisdiction of incorporation of each entity (United States and Israel).measurement alternative therein. The investment will be re-measured upon future observable price change(s) in orderly transaction(s) or upon impairment, if any.

b. Carryforward Tax LossesNOTE 4 - SALE OF NOVOMIC

Carryforward Tax LossesAs described in Note 1 above, on January 6, 2020, definitive agreements were executed for the sale of 90% of the Companyshares in Novomic to Traistman Radziejewski Fundacja Ltd., which was completed on May 14, 2020. The remaining investment in Novomic (represents 10% holding) is not presented within the Company’s condensed consolidated balance sheet as of September 30, 2019, amounted to approximately $0.5 million. Carryforward Tax Losses2020, as it had no significant value as of that date. Starting on the deconsolidation date, the remaining investment in Novomic is accounted as an investment valued under the measurement alternative as described in Note 2 above.

The following table summarizes the assets and liabilities of Novomic amountedas of the deconsolidation date:

NOTE 5 – CONVERTIBLE NOTES

On April 1, 2020 the Company entered into a Convertible Note Purchase Agreement (the “CL Agreement”) with Citrine S A L Investment & Holdings Ltd, 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 approximately $6.8 million.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 fullWarrants 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.

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 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”) was estimated using the Monte Carlo Simulation Model to compute the Convertible Component’s fair value of $320,279 and derived service period of 1.2 years. The assumptions used to perform the Monte-Carlo simulation were consistent with those utilized in the Company’s Black-Scholes valuation allowancefor stock options, specifically: expected volatility of 101.62%, risk-free interest rate of return of 0.12% and dividend yield of 0.0%.

Warrants

As mentioned above, as part of the June 12, 2020 CL Agreement Amendment, the Company issued the Buyer 5,589,172 A warrants and 5,589,172 B warrants to purchase a total of 11,178,344 shares of common stock of the Company.

The fair value of such warrants as of the drawdowns dates was created against these carry forward tax losses sinceestimated at $301,665 using the realizationBlack-Scholes option-pricing model and is presented within the consolidated statements of any future benefit from thesechanges in shareholders equity (deficit).

The following are the data and assumptions used:

Convertible Notes

The drawdowns notices amount, net operating losses cannot be sufficiently assured at September 30, 2019.of the Conversion feature and the Warrants amounts (hereafter “Convertible notes”), is $580,925 as of the agreement date. The convertible notes are accounted for according to the effective interest method.

NOTE 4: LOSS PER SHARE6 – SHAREHOLDERS’ EQUITY

Loss per share is based on the loss that is attributed to the aggregate numberOn January 29, 2020, holders of outstanding10,344,828 Redeemable convertible Series A preferred stock, par value $0.0001, converted their shares into shares of common stock, divided bypar value $0.0001. See also Note 9 below.

The terms of the weighted average numbertransaction for the issuance of 893,699,276 shares of common stock in issue duringtotal are described in Note 1 above. During February and March 2020, the period.Company issued 432,996,555 shares of common stock, par value $0.0001, to investors in respect of the transaction described in Note 1 above, for a total consideration of $45 thousand, and on November 12, 2020, the Company issued the remaining shares of common stock (refer also to Note 10 below).

On March 5, 2020 the Company issued 15,000,000 shares of common stock to its legal advisor in respect of legal consulting services, with respect to the Citrine Global Transaction as well as other legal services, as agreed between the parties, which, as of September 30, 2020, is expected to be provided until June 30, 2021. The Company estimated the fair value of the shares issued based on the share price at the grant date at $4,785 thousand, of which $2,201 thousand and $861 thousand were recorded as share based compensation expense in the nine and three month periods ended September 30, 2020, respectively, and the remaining was recorded as prepaid share based payment. The prepaid services will be expensed over the attribution period of the remaining legal consulting services. Such expense is included in the Marketing, general and administrative expenses within the condensed consolidated statements of operations and comprehensive loss.

TechCare Corp.

NotesOn May 14, 2020 the Company amended its Certificate of Incorporation to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)reflect the increase of its authorized capital by one billion shares of common stock.

NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS7 – STOCK OPTIONS

The carrying amount of the Company’s financial instruments, including cash equivalents, accounts receivable and other current assets, accounts payable and accrued liabilities and note payable approximate their fair value, due to their short term in nature and their carrying amounts approximates the amounts expected to be received or paid.

A hierarchy has been established 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. The Company accounts for option liability as Level 3 since its inputs are unobservable inputs for the liability.

The following table is a reconciliationpresents the Company’s stock option activity for employees and directors of the changeCompany for the financial liability where fair value measurement is estimated utilizing Level 3 inputs:nine months ended September 30, 2020:

NOTE 6:8 – AGREEMENTS WITH INTELICANNA LTD

On May 31, 2020, the Company entered into a strategic partnership with Intelicanna Ltd., an Israeli medical cannabis company listed on the Tel Aviv Stock Exchange with ticker symbol INTL (“Intelicanna”), via a share exchange agreement and an agreement for future issuance of shares. The share exchange agreement provides 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 provides that a fall in a share price of a party, not exceeding 20%, measured six months after issuance of shares by both parties pursuant 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.

The features of the shares exchange agreement are considered a derivative and accounted for at fair value. The fair value of these features amounted as of September 30, 2020 to $59,629, which is presented among current liabilities within the Company’s condensed consolidated balance sheet. The fair value of such shares exchange agreement was estimated using the Black-Scholes option-pricing model.

The following are the data and assumptions used as of the balance sheet date related to future potential issuance of shares as describe above for potential fall in share price of a party, not exceeding 20%:

Furthermore, on June 25, 2020, the Israeli Subsidiary entered into a services agreement with Intelicanna to provide business development and consulting services to Intelicanna, including assistance with raising financing (the “Services Agreement”) (references in this paragraph to the Company include the Israeli Subsidiary). The terms of the Services Agreement include: (1) the Company will, for a period of 18 months, assist Intelicanna to raise up to NIS 15 million for Intelicanna’s working capital purposes, whether through issuance of convertible securities or any other means; all sums raised must be approved in advance by the Company, and in accordance with a business plan presented to the Company from time to time; the Company will have no obligation under the Services Agreement to invest in Intelicanna, and no liability if its efforts to source financing for Intelicanna are unsuccessful; (2) in the event Intelicanna raises funds through assistance from the Company, the Company will be entitled to (i) cash consideration equal to 5% of any amount raised, whether directly from the Company, or from any of its affiliates or any unrelated third party, and (ii) options to acquire a number of shares of Intelicanna equal to 5% of the amount raised divided by the Exercise Price; the “Exercise Price” will be the price per share at which the amount was raised, or if it was not raised through issuance of shares, the price per share at which Intelicanna last raised funds through issuance of shares; and (3) for one or more periods of at least 90 days, each time at Intelicanna’s request which the Company may accept or decline at its discretion, the Company will provide business development and strategy-building services, including: consulting on strategy and business plan; assistance defining financing needs; helping identify ways to develop potential sources of finance; and ongoing consulting support to Intelicanna’s management team and board. Intelicanna will pay the Company a fee of NIS 2,500 per day for such services.

Also on June 25, 2020, to assist Intelicanna to raise the first NIS 1 million towards the up to NIS 15 million mentioned in the Services Agreement, 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 will bear 6% annual interest and Intelicanna will make additional payments equalling 6% of its gross revenues between the date the financing is received and the date Intelicanna’s aggregate gross revenues thereafter equal NIS 2 million. If the total of the 6% interest plus the additional payments would result in a return of less than 12% in the year to the Company, the interest will be increased to bring the total return to 12%. Every three months Intelicanna must pay the interest, and after 12 months, it must repay the capital, plus the total of the additional payments due, plus any outstanding interest, and it must pay interest of 2% per month on any late payments, provided however that until the foregoing obligations are paid in full Intelicanna must pay 50% of its gross revenues to the Company upon receipt. If Intelicanna does not pay all amounts due within 18 months, it shall, at the Company’s option, issue to the Company a number of its shares equal to NIS 1.5 million divided by the lower of (i) VWAP of the three trading days prior to the lapse of the 18 months, and (ii) VWAP of the three trading days prior to the signing of the financing agreement. The financing must be paid by the Company to Intelicanna within 30 days of signing the financing agreement, subject to completion of due diligence to the Company’s satisfaction and to Intelicanna receiving a commercial growing license.

On July 9, 2020, the Company transferred to Intelicanna NIS 500 thousand (approximately $145 thousand) on account of the above loan. The Company elected the fair value option to account for the short-term loan.

Following the strategic partnership the Company entered with Intelicanna, on September 17, 2020 the Company issued to Intelicanna 2,143,470 shares of common stock in exchange for 619,589 of Intelicanna’s ordinary shares. The Company measures its investment in Intelicanna at fair value through profit or loss at level 2. The fair value reflects the value of Intelicanna’s stock price less discounts for lack of marketability since the parties may not sell the shares within the first six months after issuance. During the period, the change in traded securities’ fair value was in the amount of approximately $50 thousand.

Ilanit Halperin, a director and the Chief Financial Officer of the Company, is also the Chief Financial Officer of Intelicanna.

NOTE 9 – RELATED PARTY TRANSACTIONSPARTIES

TechCare Corp.

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)

NOTE 7:10 – SUBSEQUENT EVENTS

On October 6, 2019, Mrs. Osnat Philipp, the Chief Executive Officer of Novomic, and the Company jointly agreed to terminate her employment agreement. Mrs. Philipp continued providing her services to Novomic as required under Israeli law until October 30, 2019.. Mrs. Philipp’s resignation was not as a result of any disagreement or dispute with either the Company or Novomic.

On October 22, 2019, Mrs. Tali Dinar, the Chief Financial Officer of the Company, and the Company, jointly agreed to extend Mr. Dinar terminate notice period. Mrs. Dinar will continue to provide her services to the Company as required under Israeli law until December 22, 2019, unless otherwise agreed to by Mrs. Dinar and the Company.

On October 23, 2019, Novomic appointed Idan Traitsman to serve as the Chief Executive Officer of Novomic, effective immediately. In connection with Mr. Traitsman’s appointment, the Company agreed to pay Mr. Traitsman a monthly salary of NIS 10,000 (approximately $2,800) plus VAT.

On November 17, 2019, the Company entered into a form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 3,000,000 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $87,000. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase up to an additional 145,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $87,000. The option was classified as a derivative financial liability and are re-measured each reporting date, with changes in fair value recognized in finance expense (income), net, since the exercise price of the warrants is denominated in USD and the functional currency of the Company is the NIS.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTSForward-looking Statements

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other variations thereon or comparable terminology. The statements herein and their implications are merely predictions and therefore inherently subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance levels of activity, or our achievements, or industry results to be materially different from those contemplated by the forward-looking statements. Such forward-looking statements appear in this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and may appear elsewhere in this Quarterly Report on Form 10-Q and include, but are not limited to, statements regarding the following:

Our business and operations are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report.

In addition, historic results of scientific research, clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not suggest different conclusions. Also, historic results referred to in this periodic report would be interpreted differently in light of additional research, clinical and preclinical trials results. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018,2019 as filed with the Securities and Exchange Commission, or the 2018 Annual Report.SEC, on May 11, 2020, and in Part II, Item 1A of our Quarterly Report on Form 10-Q for the six month ended, as filed with the SEC on August 14, 2020. Readers are also urged to carefully review and consider the various disclosures we have made in that report.

As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “TechCare”“Citrine” mean TechCareCitrine Global, Corp. and our wholly ownedwholly-owned subsidiary NovomicCTGL -Citrine Global Israel Ltd., unless otherwise indicated or as otherwise required by the context.

Overview and Recent Developments

We are aOur business activity is comprised of creating value and implementing expansion strategies for promising technology company engagedindustries with global growth potential in the design,high-tech and biotech fields. Our strategy combines comprehensive solutions that include supportive environments and the provision of, among other things, entrepreneurship and establishment of innovation centers for operations and R&D as well as financing and investment solutions, which includes strategic business development and assistance in building strategy to realize potential. Such wide spectrum of services is targeted at growing developing industries using an integrated strategy.

In accordance with our vision, to assist in the realization and growth of developing industries we believe the health and wellness fields are demonstrating high growth potential and we are therefore primarily focused on these sectors. We choose specific industries in which we have advantage and know-how in order to create eco-systems to empower developing industries become a global success and improve the health and quality of life of as many people as possible worldwide. One of our main tools to achieve this is our Innovation Centers.

Our unique platform of the innovation centers will be for creating ecosystems designed for operation, research and development, and commercialization of a unique delivery platform utilizing vaporization of various natural compounds for multiple health, beauty and wellness applications. Our delivery platform is proprietary and patented.

Our current product offering includes Novokid® -innovative technology industries with global growth potential. Each innovation center will focus on an innovative home use device which vaporizes a natural, plant-based, pesticides, and silicone-free compound that effectively treats head lice and eggs. Following our soft launch of Novokid® in the Netherlands, we expanded our distribution network and launched Novokid in Israel during late May 2018 through Super Pharm, Israel’s largest and leading drugstore chain. The launch was accompanied by a radio and digital brand awareness and marketing campaign and supported by Meditrend, an Israeli distributor, specializing in health and wellness products while representing leading brands. On September 15, 2019, the Company terminated the agreement with its existing distributer and began selling the Novokid product directly to Super Pharm.

We believe that we will continue to experience losses and increased negative working capital and negative cash flows in the near futureindustry and will not be able to return to positive cash flow without either obtaining additional financing in the near term or completing a business transaction. Failure to obtain the necessary capital at acceptable terms, if at all, when needed, may force us to delay, limit, or terminate our product development efforts and adversely effect our ability to secure regulatory approvals and would adversely impact our plannedprovide an operational solution that includes manufacturing, research and development, efforts in connectionlaboratories, clinical trials, a logistics center, distribution, import, export, and more. The companies that will be part of the innovation centers will also benefit from assistance with our future products, which may make it more difficult for us to attain profitability.strategy building, financing, investments and collaborations between entrepreneurs, universities, and companies from all over the world.

The Company provides solutions to companies from Israel, USA, Canada, Europe and around the world through subsidiaries and local teams and professionals in each region in fields it has advantages. Citrine Global, Corp. operates in Israel through its wholly owned subsidiary, “CTGL -Citrine Global Israel Ltd.”, which focuses on Israeli technologies in the fields of health, wellness, food technology and medical cannabis. In Israel we identified the need for innovation centers in the medical cannabis and food technology industries and decided to establish the first centre in the field of cannabis through our subsidiary CTGL -Ctrine global Israel Ltd that owns 60% of “Cannovation Center Israel Ltd.”

Cannovation Center Israel Ltd. focuses on the medical cannabis industry as well as cannabidiol (CBD) and hemp infused products and edibles, botanical products, food supplements and cosmetics and intends to open a center focusing on these types of products and technologies. The planned center will include manufacturing plants, laboratories for QA, research & development, and clinical trial, facilities for recycling, logistics and distribution with import and export services, and more. We are working towards obtaining the support of The Israeli Ministry of Economy, The Israeli Innovation Authority and The Israeli Ministry of Health for the establishment of this innovation center in Israel. We view the Cannovation Center as an Israeli national project which would be a leading operational and research center and integrate partners and companies from Israel and worldwide. Our team, partners and shareholders have proven experience, and a rich network of contacts, in Israel and around the world in the fields of technology, high-tech, biotech, food technology, and medical cannabis, as well as investments, entrepreneurship, real estate, finance, and business and strategic development.

On January 6, 2020, our predecessor company, TechCare Corp., a Delaware corporation (the “TechCare”) and Citrine S A L Investment & Holdings Ltd., a wholly-owned subsidiary of the Company (“Citrine Investment”) entered into a Common Stock Purchase Agreement (the “Citrine Agreement”), which was later amended and restated on February 23, 2020 (the “AR Citrine Agreement”). Pursuant to the AR Citrine Agreement, TechCare agreed to sell Citrine Investment 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 Meir Soffer, Ilan Ben Ishay and Ilanit Halperin as members of the Board, and (iii) the transfer of Directors is exploringthe TechCare’s signatory rights to all Company bank accounts in the name of Citrine Investment’s nominee (collectively, the “Pre-Closing”). In addition, the AR Citrine Agreement provides for the second tranche of up to the remaining number of shares of common stock that will result in Citrine, or its group of business partners, 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.

As described herein, since February 2020, the Company has appointed new personnel, entered into a convertible loan and warrants agreement with affiliates, and has completed strategic alternativestransactions in respect of Novomic Ltd. (“Novomic”), Nanomedic Ltd, and Intelicanna Ltd. It has also established a wholly owned subsidiary and a 60% owned subsidiary, submitted an application in respect of the Cannovation Center, and recently submitted its formal application to enhance stockholder value, which may include future acquisitions,list its common stock on the Nasdaq Capital Market. The Board has approved a merger with another company, a potential salereverse stock split and the removal of certain assets, including Novomic, orthe undesignated preferred stock from the Company’s authorized capital, all subject to the approval of the Company’s stockholders.

On January 6, 2020, definitive agreements were executed for the sale of 90% of the shares in Novomic to Traistman Radziejewski Fundacja Ltd., which was completed on May 14, 2020, 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 asto Citrine S A L Investment & Holdings Ltd. and a public shell company.group of related persons and entities (the “Citrine Global Transaction”). Traistman Radziejewski Fundacja Ltd. is controlled by Oren Traistman, who was a holder of over 5% of the Company’s issued share capital and a director of the Company until February 27, 2020. On February 23, 2020, the Company entered into an agreement amending and restating the January 6, 2020 agreement concerning the Citrine Global Transaction, which provided for the issuance and sale of the shares in stages. Pursuant to this agreement, on February 27, 2020 and March 5, 2020, 432,996,555 shares of common stock of the Company were issued to Citrine S A L Investment & Holdings Ltd. and its group of related persons and entities, resulting in a change of control of the Company. The amended and restated agreement provided for the issuance of 893,699,276 shares of common stock in total in consideration for $150 thousand, however, the Company was unable to complete the issuance of all these shares at that time because the Company did not have sufficient authorized capital to issue such shares of common stock. The Company’s certificate of incorporation was amended on May 14, 2020, increasing its authorized share capital by one billion shares of common stock, after filing an information statement on Form 14C. On November 12, 2020, the remaining 445,702,721 shares of common stock of the Company were issued to Citrine S A L Investment & Holdings Ltd. and its group of related persons and entities.

InJanuary 2019, weOn April 1, 2020 the Company entered into a joint venture agreementConvertible Note Purchase Agreement (the “CL Agreement”) with Citrine S A L Investment & Holdings Ltd, 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 Chinese partner fordrawdown period starting on April 1, 2020 and ending upon the formationearlier of (i) 6 months thereafter and (ii) the consummation of a Chinese joint venture intended to focus onpublic offering by the developmentCompany. The CL Agreement provides that the Notes will bear an annual interest rate of comprehensivesix percent (6%) and broad range of health, wellness, beauty and home products for customers by utilizing our patented technology of vaporization of natural and plant-based compounds. The joint venture intends to sell its products inthat the Greater China region, including mainland China, Hong Kong, Macao, and Taiwan, directly or through others. We are currently working with our Chinese Partner on the formation of the Chinese joint venture entity.

On March 13, 2019, we issued and sold to ICB Biotechnology Investments Ltd. (“ICB”) 957,854 shares of our common stock for aconversion price per share of $0.261,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 aggregate considerationamounts of $250 thousand. In accordance$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 May 26, 2020, the board of directors of the Company appointed Ms. Ilanit Halperin as Chief Financial Officer of the Company, replacing Mr. Zviel Gedalihou, effective from May 27, 2020. The board of directors also appointed Ms. Halperin as Chief Financial Officer of the Company’s wholly-owned Israel subsidiary, effective once incorporated.

On May 31, 2020, the Company entered into a strategic partnership with Intelicanna Ltd., an Israeli medical cannabis company listed on the Tel Aviv Stock Exchange with ticker symbol INTL (“Intelicanna”), via a share exchange agreement and an agreement for future issuance of shares. The share exchange agreement provides 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 provides that a fall in a share price of a party, not exceeding 20%, measured six months after issuance of shares by both parties pursuant 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.

Furthermore, on June 25, 2020, the Israeli Subsidiary entered into a services agreement with Intelicanna to provide business development and consulting services to Intelicanna, including assistance with raising financing (the “Services Agreement”) (references in this paragraph to the Company include the Israeli Subsidiary). The terms of the subscriptionServices Agreement include: (1) the Company will, for a period of 18 months, assist Intelicanna to raise up to NIS 15 million for Intelicanna’s working capital purposes, whether through issuance of convertible securities or any other means; all sums raised must be approved in advance by the Company, and in accordance with a business plan presented to the Company from time to time; the Company will have no obligation under the Services Agreement to invest in Intelicanna, and no liability if its efforts to source financing for Intelicanna are unsuccessful; (2) in the event Intelicanna raises funds through assistance from the Company, the Company will be entitled to (i) cash consideration equal to 5% of any amount raised, whether directly from the Company, or from any of its affiliates or any unrelated third party, and (ii) options to acquire a number of shares of Intelicanna equal to 5% of the amount raised divided by the Exercise Price; the “Exercise Price” will be the price per share at which the amount was raised, or if it was not raised through issuance of shares, the price per share at which Intelicanna last raised funds through issuance of shares; and (3) for one or more periods of at least 90 days, each time at Intelicanna’s request which the Company may accept or decline at its discretion, the Company will provide business development and strategy-building services, including: consulting on strategy and business plan; assistance defining financing needs; helping identify ways to develop potential sources of finance; and ongoing consulting support to Intelicanna’s management team and board. Intelicanna will pay the Company a fee of NIS 2,500 per day for such services.

Also on June 25, 2020, to assist Intelicanna to raise the first NIS 1 million towards the up to NIS 15 million mentioned in the Services Agreement, 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 will bear 6% annual interest and Intelicanna will make additional payments equalling 6% of its gross revenues between the date the financing is received and the date Intelicanna’s aggregate gross revenues thereafter equal NIS 2 million. If the total of the 6% interest plus the additional payments would result in a return of less than 12% in the year to the Company, the interest will be increased to bring the total return to 12%. Every three months Intelicanna must pay the interest, and after 12 months, it must repay the capital, plus the total of the additional payments due, plus any outstanding interest, and it must pay interest of 2% per month on any late payments, provided however that until the foregoing obligations are paid in full Intelicanna must pay 50% of its gross revenues to the Company upon receipt. If Intelicanna does not pay all amounts due within 18 months, it shall, at the formationCompany’s option, issue to the Company a number of its shares equal to NIS 1.5 million divided by the lower of (i) VWAP of the three trading days prior to the lapse of the 18 months, and (ii) VWAP of the three trading days prior to the signing of the financing agreement. The financing must be paid by the Company to Intelicanna within 30 days of signing the financing agreement, subject to completion of due diligence to the Company’s satisfaction and to Intelicanna receiving a joint venturecommercial growing license.

On July 9, 2020, the Company transferred to Intelicanna NIS 500 thousand (approximately $145 thousand) on account of the above loan. Following the strategic partnership the Company entered with China-Israel Biological Technology Co.Intelicanna.

On September 17, 2020 the Company issued to Intelicanna 2,143,470 shares of common stock in exchange for 619,589 of Intelicanna’s ordinary shares. Ilanit Halperin, a director and the Chief Financial Officer of the Company, is also the Chief Financial Officer of Intelicanna.

On June 3, 2020 The Company established a new Israeli subsidiary, CTGL – Citrine Global Israel Ltd, (wholly owned subsidiary 100%) (the “Israeli Subsidiary”).

On June 22, 2020, the Company entered into a share purchase agreement with Nanomedic Technologies Ltd., an Israeli private company and a related party as further described below (“CIBD”Nanomedic”) as part of an 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. The Company 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 Investment & Holdings Ltd 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 Meir Soffer, chairperson and CEO of the Company, 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 ICB,Nanomedic immediately prior to the A-1 funding round.

On July 21, 2020, the Israeli Subsidiary began to work with certain shareholders of the Company who have been working towards establishing a innovation Center focuses on the medical cannabis industry , cannabidiol (CBD) , hemp, botanical, food supplements and cosmetics products The Company’s board of directors approved that the Israeli Subsidiary to proceed with preparations for entering into an agreement with certain shareholders of the Company pursuant to which (1) the Israeli Subsidiary would hold approximately 60% of the shares in the Cannovation Center, and certain shareholders of the Company would hold approximately 40% of the shares; and (2) the Israeli Subsidiary would accept limitations on its rights in the Cannovation Center if and as mandated under Israeli regulations on the involvement of foreign entities.

The Cannovation Center has submitted an application to the Israeli Ministry of the Economy for a grant and is also preparing to apply for licenses from the Medical Cannabis Unit in the Israeli Ministry of Health.

As part of this process, the Israeli Subsidiary established a new Israeli subsidiary Cannovation Center Israel Ltd, which was incorporated on August 20, 2020 (the “Cannovation Center”) and the transferCompany’s Israeli Subsidiary holds 60% of the relevant intellectual property rightsshares in the Cannovation Center.

On August 4, 2020, the board of directors of the Company approved for the Company and/or the Israeli Subsidiary (references in this paragraph to the joint venture, we will issueCompany include the Israeli Subsidiary) to proceed with preparations for investing in iBOT: Israel Botanicals, an Israeli botanical nutraceutical company. iBOT has a manufacturing facility for a wide range of botanical formulations, and sellpart of its strategy is to ICB an additional 957,854 Shares for an additional investment amount of $250 thousand (the “Additional Investment”). In addition,combine this with hemp and CBD. The board gave its approval, subject to agreement of definitive terms and receipt of all necessary corporate and other approvals, for a proposed transaction in which (1) the consummation of the Additional Investment, we will grant ICBCompany would have an option to purchase up to additional 833,333 sharesmake one or more investments during a period of our common stock at a price per share of $0.60, for12 months in an aggregate considerationamount of up to $1 million. To date,million (one million US dollars); (2) the investments may be through loans, direct equity purchases, or other means, and would be based on milestones; and (3) iBOT would grant the Company a 25% discount in its next fundraising. In addition, the board approved for the Company to proceed with preparations for entering a services agreement with iBOT pursuant to which the Company would provide consulting and other services to iBOT. iBOT is controlled by an affiliate of the Company.

On October 8, 2020, the board of directors of the Company approved a reverse stock split of the Company’s authorized, issued and outstanding shares of common stock, par value $0.0001 per share, at a ratio between 1-for-40 to 1-for-100, subject to the approval of the Company’s stockholders (the “Reverse Stock Split”). The final ratio of the Reverse Stock Split will be determined by the Board at a later date. Since such stock split was not approved yet as of the approval date of these financial statements, it is not reflected in any shares information disclosed within these financial statements.

The Company has metrecently submitted its formal application to list its common stock on the Nasdaq Capital Market (“Nasdaq”). Any listing of the Company’s common stock on Nasdaq is subject to review by Nasdaq and is also dependent on the Company meeting all of the milestones required for the closingnecessary Nasdaq listing requirements, including, but not limited to, shareholder’s equity requirements, a sufficient price per share and a sufficient number of the Additional Investment. Currently, thereround lot holders. There is no guarantee that the Company will be ablesuccessful in obtaining the necessary approvals to close on the Additional Investment.

On April 28, 2019, we entered into a form of securities purchase agreement with each of Y.M.Y. Industry Ltd. (“YMY”), Traistman Radziejewski Fundacja Ltd. (“TRF”) and Microdel Ltd. (“Microdel” and collectively, the “Investors”) relating to an offering of sale of an aggregate of 1,229,508 shares of ourlist its common stock at a purchase price of $0.183 per share for aggregate gross proceeds of approximately $225 thousand. In addition, we granted the Investors an option, for a period of twelve months, to purchase up to an additional 375,001 shares of common stock at a price per share of $0.60, for additional aggregate consideration of $225 thousand. The closing of the offering took place on April 29, 2019. The option was classified as a derivative financial liability and are re-measured each reporting date, with changes in fair value recognized in finance expense (income), net, since the exercise price of the warrants is denominated in USD and the functional currency of the Company is the NIS.

On August 20, 2019, we entered into an additional form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 8,275,862 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $240 thousand. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase additional 400,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $240 thousand. The closing of the offering took place on August 29, 2019. The option was classified as a derivative financial liability and are re-measured each reporting date, with changes in fair value recognized in finance expense (income), net, since the exercise price of the warrants is denominated in USD and the functional currency of the Company is the NIS.Nasdaq.

On November 17, 2019, we entered into a form8, 2020, the board of securities purchase agreement with YMY and TRF, relatingdirectors of the company approved an amendment to an offeringits certificate of an aggregateincorporation to remove from its authorized capital stock of 3,000,000the Company the fifty million (50,000,000) shares of undesignated preferred stock, par value $0.0001 per share, subject to the approval of the Company’s newly designated Series A Convertible Preferred Stock at a purchase pricestockholders. No shares of $0.029 per sharepreferred stock are currently outstanding, and such removal and cancellation would remove the authority of the board of directors or any authorized committee thereof to provide for aggregate gross proceedsthe issuance of approximately $87,000. In addition,shares of preferred stock without further approval of the Company granted YMY and TRF an option, for a period of twelve months, to purchase up to an additional 145,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $87,000.Company’s stockholders.

Results of Operations during the three and nine months ended September 30, 20192020 as compared to the three and nine months ended September 30, 20182019

Revenues

During the three andmonths ended September 30, 2020, we did not generate any revenues. During the nine months ended September 30, 2019,2020, we generated $36 and $121$11 thousand in revenues, compared to $90$36 thousand and $189$121 thousand in revenues in the three and nine months ended September 30, 2018.2019. The decrease is mainly attributable to a decreasereduction in the sales of Novomic products, that failure to obtain the United States Food and Drug Administration approval for our products.Novomic products or enter into additional engagements with distributors, and also as a result of our selling 90% of our shares in Novomic and focusing on our new strategy and business activity, and therefore ceasing to consolidate the financial statements of Novomic.

Gross Profit

OurDuring the three months ended September 30, 2020, we did not have any gross profit (loss) duringor loss. During the three and nine months ended September 30, 2019, were $3 and $(30)2020, we incurred a gross loss of $2 thousand, compared to $19gross losses of $2 thousand and $60$30 thousand in the three and nine months ended September 30, 2018.2019. The decrease is mainly attributable to decrease in the sales volumegross losses is mainly as a result of our selling 90% of our shares in Novomic and a decrease in inventory value.focusing on our new strategy and business activity, and therefore ceasing to consolidate the financial statements of Novomic.

Research and Development Expenses

OurDuring the three months ended September 30, 2020, we did not have any research and development expenses. During the nine months ended September 30, 2020, our research and development expenses were $18 thousand as compared to $34 thousand and $115 thousand during the three and nine months ended September 30, 2019 were $34 thousand and $115 thousand and all expenses resulted from ongoing research and development expenses.

Our research and development expenses during the three and nine months ended September 30, 2018 were $143 thousand and $191 thousand.2019. The decrease is mainly attributable to decreasea reduction in expenses related to the lice product.Novomic products as a result of the conclusion of our Board that the Company would not be able to successfully commercialize the Novomic products and also to us selling 90% of our shares in Novomic and focusing on our new business activity, and therefore ceasing to consolidate the financial statements of Novomic.

Marketing, General and Administrative Expenses

Our marketing, general, and administrative expenses during the three and nine months ended September 30, 20192020, were $365$1,058 thousand and $2,815 thousand compared to $366 thousand and $1,177 thousand and were comprised mainly of $819 thousand in payroll and payments to consultants for the nine months ended September 30, 2019. Our marketing, general and administrative expenses during the three and nine months ended September 30, 2018 were $523 thousand and $1,490 thousand and were comprised mainly of $881 thousand in payroll and payments to consultants and professional services for the nine months ended September 30, 2018.2019. The decreaseincrease in our marketing, general and administrative expenses is mainly attributable to the increase in our share-based compensation expenses, which was partially offset by a decrease in marketing expenses and professional services.services as a result of the conclusion of our Board that the Company would not be able to successfully commercialize the Novomic products and therefore ceasing to consolidate the financial statements of Novomic.

Net Loss

During the three and nine months ended September 30, 20192020, we incurred a net loss of $406$1,229 thousand and $1,342$3,015 thousand. During the three and nine months ended September 30, 2018,2019, we incurred a net loss of $656$405 thousand and $1,515$1,342 thousand. The decreaseincrease in net loss is mainly attributable to a decrease in operating expenses.the share based compensation expenses as described above.

Liquidity and Capital Resources

Our balance sheet as of September 30, 20192020, reflects total assets of $666$3,974 thousand, consisting mainly of cash and cash equivalents in the amount of approximately $126$295 thousand, inventoryinvestment in trading securities of approximately $198$464 thousand, prepaid share based payment, and other current assets of approximately $2,613 thousand, short-term loan measured at a fair value of approximately $152 thousand and property and equipment, netinvestments valued under the measurement alternative of approximately $156$450 thousand. As of December 31, 2018,2019, our balance sheet reflects total assets of approximately $1,131$257 thousand consisting mainly of cash and cash equivalents in the amount of approximately $475$18 thousand, inventory in the amount of approximately $249$35 thousand, other receivablescurrent assets of approximately $177$19 thousand, and property and equipment net, of approximately $161$156 thousand.

As of September 30, 2019,2020, we had total current liabilities of approximately $270$748 thousand, consisting mainly of accounts payable and accrued expenses of approximately $164$263 thousand, commitment to issue shares of approximately $105 thousand, the fair value of shares exchange agreement of approximately $60 thousand and a note payablefair value of the convertible component in convertible loan of approximately $80$320 thousand. As of December 31, 2018,2019, we had total current liabilities of approximately $385$360 thousand consisting mainly of accounts payable and accrued expenses of approximately $231$224 thousand and a note payable of approximately $80$123 thousand.

As of September 30, 2019,2020, excluding prepaid share based payment of $2,613 thousand to a service provider, we had positivenegative working capital of approximately $104$302 thousand, compared to positivenegative working capital of approximately $573$278 thousand at December 31, 2018. The working capital has been sufficient to sustain our operations to date, although there is substantial doubt about our ability to continue as going concern.2019. Our total liabilities as of September 30, 20192020 were approximately $354$1,425 thousand, compared to approximately $390$368 thousand at December 31, 2018.2019.

During the nine months ended September 30, 2020, we used approximately $613 thousand cash in our operating activities. This resulted mainly from an overall net loss of approximately $3,015 thousand, net of an increase in stock-based compensation of approximately $2,201 thousand, fair value adjustment of liability in connection with stock exchange agreement of approximately $60 thousand, and expenses in respect of convertible loans.

During the nine months ended September 30, 2019, we used approximately $1,035 thousands ofthousand cash in our operating activities. This resulted mainly from an overall net loss of approximately $1,342 thousand, a decrease in other receivablesmanagement fee waiver of approximately $169$199 thousand, and a decrease in inventory of approximately $68 thousand. During the nine months ended September 30, 2018, we used approximately $1,779 thousand of cash in our operating activities. This resulted mainly from an overall net loss of approximately $1,515 thousand, an increase in accounts payable and accrued expenses of approximately $151$82 thousand, and an increase in inventoryother current assets of approximately $121$169 thousand.

During the nine months ended September 30, 2019,2020, we used approximately $3$608 thousand cash in our investing activities,activities. This resulted mainly from a subsidiary no longer consolidated of approximately $14 thousand and an investment accounted under the measurement alternative of $450 thousand and loans granted of $145 thousand, as compared to approximately $59$3 thousand in the same period in the prior year.

During the nine months ended September 30, 2019,2020, we provided approximately $1,501 thousand cash by our financing activities provided us with $697activities. This resulted mainly from the issued convertible notes and warrants of approximately $1,170 thousand and a commitment to issue shares to related parties of approximately $105 thousand and loans from related parties of approximately $154 thousand and issuance of common stock of approximately $72 thousand, as compared to $1,622approximately $698 thousand in the same period in the prior year, throughyear.

The Company has a history of accumulated losses, and its development and execution of its strategy are still uncertain. However, based on the Company’s current cash balances, capital raised by the second quarter of 2020 and the irrevocable letter it has received (as noted below), the Company has sufficient funds for its plans for continuing its new activity in the next twelve months from the issuance of common stock.

On March 13, 2019, we issued and sold to ICB 957,854 shares of our common stock at a price per share of $0.261, for aggregate consideration of $250 thousand. In April 2019, the Company entered into subscription agreements with several investors, consisting of our officers and directors, pursuant to which we issued 1,229,508 shares of common stock for aggregate consideration of $225 thousand. The Company recorded derivative liability in its books. In addition, in August 2019, the Company entered into subscription agreements with several investors, consisting of our officers and directors, pursuant to which we issued 8,275,862 newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $240 thousand. The Company recorded derivative liability in its books.this quarterly report on Form 10-Q.

On April 28, 2019, we entered into a formCitrine S A L Investment & Holdings Ltd., on behalf of securities purchase agreementitself and its affiliates and related parties, has furnished the Company with an irrevocable letter of obligation to financially support the Investors relatingCompany until December 31, 2021, that will allow it to an offering of sale of an aggregate of 1,229,508 shares of our common stock at a purchase price of $0.183 per share for aggregate gross proceeds of approximately $225 thousand. In addition, we granted the Investors an option, for a period of twelve months, to purchase up to an additional 375,001 shares of common stock at a price per share of $0.60, for additional aggregate consideration of $225 thousand. The closing of the offering took place on April 29, 2019.be operational as planned and budgeted through this period.

On August 20, 2019, we entered into an additional form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 8,275,862 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $240 thousand. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase additional 400,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $240 thousand. The closing of the offering took place on August 29, 2019.

On November 17, 2019, we entered into a form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 3,000,000 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $87,000. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase up to an additional 145,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $87,000.

While management believes the Company will be successful in its current and planned operating activities, there can be no assurance that the Company will be successful in the achievement of sales of its products that will generate sufficient revenues to earn a profit and sustain the operations of the Company. Our ability to create sufficient working capital to sustain us over the next twelve-month period and beyond is dependent on our abilityintends to raise additional fundscapital, through the issuance of equity or debt instrument. There can be no assurance that sufficient capital will be availableinstruments, from other sources to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources. In addition,grow our Board of Directors is exploring strategic alternatives to enhance stockholder value, which may include future acquisitions, a merger with another company, a potential sale of certain assets, including Novomic, or the sale of the Company as a public shell company.

Going Concern Consideration

As a result of the above, there is substantial doubt aboutbusiness and sustain our ability to continue as a going concern. Our financial statements contain additional note disclosures with respect to this matter, but no accounting adjustments that relate to this matter.operations.

Off-Balance Sheet Arrangements

We haveThe Company has no off-balance sheet arrangements.

Critical Accounting Policies

Please see Note 1B of Part I, Item I of this Quarterly Report on Form 10-Q for the summary of significant accounting policies. In addition, reference is made to Note 1B in the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 (filed on March 28, 2019) with respect to our Critical Accounting Policies.

All other material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2018 are recorded in Note 1b of this quarterly report

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures.Procedures

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chairman of the Board of Directors (who is the Company’s principal executive officer)officer and the Company’s Chief Financial Officer (CFO) (who is the Company’s principal financial officer)officer to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and theobjectives. The Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on ourthe Company’s evaluation of the effectiveness of ourits disclosure controls and procedures as of September 30, 2019, our2020, the Company’s Chairmanprincipal executive officer and CFOthe Company’s principal financial officer concluded that the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to ourthe Company’s management, including our Chairmanits Chairperson and CFO, to allow timely decisions regarding required disclosure.

Management’s Remediation PlanBased on this evaluation, the Company’s management concluded that its internal control over financial reporting was not effective as of September 30, 2020, as it identified control deficiencies that constituted material weaknesses in the Company’s internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weaknesses identified in the Company’s internal control over financial reporting are described below: