UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

OR

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

Commission file number: 333-208814

SEEDO CORP.

(Exact name of registrant as specified in its charter)

Commission file number:333-208814

GRCR Partners Inc.

 (Exact name of registrant in its charter)

Issuer’s telephone number: 203.307.1179

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value $0.001

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 day.[X]

☒ Yes [   ]☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ ]☐ No [  ]  ☒

(Does not currently apply to the Registrant)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, 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 if the Exchange Act.

Large accelerated filer [  ]

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

Non-accelerated filer  [  ]

(Do not check if a smaller reporting company)

Smaller reporting company [X]  Emerging Growth Company [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ]☐ No [X]  ☒

State

Indicate the number of shares outstanding of each of the issuer’s classes of common equity,stock, as of the latest practicable date.

TABLE OF CONTENTS

3

PART I. Financial Information

Item 1. Interim Financial Statements.

GRCR PARTNERS INC

CONDENSED BALANCE SHEETS

AS OF JUNE 30, 2018 (UNAUDITED) AND SEPTEMBER 30, 2017

an integral part of these statements.

SEEDO CORP.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2019

GRCR PARTNERS INC

SEEDO CORP.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2019

IN THOUSANDS OF U.S. DOLLARS

INDEX

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

SEEDO CORP.

CONDENSED STATEMENTS OF OPERATIONSCONSOLIDATED BALANCE SHEETS (Unaudited)

FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2018 AND 2017U.S. dollars in thousands, except share and per share data

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

GRCR PARTNERS INC

SEEDO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWOPERATIONS (Unaudited)

FOR THE NINE MONTHS ENDED JUNE 30, 2018 AND 2017U.S. dollars in thousands, except share and per share data

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

GRCR PARTNERS INC

NOTES TO UNAUDITED INTERIM SEEDO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY

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

SEEDO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFICIENCY

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

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

SEEDO CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

U.S. dollars in thousands

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

Reverse merger

Note 1. TheOn September 14, 2018, the Company History and NatureEroll completed a merger transaction. Eroll survived the merger as a wholly-owned subsidiary of the BusinessCompany.

GRCR Partners Inc. (the “Company”, “Our” or “We”), formed on January 16, 2015 is a providerImmediately following the merger, Eroll shareholders held approximately 87.4% of risk management and asset protection (RAP) services for businesses, individuals and families. Prior to 2017,the outstanding shares of common stock of the Company provided its services primarily to businessesin exchange of 1,137 shares of common stock of Eroll on a project-based fee arrangement. During 2017,fully diluted basis while the pre-merger Company shareholders retained the remaining approximate 12.6%.

Pursuant to the terms and conditions of the agreement governing the Reverse Merger, at the time of the Reverse Merger, the Company shiftedissued 12,073,500 nonassessable shares of its business modelshares of common stock. Each of the holders of the pre-Reverse Merger issued and outstanding shares of common stock of Eroll received their pro-rata allotment of these shares in the Company according to more recurring fee based engagements and expanded target markets to included individuals and families. The Company delivers services following a proprietary progressive bSecure methodology. The Company believes that by combining expert consulting, proven processes and software, clients can cost effectively build and maintain RAP programs that reduce day-to-day and long-term riskstheir then current shareholding in their work environment, personal and family lives.Eroll. At the closing of this Reverse Merger, there were 15,000,000 shares of common stock of the Company.

The reverse merger was accounted for as a reverse recapitalization which is outside the scope of ASC Topic 805, “Business Combinations” (“ASC 805”). Under reverse capitalization accounting, Eroll is considered the acquirer for accounting and financial reporting purposes and acquired the assets and assumed the liabilities of the Company. The assets acquired and liabilities assumed are reported at their historical amounts. The annual consolidated financial statements of the Company reflect the operations of the acquirer for accounting purposes together with a deemed issuance of shares, equivalent to the shares held by the former stockholders of the legal acquirer and a recapitalization of the equity of the accounting acquirer. The annual consolidated financial statements include the accounts of the Company since the effective date of the reverse capitalization and the accounts of Eroll since inception.

Eroll was incorporated pursuant to the laws of the state of Israel on May 18, 2015.

Eroll has seven subsidiaries as followings:

Seedo U.S. Inc.   (Seedo Inc.) incorporated pursuant to the laws of the state of Colorado, U.S in November 2016. To date, the subsidiary has no activities.

Seedo USA LLC (Seedo USA) incorporated pursuant to the laws of the state of Nevada U.S on March 2017. To this date the subsidiary has no activities.

Urban Auto Grow Inc. (UAG) incorporated pursuant to the laws of the state of Nevada U.S on January 2017. To this date the subsidiary has no activities.

E.L Urban Auto Grow Ltd. (Urban) incorporated pursuant to the laws of the state of Cyprus on December 2017. To this date the subsidiary has no activities.

Seedo FarmTech Ltd. incorporated pursuant to the laws of the state of Israel on April 10, 2019. To this date the subsidiary has no activities.

Dan SeedoFarm Ltd Ltd incorporated pursuant to the laws of the state of Israel on June 27, 2019. To this date the subsidiary has no activities.

Tech Farm Agricola S.R.L incorporated pursuant to the laws of the state of Messina, Italy on May 20, 2019. To this date the subsidiary has no activities. The Company holds 33% of Tech Farm Agricola S.R.L.

Effective December 31, 2018, the Company changed its fiscal year end from September 30 to December 31. This change is being made in order to align the Company’s fiscal year end with its subsidiaries following the reverse merger. The Company refers to the period beginning October 1, 2017 and ending September 30, 2018 as “fiscal 2018.” 

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

The accompanying condensed consolidated financial statements have been prepared using accounting principles generally accepted inassuming the United States of America applicable forCompany will continue as a going concern, which assumes thatcontemplates the Company will realize itsrealization of assets and discharge its liabilities and commitments in the ordinarynormal course of business. Since inception, the Company has a retained deficit of $104,118 and has a working capital deficit of $48,742 at June 30, 2018. Although we are generating revenue, our growth is dependent upon achieving sales growth, management of operating expenses and ability of the Company to obtain the necessary financing to fund future obligations and pay liabilities arising from normal business operations when they come due, and upon profitable operations.  The Company may also explore other grow opportunities, including, but not limited to, a merger or acquisitions.

Management has concludedAs of September 30, 2019, the condensed consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that duemay result from uncertainty related to the conditions described above, there is substantial doubt about the entity’sCompany’s ability to continue as a going concern through August 2019. We have evaluated the significance of these conditions in relation to our ability to meet our obligations and believe that we may need to either borrow funds from our majority shareholder or raise additional capital through equity or debt financings. We expect our current majority shareholder will be willing and able to provide such additional capital or sell ownership in the Company.  However, we cannot be certain that such capital (from our shareholders or third parties) will be available to us or whether such capital will be available on terms that are acceptable to us.  Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.

Note 2. Summary of Significant Accounting Policiesconcern.

Basis of Presentation and Organization

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles and standards of the Public Company were prepared from the accounts of the Company under the accrual basis of accounting.  The balance sheet at September 30, 2017 was derived from auditedAccounting Oversight Board for interim financial statements but doesinformation. Accordingly, they do not include all disclosuresthe information and footnotes required by accounting principals generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, the accompanying financial statements include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s (i) consolidated financial position as of September 30, 2019, (ii) consolidated results of operations for the three and nine months ended September 30, 2019 and (iii) consolidated cash flows for the nine months ended September 30, 2019. The results for the three and nine months periods ended September 30, 2019, as applicable, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019.

The consolidated financial statements have been prepared in accordance with U.S Generally Accepted Accounting Principles in the United States of America. The other information in these condensed financial statements is unaudited but, in the opinion of management, reflects all adjustments necessary for the fair presentation of the results for the periods covered.  These financial statements should be read in conjunction with the financial statements and additional information as contained in our Form 10K for the year ended September 30, 2017.

Cash and Cash Equivalents

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents. The Company’s cash and cash equivalents are located in a United States bank.  The Company does not have any cash equivalents as of June 30, 2018 or September 30, 2017.

Accounts Receivable

The Company’s accounts receivables are derived from direct customers. Collateral is not required for accounts receivable. The Company maintains an allowance for potential credit losses as considered necessary. The Company performs ongoing reviews of all customers that have breached their payment terms or for whom information has become available indicating a risk of non-recoverability. The Company records an allowance for bad debts for specific customers identified as well as an allowance based on its historical collection experience. The Company’s evaluation of the allowance for potential credit losses requires the use of estimates and the actual results may differ from these estimates. At June 30, 2018 and September 30 2017, the allowance for potential credit losses was $0.

Fixed Assets

Office equipment is stated at cost and depreciated over three years using the straight-line method of accounting. For the three and nine months ended June 30, 2018, and 2017, the Company recorded depreciation expense of $0 and $0, and $0 and $838, respectively.

Revenue Recognition

The Company derives its revenue from the sale of compliance, legal, risk management and management and public reporting consulting services. The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers.

Consulting Services

Because the Company provides its applications as services, it follows the provisions of Accounting Standards Codification No.605,Revenue Recognition. The Company recognizes revenue when all of the following conditions are met:

The Company recognizesgenerates revenues from sales of products. The Company sells its products directly to end customers.

In accordance with Topic 606, revenue is recognized when obligations under the terms of a contract with our customer are satisfied; generally this occurs with the transfer of control of our products. Revenue is measured as services are performed or monthly based upon contract terms. Contracts may eitherthe amount of consideration to which we expect to be for a specific project, or, a monthly recurring fee.entitled

ReimbursementsIn exchange for transferring products or providing services. To achieve this core principle, the Company applies the following five steps:

A contract with a customer exists when (i) the Company enters into a written agreement with a customer that defines each party’s rights regarding the products or services to be transferred and identifies the payment terms related to these products or services, (ii) both parties to the contract are committed to perform their respective obligations, (iii) the contract has commercial substance, and (iv) the Company determines that collection of substantially all consideration for products or services that are transferred is probable based on the customer’s intent and ability to pay the promised consideration.

Performance obligations promised in a contract are identified based on the products or services that will be transferred to the customer that are both capable of being distinct, whereby the customer can benefit from the product or service either on its own or together with other resources that are readily available from the Company, and are distinct in the context of the contract, whereby the transfer of the products or services is separately identifiable from other promises in the contract.

The transaction price is determined based on the consideration to which the Company incurs certain out-of-pocket expenses that are reimbursed by its clients,will be entitled in exchange for transferring products or services to the customer. To the extent the transaction price is variable, revenue is recognized at an amount equal the consideration to which the Company expects to be entitled. This estimate includes customer sales incentives which are accounted for as a reduction to revenue and estimated using either the expected value method or the most likely amount method, depending on the nature of the program.

If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately.

The Company generally satisfies performance obligations at a point in its Statement of Operations.time, once the customer has obtained the legal title to the items purchased. Revenue is recognized based on the transaction price at the time the related performance obligation is satisfied by transferring a promised product or service to a customer.

Net Income (Loss) per Common ShareTypical timing of payment

Basic income (loss) per shareThe Company offers several payment methods that includes but not limited to full advance payment and partial amount in advanced while collecting the remaining amount before delivery.

Revenue expected to be recognized in any future year related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less.

The Company’s unfilled performance obligations as of September 30, 2019 is computed by dividing$2.4 million.

The Company recognized revenues of $703 for the net income (loss) attributable tonine month ended September 30, 2019, as part of advances recognized in prior periods.

Warranties are classified as assurance type. A warranty is considered an assurance type warranty if it provides the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted income per share is computed similar to basic income per share exceptconsumer with assurance that the denominator is increased to includeproduct will function as intended for a limited period of time. As of September 30, 2019, the numberCompany recorded a provision for warranty in a total amount of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive.  There were no dilutive financial instruments issued or outstanding for the periods ended June 30, 2018 or 2017.$35.

Income Taxes

The Company accounts for income taxes pursuantshare-based compensation in accordance with ASC No. 718, “Compensation-Stock Compensation” (“ASC No. 718”). ASC No. 718 requires companies to FASB ASC 740. Deferred tax assets and liabilities are determinedestimate the fair value of equity-based payment awards on the date of grant using an Option-Pricing Model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations. The Company recognizes compensation expenses for the value of its awards granted based on temporary differences between the basesstraight-line method over the requisite service period of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classificationeach of the assets and liabilities generating the differences.awards.

The Company maintainsselected the Black-Scholes-Merton option pricing model as the most appropriate fair value method for its share-option awards. The option-pricing model requires a valuation allowancenumber of assumptions, of which the most significant are the fair market value of the underlying ordinary share, expected share price volatility and the expected option term. Expected volatility was calculated based upon certain peer companies that the Company considered to be comparable. The expected option term represents the period of time that options granted are expected to be outstanding. The expected option term is determined based on the simplified method in accordance with respectStaff Accounting Bulletin No. 110, as adequate historical experience is not available to deferred tax assets.provide a reasonable estimate. The simplified method will continue to apply until enough historical experience is available to provide a reasonable estimate of the expected term. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company establishes a valuation allowancehas historically not paid dividends and has no foreseeable plans to pay dividends.

The fair value of Restricted Stock Units (“RSUs”) granted is determined based uponon the potential likelihoodprice of realizing the deferred tax asset and taking into consideration the Company’s financial positionshares of common stock on the date of grant.

The fair value for options granted in April 2019, is estimated at the date of grant using a Black-Scholes-Merton option pricing model with the following assumptions:

The Company accounts for options granted to consultants and resultsother service providers under ASC No. 718 and ASC No. 505, “Equity-based payments to non-employees.” The fair value of operations forthese options was estimated using a Black-Scholes-Merton option-pricing model.

In the current period. Future realizationnine months ended September 30, 2019, the non-cash compensation expenses related to nonemployees were $766. As of September 30, 2019, there were $3,971 of total unrecognized compensation cost related to non-vested share-based compensation to non-employees.

Recently Implemented Accounting Pronouncements

The Company early adopted ASU 2014-09 as of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. Changes in circumstances, such as the Company generating taxable income, could causeJanuary 1, 2019. The adoption did not have a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimates.

The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. Among its numerous changes to the Internal Revenue Code, the Act reduces U.S. corporate rates from 35% to 21%. Additionally, the Act limits the use of net operating loss carry backs, however any future net operating losses will instead be carried forward indefinitely. Only 80% of current income will be able to be offset with a net operating loss carryforward, with the remainder of the net operating loss continuing to carry forward. Based on an initial assessment of the Act, the Company believes that the most significant impact on the Company’s consolidated financial statements will be reduction of deferred tax assets related to net operating losses.  Such reduction is expected to be largely offset by changes to the Company’s valuation allowance.income.

Fair Value of Financial InstrumentsRecently Implemented Accounting Pronouncements :

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of December 31, 2017 the carrying value of accounts receivable, accounts payable-trade and accrued liabilities approximated fair value due to the short-term nature and maturity of these instruments.

Customer Concentration Disclosure.

For the three months ended June 30, 2018 and 2017, 1 and 3 customers made up 100% and 94% of our revenue, respectively. Those customers represented 100%, and 38%, 38%, 19%, respectively for three months ended March 31, 2018 and 2017.

For the nine months ended June 30, 2018 and 2017, 3 and 3 customers made up 81% and 96% of our revenue, respectively. Those customers represented 51%, 15%, 15% and 40%, 40% 16%, respectively for nine months ended June 30, 2018 and 2017.

Estimates

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and expenses. Actual results could differ from those estimates made by management.

Recent accounting pronouncements

In May 2014,July 2017, the FASB issued ASU 2014-09, Revenue from Contracts2017-11, “Earnings per share: I. Accounting for Certain Financial Instruments with CustomersDown Round Features,” which modifies how all entities recognize revenue and various other revenue accounting standards for specialized transactions and industries. This updateallows companies to exclude a down round feature when determining whether a financial instrument is considered indexed to the entity’s own stock. As a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expectsresult, financial instruments with down round features may no longer be required to be entitled in exchange for those goods or services. In August 2015,accounted classified as liabilities. A company will recognize the FASB issued ASU 2015-14, which deferredvalue of a down round feature only when it is triggered, and the effective datestrike price has been adjusted downward. For equity-classified freestanding financial instruments, such as warrants, an entity will treat the value of the effect of the down round, when triggered, as a dividend and a reduction of income available to common shareholders in computing basic earnings per share. The guidance in ASU to2017-11 is effective for fiscal years beginning after December 15, 2017,2019, and interim periods within those fiscal years. Early adoption is permitted, and the guidance is to be applied using a full or modified retrospective approach. The Company has completed evaluationearly adopted this guidance in connection with the down round feature within the embedded optional conversion feature of the possiblewarrants, as discussed in Note 7d.

In October 2017, Eroll entered into rental agreements for its office premises in Israel which will end on June 30, 2022. The agreement is secured by bank guarantees and monthly debentures equivalent with the lease payments.

On June 20, 2019 the Company signed an amendment to its rental agreement, accordingly the Company signed an extension to its original agreement until June 30, 2022, and rented two additional office premises until June 30, 2024.

The future minimum lease fees payable for the lease agreement as of ASU 2014-15 includingSeptember 30, 2019, are as following:

The Company enters into a vehicle operating lease agreement for a period of 32 months. The future minimum lease fees payable for both above agreements as of September 30, 2019, are as following:

The Company also granted the contract reviewforegoing lender warrants to purchase 333,333 and has no material impact100,000 shares of common stock of the Company at an exercise price of $1.5 and $2 per share, respectively. The warrants were classified as shareholders’ equity.

The Company estimated the fair value of warrants using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:

The Company also granted the broker 33,333 shares of common stock of the Company which were issued on the Company's consolidated financial statements.  April 12, 2019.

The Company has implemented all new accounting pronouncements that areaccounted for the loan in effectaccordance with ASC 470,Debt. The Company allocated the consideration of the loan, the related warrants and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impactthe shares of common stock based on its financial position or resultstheir relative fair value at the date of operations.issuance, which is also the commitment date.

Note 3. Note Payable

On March 16, 2017,June 19, 2019 the Company executed an amendment to the loan agreement. Total debt was $1,175 according to the amendment the lender will exercise its 433,333 warrants pursuant to the original agreement for a promissory note (the “Note”) with an unaffiliated lendertotal amount of $700. The remaining debt of $475 will be paid in three separate monthly payments of $158.333 each for the next three months.

On August 15, 2019 the company issued 433,333 shares in respect of exercise of 433,333 warrants granted as part of the loan agreement signed on December 11, 2018.

During the nine months period ended September 30, 2019 the Company recorded interest and financial expenses related to the loan in the amount of $25,000.  $800.

The Note matures one year from issuanceprincipal amount shall bear interest at a monthly rate of 2%. In case the Company doesn’t repay the loan on Maturity Date the Company is obligated give the lender a 7 days notice then the loan and hasthe outstanding interest amount shall bear a 12%monthly interest rate.   Throughrate of 5%, if the company fails to notify the lender the loan and the outstanding interest amount shall bear an annual interest rate of 32.92%

As of September 30, 2019 the Company did not repay the loan amount but gave the lender a second addendum to7 days notice therefore entered the Note dated August 8, 2018,5% interest, accordingly the Note’s due date was extended until December 31, 2018.  

ForCompany recorded interest for the three and nine months ended JuneSeptember 30, 2019 in the amount of $13.

According to the August Loan Agreement, the Company shall issue Cannabics shares of common stock of the Company representing 7.5% of the outstanding shares on a fully-diluted basis of the Company at the time of conversion. Following the Second Loan, Cannabics shall hold 15% of the outstanding shares on a fully-diluted basis of the Company. In addition, according to the agreement Cannabics shall issue to the Company 1,000,000 warrants with an exercise price of $2 per share, of the Cannabics shares, for a period of 12 months. The warrants were issued on August 14, 2018. The warrants were classified as an asset and 2017,are evaluated every report date. During the nine months period ended September 30, 2019 the Company recorded $748expenses due to the warrant in the amount of $1. As of September 30, 2019, and $748,December 31, 2018 the warrants fair value amount was $0 and $2,244$1, respectively.

On September 12, 2018, Eroll and $871Cannabics executed an amendment to the August Loan Agreement, solely amending the mechanics of the percentage of the Company shares Cannabics may convert for its investment, though the finite amount remains unchanged. The amendment to the August Loan was as follows: Cannabics is to receive 10% of the shares of common stock, for the initial $1,000 financing (as opposed to 15%); and for the Second Loan, Cannabics shall receive 10% (5% issued on the date of the money transfer and an additional 5% issued on the date of conversion) of the shares of common stock on a fully diluted basis.

On September 26, 2018, pursuant to the August Loan Agreement with Cannabics, the Company received its second installment of $500.

In addition, under the agreement the Company shall pay to Cannabics royalties in interest expense, respectively.an amount equal to a percentage of the Company’s revenues starting of January 2019 sales as follows:

Note 4. Related Party TransactionsNotwithstanding the above, for the first year following the Second Loan closing date, The Company shall pay Cannabics minimum royalties of not less than $500. In the event the Second Loan is converted into shares, the aggregate royalties to be paid hereunder will be capped at max $8,000.

On November 6, 2018, pursuant to the August Loan Agreement with Cannabics the Company received $300 towards the Second Loan, and on December 10, 2018, pursuant to the August Loan Agreement the Company received the remaining $700 out of the Second Loan.

As part of the completion of the August Loan Agreement the Company recorded a provision for royalties in a total amount of $500.

The Company has paidallocated the majority shareholder, officerremaining consideration ($500) of the second convertible loan and director $2,000 and $3,000, and $4,100 and $3,000issuance of shares based on their relative fair value at the date of issuance. As such the Company recorded issuance of the shares in a total amount of $250.

The Company accounted for the threeconvertible loan in accordance with ASC 470-20, Debt with conversion and nine month periods ended June 30, 2018 and 2017, respectively.  Such amounts are presentedother Options. According to ASC 470-20-30-8, since the intrinsic value of the beneficial conversion feature (“BCF”) exceeds the entire proceeds of the loan, the Company allocated the entire proceeds of $250 related to the convertible loan to the BCF as additional paid in the statements of operations, in the general and administrative line as related party costs.  The Company has no formal contract in place with its sole officer and director.capital.

Note 5. Subsequent Events

On AugustJanuary 15, 2018,2019 according to the original agreement and the amendment stated above the Company executed a promissory note (the “Note2”) with an unaffiliated lenderconverted the Second Loan, in the amount of $10,000.$1,000 and issued Cannabics 770,397 shares of common stock with $0.0001 par value each. As a result, the Company recorded financial expenses related to the loan in the amount of $942. The Note2 matures one yeartotal holding as of September 30, 2019, for Cannabics is 17.52% of the Company’s shares of common stock.

As a result on September 27, 2018, the Company issued 540,000 shares of common stock with 0.0001 par value each with respect to share based compensation. As defined in an amendment as of November 6, 2018, the loan shall have a due date certain of November 4, 2019.

The Company shall repay the loan as soon as practicable following the date of Seedo Corp’s receipt of a loan from issuancea third party.

The Company repaid the loan on October 23, 2019.

With respect to convertible loan since the contingent BCF shall not be recognized in earnings until the contingency is resolved.

On March 5, 2019, the June Loan was converted into 500,000 shares of common stock with $0.0001 par value each.

During the nine months period ended September 30, 2019, the Company recorded an interest expenses in the total amount of $10.

During the nine months period ended September 30, 2019, the Company recorded an interest expenses in the total amount of $10. According to ASC 470 the Company did not record a BCF with respect to July Loan since the contingent BCF shall not be recognized in earnings until the contingency is resolved.

On April 11, 2019 the July Loan was converted into 150,000 shares of common stock with $0.0001 par value each.

The Company at its option shall have the right to redeem, in part or in whole, outstanding principal and hasinterest under the December Loan agreement prior to the maturity date. The Company shall pay an amount equal to the principal amount being redeemed plus a 6%redemption premium equal to 20% of the outstanding principal amount being redeemed plus outstanding and accrued interest rate.    .

The Note 2 has no prepayment penalty and has a conversion clause that allows the noteholderDecember Lender shall be entitled to convert at its option any portion of the outstanding and unpaid conversion amount into fully paid and nonassessable shares of common stock, at the lower of the fixed conversion price then in effect or the market conversion price. The number shares of common stock issuable upon conversion of any conversion amount shall be determined by dividing (x) such conversion amount by (y) the fixed conversion price of $1.2 or (z) 80% of the lowest the volume-weighted average price of the Company’s shares of common stock during the 10 trading days immediately preceding the conversion date.

The Company accounted for the convertible loan in accordance with ASC 470-20, Debt with conversion and other Options. According to ASC 470-20-30-8, since the intrinsic value of the BCF exceeds the entire proceeds of the loan, The Company allocated the entire proceeds to the BCF as additional paid in capital.

On April 3, 2019, the loan and the accrued interest in the amount of $568 were converted to 473,025 shares of common stock with $0.0001 par value each.

During the nine months period ended September 30, 2019, the Company recorded interest and financial expenses related to the convertible loan in the amount of $543.

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

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

The Company also granted the February Lender a warrant to purchase 137,500 shares of common stock of the companyCompany at $0.75an exercise price of $2 per share.  

On August 20, 2018,share, such exercise price is subject to any future price-based anti-dilution adjustments. As the Company executed a promissory note (the “Note3”early adopted ASU 2017-11 the warrants were classified in shareholders equity.

The Company estimated the fair value of warrants using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:

The fair value of the warrants granted was $242.

The Company accounted for the convertible loan in accordance with an unaffiliated lenderASC 470-20, Debt with conversion and other Options. The intrinsic value of the BCF was calculated and the Company allocated $96 to the BCF as additional paid in capital. The remaining consideration of $162 was allocated to convertible loan.

During the nine months period ended September 30, 2019, the Company recorded interest and financial expenses related to convertible loan in the amount of $10,000.   The Note3 matures$105.

Each Ordinary share is entitled to receive dividend, participate in the distribution of the Company’s net assets upon liquidation and to receive notices of participate and vote (at one yearvote per share) at the general meetings of the Company on any matter upon which the general meeting is authorized.

Also as part of the agreement the investor may, in its sole determination, from issuance and has a 6% interest rate.    The Note 2 has no prepayment penalty and has a conversion clause that allows the noteholderclosing date until the 24-month anniversary of the closing date, elect to convert any principal and accrued interest intopurchase in one or more purchases, additional shares of common stock of the companyCompany with an aggregate

Subscription amount thereof equal to up to $500, at $0.75the price per share.  share of $1.5 (such securities, the “Greenshoe Securities” and such right to receive the Greenshoe Securities).

On April 1, 2019, the Company’s board of directors adopted the Seedo Corp. 2018 Share Options Plan (the “2018 Plan”). As of September 30, 2019, the Company had reserved 3,019,330 shares of common stock under the 2018 Plan, for issuance to the Company’s and its affiliates’ respective employees, directors, officers, consultants and contractors.

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

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

RSUs under the 2018 Plan may be granted upon such terms and conditions, no monetary payment (other than payments made for applicable taxes) shall be required as a condition of receiving the Company’s shares pursuant to a grant of RSUs, and unless determined otherwise by the Company, the aggregate nominal value of such RSUs shall not be paid and the Company shall capitalize applicable profits or take any other action to ensure that it meets any requirement of applicable laws regarding issuance of shares for consideration that is lower than the nominal value of such shares. If, however, the Company’s board of directors determines that the nominal value of the shares shall not be waived and shall be paid by the grantees, then it shall determine procedures for payment of such nominal value by the grantees or for collection of such amount from the grantees by the Company.

Shares issued pursuant to any RSUs units may (but need not) be made subject to exercise conditions, as shall be established by the Company and set forth in the applicable notice of grant evidencing such award. During any restriction period in which shares acquired pursuant to an award of RSUs remain subject to exercise conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of unless otherwise provided in the 2018 Plan. Upon request by the Company, each grantee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares hereunder and the Company may place appropriate legends evidencing any such transfer restrictions on the relevant share certificates.

A summary of employee share options activity during the nine months ended September 30, 2019 is as follows:

A summary of RSUs activity during the nine months ended September 30, 2019 is as follows:

The Company granted 360,000 options and 873,450 RSU’s units during the nine months ended September 30, 2019 to a non-employee consultant and directors.

The Company recognized non-cash share-based compensation expense for both employees and non-employees for the nine months period ended September 30, 2019 in the condensed consolidated statements of operations as follows:

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

The Debentures are unsecured, have a maturity date six months from the month following the signing of the respective Debenture, bear no interest and may be converted, at the election of the holder, into common stock par value $0.0001 each of the Company at a conversion price of the lesser of (x) $1.40 per share, or (y) the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the applicable notice of conversion. The Debentures contain anti-dilution protection during the period which the Debentures are outstanding, for decrease in share price and additional issuances, to maintain the aggregate percentage of equity holdings of the holders of all Debentures at 4.99%.

Item 2.  Management’s Discussion and Analysis or Plan of Operation.Financial Condition and Results of Operations.

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED FINANCIAL STATEMENTS AND THE RELATED NOTES THAT APPEAR ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q AND THE FINANCIAL STATEMENTS AND RELATED NOTES THERETO FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 2018 AND THE RELATED MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, BOTH OF WHICH ARE CONTAINED IN OUR ANNUAL REPORT ON FORM 10-K FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”), ON JANUARY 15, 2019. PAST OPERATING RESULTS ARE NOT NECESSARILY INDICATIVE OF RESULTS THAT MAY OCCUR IN FUTURE PERIODS. THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT OUR PLANS, ESTIMATES AND BELIEFS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW AND ELSEWHERE IN THIS QUARTERLY REPORT.

FORWARD-LOOKING STATEMENTS

Certain matters discussed herein are forward-looking statements.  SuchThis quarterly report on Form 10-Q contains certain forward-looking statements contained in this Form 10-Q involve riskswithin the meaning of the Private Securities Litigation Reform Act of 1995 and uncertainties,other Federal securities laws, and is subject to the safe-harbor created by such Act and laws.  Forward-looking statements may include statements regarding our goals, beliefs, strategies, objectives, plans, including statements as to:

product and technology developments, future financial conditions, results or projections or current expectations These forward-looking statements can generally be identified as such becauseinvolve known or unknown risks, uncertainties and other factors that may cause the contextactual results, performance, or achievements of the statement will include wordsCompany to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties. Although we “believe,” “anticipate,” “expect,” “estimate” or words of similar meaning. Similarly, statementsbelieve that describe our future plans, objectives or goals are also forward-looking statements. Suchthe expectations reflected-in the forward-looking statements are subject to certain risks and uncertainties which are described in close proximity to such statements and which could cause actualreasonable, we cannot guarantee future results, to differ materially from those anticipated aslevels of the date of filing of this Form 10-Q.   Shareholders, potential investors and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements.  The forward-looking statements included herein are only made as of the date of filing of this Form 10-Q, and we undertake no obligation to publicly update such forward-looking statements to reflect subsequent eventsactivity, performance or circumstances.

This discussion contains forward-looking statements that reflect our plans, estimates and beliefs.achievements. Our actual results may differ materially from those anticipated in these forward-looking statements.

Summary of Business

GRCR Partners Inc. (the “Company”, “Our” or “We”) was formed on January 16, 2015 under the laws These forward-looking statements are made as of the Statedate of Delaware.   We are a provider of risk managementthis report, and asset protection services for businesses, individuals and families. Our offices are located at 1771 Post Rd East #178, Westport CT 06880. Our telephone number is 203-307-1179 and our website iswww.grcrpartners.com

Priorwe assume no obligation to 2017, the Company provided its services primarily to small businesses on a project-based fee arrangement. During 2017, the Company shifted its business model to more recurring fee based engagements and expanded target markets to included individuals and families.    The Company delivers services following its progressive bSecure methodology.    The Company believes that by combining expert consulting, proven processes and software, clients can cost effectively build and maintain RAP programs that reduce day-to-day and long-term risks in their work environment, personal and family lives.   

Our Opportunity

Along with the lack of clearly identified corporate risk management roles, an overall complex approach to personal and family asset protection, we believe there is a need to bridge the communication gap between technology and risk as well as lack of appropriate metrics to define and track enterprise risks.   Some may be scratching their heads and wondering why CROs are necessary.  After all, isn’t risk already part of the domain responsibility of the chief executive officer (CEO), general counsel, chief security officer (CSO), chief information officer (CIO), chief information security officer (CISO) and chief operating officer (COO)?    The answer is yes; every member of the C-suite is responsible for their domain and for ensuring the remainder of the enterprise or company benefits from their decisions and counsel for collective risk management.  

Given the global nature of business today, it has become harder and harder to wrap your arms around risk management. How do you invest intelligently?   How do we protect ourselves and our customers in the most effective way? Today’s risk management needs to go beyond just checking off boxes that are required by regulations. The only way you can truly protect the enterprise is by understanding the context and the landscape in which your business operates. If an organization can leverage that information and collect it and provide context, the organization will be more agile and adaptiveupdate these forward-looking statements whether as a result of new information, future events, or otherwise, other than as required by law. In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this report might not occur and actual results and events may vary significantly from those discussed in the forward-looking statements. 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 September 30, 2018. Readers are also urged to carefully review and consider the various disclosures we have made in that report.

When used in this quarterly report, the terms “Seedo,” “the Company,” “we,” “our,” and “us” refer to SEEDO CORP., a Delaware corporation, unless otherwise indicated or as otherwise required by the context.

Company Overview

We are a global technology company focusing on producing cutting edge technology for the Agro-tech markets for home, industrial, commercial and medical use. We produce automated plant growing devices managed and controlled by an artificial intelligent algorithm, allowing customers to grow their own herbs and vegetables effortlessly from seed to harvest, while providing optimal conditions to assure premium quality produce year-round. Seedo delivers the future of automated plant growing technologies today. Our technology affords for pesticide free, soil free optimal growing in a self-regulating climate - allowing anyone to grow simply, from seed to harvest.

Sales, Marketing and the SEEDO “Community”

We are continuing our organic marketing efforts and have approximately:

As of September 30, 2019, we have delivered 462 home cultivator units which amounts to approximately 17% of our pre-orders. We believe that following the delivery of the pre-order units combined with a marketing campaign and our community strength, we will be able to sell and deliver thousands of our “Home Cultivator” devices world-wide.   At the moment, we have delivered to customers in Europe and North America, which are our target markets, though our devices are also being sold in Latin America, Asia, Australia, the Middle East and Africa.

In addition, we recently entered into an agreement with a company affiliated with Mr. Calvin Cordozar Broadus Jr., professionally known as “Snoop Dogg” (“Snoop Dogg”), with respect to services that Snoop Dogg will provide to the Company as its brand ambassador. In this role, Snoop Dogg will represent the Company on a variety of platforms and work closely with the Company to achieve maximum brand awareness and sales growth.

We also recently signed an agreement with a leading online cannabis retailer, Namaste Technologies, for marketing and distribution across Europe and Canada.

Our Opportunity

Since September 14, 2018, our main business has been operated by our wholly owned subsidiary Eroll Grow Tech Ltd. (“Eroll”). We deliver devices that we believe represent the future of automated plant growing technologies, for home, commercial, and medical use.

The Home Cultivator

We target the world-wide population which wants to grow their own herbs and vegetables pesticide free, with self-regulating climate control capabilities - allowing each user to grow its own herbs and vegetables, from seed to harvest. Our cutting-edge technology also addresses the medical cannabis market, as we have optimized our growing technologies for the cannabis plant.

We believe that the risk level goes down.following advantages afford us a unique market penetration opportunity: