| RELATED PARTIES | NOTE
5 – RELATED PARTIES A.
Transactions and balances with related parties SCHEDULE OF TRANSACTIONS AND BALANCES WITH RELATED PARTIES
2022 2021
Three months ended March 31
2022 2021
Research and development expenses:
Directors compensation and fees to officers 25 -
Research and development
expenses 25 -
General and administrative expenses:
Directors compensation and fees to officers (*) 176 92
(*) Share based compensation 27 -
General
and administrative expenses 27 -
Financing expenses, net:
Interest on loan 379 - B.
Balances with related parties:
As of March 31,
2022 2021
Current Assets:
Short term loan 16 -
Prepaid expenses 18 -
34 -
Current Liabilities:
Convertible notes - 879
Accrued compensation 1,024 404
1,024 1,283
Non-current Liabilities:
Convertible notes 1,655 -
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-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. 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, 2021 as filed with the Securities and Exchange Commission, or the SEC, on April 8, 2022. 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 “Citrine” mean Citrine Global, Corp.
and our wholly-owned subsidiary CTGL -Citrine Global Israel Ltd. unless otherwise indicated or as otherwise required by the context. Overview We
are a plant-based wellness & pharma solutions company. Our business activity is primarily comprised of developing wellness and pharma
solutions, focused on science backed plant-based products to improve quality of life and complementary solutions for balancing side effects
caused by using medicines, cannabis, treatments, or an unbalanced lifestyle. The
global health and wellness market is expected to reach USD 7.6 trillion by 2030, growing at a CAGR of 5.5% from 2021 to 2030 1 2 3 We
believe the power of plant-based solutions from nature can help improve people’s health and quality of life. We have built an end-to-end
strategy to bring to market innovative plant-based wellness and pharma solutions covering the whole spectrum from innovation, research
and development, product development, infrastructure for production and manufacturing, distribution, and marketing and sales on a global
scale. Leveraging technology and research, we are focused on developing products portfolio based on rigorous scientific research ranging
from synergistic botanicals, herbal extract tinctures, medicinal mushrooms together with plant extracts, vitamins, minerals, botanical
formulations from seeds, roots, bark, fruits and a wide variety of plants that contain substances with health-supportive effects. Such
supportive effects include, but aren’t limited to, enhancing oral care, anti-inflammatory properties, relaxation, sleep enhancement,
energizing, mood and body balancing, and alleviating side effects. Our
headquarters and top executives are based in Israel, where we operate via our 100%-owned-subsidiary “CTGL Citrine Global Israel
Ltd.” and 60%-owned “Cannovation Center Israel Ltd.” Our experienced team and partners are leaders in their respective
fields with proven track records as top-level businesspeople and executives in technology, high-tech, biotech, investments, entrepreneurship,
real estate, finance, and proven experience in bringing companies to global success. We have a professional, experienced group of primary
shareholders that include Citrine S A L Investment & Technologies, which are supporting the Company. 1
Health and Wellness Market Size to Hit USD 7,656.7 Bn by 2030 2
An inside look into the 2021 global consumer health and wellness revolution 3
Increasing Health Consciousness Among Consumers to Shift the Global Prebiotic Ingredients Market Our
presence in Israel combined with our close contacts with leading universities, researchers, companies, shareholder and governmental support
powers us to access the latest technologies, talent, and innovation to bring innovative solutions to the global market. Our
mission is to become a leading company for plant-based wellness & pharma solutions to improve people’s quality of life. Our
recent achievements and upcoming milestones include: Developing
& Bringing Plant-Based Wellness & Pharma Products to Market We
are developing plant-based solutions which include products for improving quality of life and complementary solutions for balancing selected
side effects caused by using medicines, cannabis, treatments, or an unbalanced lifestyle. In December 2021 we finalized the development
of 25 proprietary formulations in multiple form factors under the brand name of Green Side by Side™ for the wellness industry. The
Green Side by Side™ product line includes herbals medicinal mushrooms, vitamins, minerals, and a variety of researched plants known
for their healing qualities that contain substances with different anti-inflammatory properties and a variety of health-supportive effects
that are relaxing, sleep enhancing, energizing, mood and body balancing, as well as enhancing oral care, alleviating side effects, and
many botanical formulations that we target for balancing selected side effects and improving quality of life. Green
Side by Side products are manufactured in Israel in a GMP-certified manufacturing facility approved by the Israeli Ministry of Health.
In Q1 2022 we launched in the Israeli market several products from the Green Side by Side™ product line, which includes the SmokLy
TM We
have commercially started marketing the products with a local Israeli partner that is targeting medical cannabis distribution channels
and we plan to expand our activity in the Israeli market as well as distribute worldwide with local partners and according to local regulations.
Green Side by Side is positioned to capture market share in the nutritional supplements market that is expected to reach $625 billion
by 2030 4 IP
and Research & Development Strategy Our
IP strategy and R&D roadmap include building our patent portfolio, conducting clinical studies, advancing products through regulatory
approvals. Leveraging technology and research, we continue to innovate, developing solutions that combine botanical formulations, herbal
extracts, tinctures, sprays and other natural delivery methods with a variety of researched plants known for their healing qualities. We
target to bring to the wellness and pharma market innovative products to improve quality of life and complementary solutions for balancing
selected side effects caused by medicines, treatments, cannabis, aging, stress, or an unbalanced lifestyle. Our
mission includes developing plant-based medicines for the plant-derived drug market that is expected to reach $53 billion by 2026 5 4
Nutritional Supplements Market to Hit US$ 624.7 Billion by 2030 5
Botanical and Plant Derivative Drug Market - Global Forecast 2018-2026 Side
Effects Caused by Medicines, Cannabis and Treatments, or an Unbalanced Lifestyle A
broad range of medicines, including use of cannabis, and treatments have common side effects such as dryness in the oral cavity (xerostomia),
headaches, dizziness, drowsiness, fatigue, nausea, vomiting, lack of concentration, and impaired appetite. We are researching and developing
complementary solutions to address the need to balance selected effects through wellness solutions, as well as clinically developed plant-based
pharmaceutical solutions 6 Addressing
a significant market need, we filed a provisional patent application with the US Patent and Trademark Office to address the side effects
of cannabis use titled “Pharmaceutical Compositions and Methods for the Treatment of Side-Effects Associated with the Use of Cannabis,
Cannabinoids and Related Products” patent No: 63/257,673. Research
shows that nearly 70% of cannabis users experience constant dry mouth and 20% percent of the elderly suffer from xerostomia as a side
effect of their medications 7 TM Green
Vision Center Production & Innovation Center for Plant-Based Wellness & Pharma Products The
Green Vision Center is part of our strategy to create end-to-end plant-based solutions covering all the infrastructure, facilities, and
activities required for developing, manufacturing, and bringing to market innovative plant-based wellness and pharma products. In
February of 2022, we completed the acquisition of 125,000 sq ft (11,687 sq meters) of industrial land in Yerucham, a city in southern
Israel, to build the Green Vision Center Israel with the Israeli government support. Approximately 90% of the acquisition cost was provided
by Israeli government programs that encourage industrial development and includes additional grants and tax incentives. Designed
by Avner Sher, one of Israel’s most highly regarded architects and artists, Green Vision Center will be a 60,000 sq ft (5,500 sq
meter) first-of-its-kind facility. The center will be constructed by a professional project construction company that will oversee the
aspects of the building including interfacing with sub-contractors and obtaining the requisite building permits and other required authorizations. As
demand for plant-based products in industries ranging from wellness, to pharma, to cosmetics, to food continues to increase, our Green
Vision Center will provide highly sought-after facilities for the development and production of botanical and plant-based products. Green
Vision Center is a first-of-its-kind center that combines:
● Manufacturing
facilities for botanicals and nutritional supplements, plant-based pharmaceuticals, medical cannabis and related products, plant-based
cosmetics, foods, and beverages
● R&D laboratories for development, clinical studies, and quality control testing
● Management and consultant offices
● Distribution and global logistics center
● International
Visitor Complex including a conference center and museum 6 Medication Side Effects: Types of Side Effects and FDA Regulations 7 International Journal
of Oral and Dental Health Israel
as a source of innovation & Global Expansion Strategy Our
presence in Israel combined with our close contacts with leading universities, researchers, companies, shareholder and government support
empowers us to access the latest technologies, talent, and innovations. Israel, known as the Startup Nation, is well positioned as a
leader in technology with a critical mass of technology companies, researchers, scientists, and government support. A
core part of our strategy includes building a worldwide network with local teams, partners, subsidiaries, Green Vision Centers, strategic
partnerships, collaborations, and mergers & acquisitions of technology and distribution companies. Initially, we are planning to
build infrastructure for business development and sales with local teams in North America and Europe. Developments
During the Quarter (i)
On January 5, 2022, Citrine 9 LP, one of the entities (hereinafter “Citrine 9”), one of the related entities who are the
signatory lenders (hereinafter the “Buyers”) Convertible Note Purchase Agreement entered into by the Company and such Buyers
in April 2020, as subsequently amended (the “CL Agreement”) agreed to honor a Draw Down Notice for, and has advanced to the
Company, $180,000 on the same terms and conditions as are specified in the CL Agreement. The annual interest on the loan continues to
be nine percent (9%). The principal and interest payment on the Note shall be made in New Israeli Shekels (NIS) at the conversion rate
which was in effect on the date on which the loan was advanced. Citrine 9 was be issued 6,666,667 Series A warrants and 6,666,667 Series
B warrants for shares of common stock, where the Series A warrants are exercisable beginning July 5, 2022 through July 5, 2024 and the
Series B warrants are exercisable beginning July 5, 2022 through July 5, 2025, in each case at an exercise price of $0.05 per share. Additionally,
on January 5, 2022, the Company and the Buyers under the CL Agreement entered into the Fourth Amendment to the CL Agreement pursuant
to which the following was agreed to:
(i) The
repayment of principal and accrued interest on all outstanding loans shall be made in New Israeli Shekels (NIS) at the conversion
rate which was in effect on the date on which the loan was advanced;
(ii) The
conversion price on all outstanding notes under the C:L Agreement has been adjusted to a conversion price of $0.05 per share
(iii) The
exercise price on all outstanding warrants issued in connection with advances made under the CL Agreement has been adjusted to an
exercise price of $0.05 per share. (ii)
We previously disclosed that the Israeli Ministry of the Economy recommended that the Company’s majority-owned subsidiary, Cannovation
Center Israel, be granted the right to purchase an industrial parcel of land from the Israel Land Authority (“ILA”) at a
subsidized price and exempt from a tender procedures typically required under Israeli law. On February 8, 2022, Cannovation Ltd. received
from ILA a counter-signed development agreement (the “Development Agreement”) to purchase rights for long term lease to 11,687
square meters of industrial land in Yeruham in Southern Israel (the “Land”) for purposes of building the Cannovation Center,
which is intended to include factories, laboratories, logistics and a distribution center for the wellness, pharma, medical cannabis
and botanicals industries. During December 2021, Cannovation Ltd. remitted to the Israeli Ministry of the Economy and the ILA the aggregate
amount of 687,650 NIS ($221,122 on the date of payment) to obtain the rights to the Land. The amount represents approximately 10% of
the prevailing market price for comparable land space in the general area and is part of the grant by the Israeli government under government
programs to encourage industrial development in Southern Israel. The amount remitted represents the total amount that Cannovation Ltd.
is required to pay as the purchase price for the Land. Under
the Development Agreement, Cannovation Ltd. will build and develop the Green Vision Center in accordance with by the time frames, terms
and conditions of the Agreement. Typically, the initial time frame for completing the development is four (4) years, subject to extensions
that the ILA may approve. Upon completion of the development within the time frames and other requirements specified in the Development
Agreement, then Cannovation Ltd. will be entitled subject to Israeli law to long term lease agreement (49 years) to the land (equivalent
to ownership rights as most of the land in Israel is government owned and when marketed usually the developers are granted with development/long
lease rights). Our
subsidiary Cannovation Ltd., holds title to the land under the Development Agreement. Under local law in Israel, there are restrictions
relating to the transfer of ownership of the premises on the land to a non-Israeli parties, as well as restrictions on the composition
of each of Cannovation’s shareholders to ensure that Israeli citizens control each such shareholder. Accordingly, the shareholders
of Cannovation, which include our 60% owned subsidiary CTGL Israel, entered into an agreement under which they undertook that at all
times they will comply with applicable law in this regard. Cannovation
Ltd. is developing its Green Vision Center as development and production of wellness & pharma plant-based products, including botanical
solutions, nutritional supplements, vitamins, healthy snacks & beverages, natural cosmetics, medical cannabis & cannabinoid-based
products, plant-based pharma products and botanical drugs, and it is planned to include manufacturing plants, laboratories, logistics,
import and export, offices, training, conference center, and an international visitor complex. On
February 7, 2022, the board of directors of Cannovation Ltd. authorized management of Cannovation Ltd. to finalize the terms of an agreement
with one of the leading real estate project construction companies in Israel to commence building the Green Vision Center. The selected
project manager is reputed for the successful completion of many projects amounting to hundreds of thousands of square meters of offices,
malls, stadiums, hospitals and public institutions throughout Israel. The project manager will oversee all aspects of the building project,
including interfacing with the sub-contractors and obtaining the requisite building permits and other required authorizations. Cannovation
Ltd. and the Company are in discussions with commercial banks and prospective investors regarding the financing of the planned development. Components
of Operating Results The
following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial
statements. Revenues We
have not generated any revenues from product sales as of March 31, 2022. Research
and Development Expenses The process of researching
and developing our products is lengthy, unpredictable, and subject to many risks. We expect to continue incurring substantial expenses
through 2022 as we continue to develop our product line. We are unable, with any certainty, to estimate either the costs or the
timelines in which those expenses will be incurred. Our current product development plans focus on the development of our Green
Side by Side Products Our
research and development costs include costs are comprised of: ●
internal recurring costs, such as personnel-related costs (salaries, employee benefits, equity compensation and other costs), materials
and supplies, facilities and maintenance costs attributable to research and development functions; and ●
fees paid to external parties who provide us with contract services, such as preclinical testing, manufacturing and related testing and
clinical trial activities. Marketing Marketing
expenses consist primarily of salaries, employee benefits, equity compensation, and other personnel-related costs associated with executive
and other support staff. Other significant marketing expenses include the costs associated with professional fees to develop our marketing
strategy. General
and Administrative Expenses General
and administrative expenses consist primarily of salaries, employee benefits, equity compensation, and other personnel-related costs
associated with executive, administrative and other support staff. Other significant general and administrative expenses include the
costs associated with professional fees for accounting, auditing, insurance costs, consulting and legal services, along with facility
and maintenance costs attributable to general and administrative functions. Financial
Expenses Financial
expenses consist primarily impact of exchange rate derived from . Comparison
of the Three Months Ended March 31, 2022 compared to the Three Months Ended March 31, 2021 The
following table presents our results of operations for the three months ended March 31, 2022 and 2021
Three Months Ended
March 31
2022 2021
Revenues - -
Cost of sales - -
Operating loss - -
Research and development expenses (25,000 ) -
Marketing, general and administrative expenses (315,000 ) (1,975,000 )
Operating loss (340,000 ) (1,975,000 )
Income (expenses) related to convertible loan terms (379,000 ) (122,000 )
Other financing expenses, net (10,000 ) (3,000 )
Net loss (729,000 ) (2,100,000 ) Revenues.
Research
and Development. Marketing,
general and Administrative Expenses. Financing
Expenses, Net. Net
Loss Financial
Condition, Liquidity and Capital Resources Liquidity
is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. At March 30, 2022, we had
current assets of $386,000 compared to total current assets of $349,000 as of December 31, 2021. At March 31, 2022, we had current liabilities
of $1,232,000 as compared to $1,064,000 as of December 31, 2021. At March 31, 2022, we had total liabilities of $3,097,000 as compared
to $2,495,000 as of December 31, 2021. The increase is mainly attributed to the increase in the balance of accounts payables and accrued
expenses and the balance of convertible component in convertible notes. At
March 31, 2022, we had a cash balance of $293,000 compared to the cash balance of $270,000 as of December 31, 2021. At
March 31, 2022, we had a working capital deficiency of $846,000 as compared with a working capital deficiency of $715,000 at December
31, 2021. On
January 5, 2022, Citrine 9 LP (hereinafter “Citrine 9”), one of the related partnership entities (collectively,
the “Buyers”) that entered into the Convertible Loan Agreement dated as of April 1, 2020, as subsequently amended (the “Convertible
Loan Agreement”) agreed to honor a Draw Down Notice (as defined in the Convertible Note Agreement) for, and advanced to the
Company, $180,000 on the same terms and conditions as are specified in the Convertible Note Agreement. The maturity date of the loan
is the earlier of July 31, 2023 or at such time as the Company shall have consummated an investment of at least $5 million in Company
securities. The terms of the advances under the Convertible note agreement were previously disclosed by the Company in Current Reports
on Form 8-K filed on each of April 21, April 23, June 12, 2020 and June 24, 2021. The annual interest on the loan continues to be nine
percent (9%). The principal and interest payment on the Note shall be made in New Israeli Shekels (NIS) at the conversion rate which
was in effect on the date on which the loan was advanced. As
provided for under the terms of the Convertible Note Agreement, Citrine 9 will be issued 6,666,667 Series A warrants and 6,666,667 Series
B warrants for shares of common stock, where the Series A warrants are exercisable beginning July 5, 2022 through July 5, 2024 and the
Series B warrants are exercisable beginning July 5, 2022 through July 5, 2025, in each case at an exercise price of $0.5 per share. Additionally,
on January 5, 2022, the Company and the Buyers entered into the Fourth Amendment to the Convertible Note Agreement pursuant to which
the following was agreed to:
(i) The
repayment of the principal and accrued interest on all outstanding loans shall be made in New Israeli Shekels (NIS) at the exchange
rate which was in effect on the date on which the loan was advanced;
(ii) The
conversion price on all outstanding notes under the Convertible Note Agreement has been adjusted to a conversion price of $0.05 per
share
(iii) The
exercise price on all outstanding warrants issued in connection with advances made under the Convertible Note Agreement has been
adjusted to an exercise price of $0.05 per share. Based
on the Company’s current cash balances, the Company believes that it 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 activities as detailed herein, it is incurring losses.
It cannot determine with reasonable certainty when and if it will have sustainable profits. Off-Balance
Sheet Arrangements The
Company has no off-balance sheet arrangements.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK Not
Applicable.
CONTROLS AND PROCEDURES Evaluation
of Disclosure Controls and 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 principal executive officer and the Company’s principal financial 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. The Company’s management is required to apply its judgment in evaluating
the cost-benefit relationship of possible controls and procedures. Based
on the Company’s evaluation of the effectiveness of its disclosure controls and procedures as of March 31, 2022, the Company’s
principal executive officer and the Company’s principal financial officer concluded that the Company’s disclosure controls
and procedures are effective. Changes
in Internal Control over Financial Reporting During
the three months ended March 31, 2022, there were no changes in the Company’s internal control over financial reporting that have
materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.
LEGAL
PROCEEDINGS From
time to time we may become involved in various legal proceedings that arise in the ordinary course of business, including actions related
to our intellectual property. Although the outcomes of these legal proceedings cannot be predicted with certainty, we are currently not
aware of any such legal proceedings that arise in the ordinary course of business, including actions related to our intellectual property.
Although the outcomes of these legal proceedings cannot be predicted with certainty, we are currently not aware of any such legal proceedings
or claims that we believe, either individually or in the aggregate, will have a material adverse effect on our business, financial condition,
or results of operations.
RISK
FACTORS An
investment in the Company’s Common Stock involves a number of very significant risks. You should carefully consider the risk factors
included in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with
the SEC on April 8, 2022, in addition to other information contained in our reports and in this quarterly report in evaluating the Company
and its business before purchasing shares of our Common Stock. There have been no material changes to our risk factors contained in our
Annual Report on Form 10-K for the year ended December 31, 2021.
UNREGISTERED
SALES OF SECURITIES AND USE OF PROCEEDS None.
DEFAULTS
UPON SENIOR SECURITIES None.
MINE
SAFETY DISCLOSURES None.
OTHER
INFORMATION None
EXHIBITS Exhibit
Index
31.1* Certification of Chief Executive Officer (Principal Executive Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
31.2 Certification of Chief Financial Officer (Principal Financial and Accounting Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
32.1* Certification of Chief Executive Officer (Principal Executive Officer), as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.1 Certification of Chief Financial Officer (Principal Financial and Accounting Officer) pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934
101.INS Inline
XBRL Instance Document
101.SCH Inline
XBRL Taxonomy Extension Schema
101.CAL Inline
XBRL Taxonomy Extension Calculation Linkbase
101.DEF Inline
XBRL Taxonomy Extension Definition Linkbase
101.LAB Inline
XBRL Taxonomy Extension Label Linkbase
101.PRE Inline
XBRL Taxonomy Extension Presentation Linkbase
104 Cover
Page Interactive Data File (embedded within the Inline XBRL document) *
Filed herewith Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized. CITRINE
GLOBAL. CORP (Registrant)
By: /s/
Ora Elharar Soffer By: /s/
Ilanit Halperin
Ora
Elharar Soffer Ilanit
Halperin
Chief
Executive Officer Chief
Financial Officer
(Principal
Executive Officer) (Principal
Financial and Accounting Officer)
Date: May
16, 2022 Date: May
16, 2022 |
