CITRINE GLOBAL CORP. 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
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, treatments, or an unbalanced lifestyle.
The global health and wellness market is expected to reach
We believe the power of plant-based solutions from nature can help improve people's health and quality of life.
We seek to bring to the market wellness and pharma innovative products, such as food supplements, healthy snacks, healthy beverages and natural cosmetics, to help improve people's health and quality of life and complementary products that aim to balance selected side effects associated with medicines, treatments or an unbalanced lifestyle. Research shows that complementary products can balance side effects associated with medicinal use or treatments. For example, probiotics, natural food supplements are recommended as a complementary product to balance side effects associated with the use of antibiotics4.
1Research, P., 2022. Health and Wellness Market Size to Hit
2 NielsenIQ. 2022. An inside look into the 2021 global consumer health and wellness revolution. [online]
3Sullivan, F., 2022. Increasing Health Consciousness Among Consumers to Shift the Global Prebiotic Ingredients Market. [online] Prnewswire.com.
4 N.A.Kerna, 2018, A complementary medicine approach to augmenting antibiotic
therapy current practices in the use of probiotics during antibiotic therapy,
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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 strategy is to bring to market, on a global scale, innovative plant-based wellness and pharma solutions, covering the whole spectrum from innovation, research and development, product development, infrastructure for production and manufacturing, distribution, marketing and sales.
Our headquarters and senior executives are based in
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
Our presence in
Our mission is to leverage the power of plant-based solutions from nature to help improve people's health and quality of life
We created multi-strategy solutions to realize our mission, the highlights of which include the following:
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.
We already finalized the development of dozens of proprietary formulations in multiple form factors that include 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, enhancing oral care alleviating side effects, and more under the brand name of Green Side by Side™ and we are in the process of finalizing the development of additional brands and product lines for the wellness industry .
Green Side by Side products are manufactured in
Go to Market Strategy and Prospective Revenue Sources
Our strategy for generating revenue in the near term and future includes sales of our proprietary product lines & our brands.
A core part of our strategy includes building a worldwide network with local teams, partners, subsidiaries, strategic partnerships collaborations, and mergers & acquisitions of technology and distribution companies.
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Our HQ are based in
We are ready to market with a range of product lines & dozens of proprietary formulations in multiple form factors that include 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, enhancing oral care alleviating side effects, and more for the wellness industry.
Initially, we are planning to build an infrastructure for sales, marketing &
business development with local teams in
Our strategy includes various business models that are intended to bring new products to market. The wellness products are sold through different distribution channels, which include online digital direct sales, online retailer websites, physical shops and retailers including food, drug, and mass merchandise retail networks. We are currently focused on building a B2B distribution network worldwide with select local partners who will be handling import, distribution, marketing, and sales while adhering with local regulations.
We target our product lines & brands for the plant-based wellness & pharma market of natural products ranging from nutraceuticals, natural superfoods, beverages, and cosmetics to legal cannabis and the evolving market of botanical and plant-derived drugs.
? The nutritional supplements market is expected to reachUSD 624.7 billion by 20305. ? The superfoods market is expected to reachUSD 287.7 billion by 20276. ? The legal cannabis market is expected to reachUSD 70.6 billion by 20287 ? The botanical and plant-derived drug market is expected to reachUSD 53 billion by 20268. ? The natural cosmetics market is expected to reachUSD 20.8 billion by 20279.
IP and Research & Development Strategy
Our IP strategy and R&D roadmap include developing plant-based wellness and pharma solutions, building our patent portfolio, conducting clinical trials, advancing products through regulatory approvals, and bringing innovative products to market.
Currently we have a provisional patent application, and as part of our IP strategy, we plan to build a patent portfolio. We are also considering purchasing patents and IP.
5 Research, P., 2022. Nutritional Supplements Market to Hit
6NielsenIQ. 2022. An inside look into the 2021 global consumer health and wellness revolution. [online]
7Grandviewresearch.com. 2022. Legal Marijuana Market Size Worth
82018-2026, G. and 2018-2026, G., 2022. Botanical and Plant Derivative Drug
Market - Global Forecast 2018-2026. [online]
9Mynewsdesk. 2022. Vegan Cosmetics Market is Growing at 6.9% CAGR, Market Size, Share, Statistics, Cosmetics Industry Trends, Leading Company Profiles, Forecast & Estimations to 2027. [online]
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Our strategy includes developing wellness, OTC products and plant-based medicines for the botanical and plant-derived drug market including:
[[Image Removed]] Developing products portfolio based on rigorous scientific
research ranging from synergistic botanicals, herbal extract
tinctures, medicinal mushrooms together with plant extracts,
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.
[[Image Removed]] Developing & researching complementary solutions to address
the need to balance selected effects for Caused by Using
Medicines, Treatments or an Unbalanced Lifestyle. A broad
range of medicines 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 that are associated with
the use of medicines and treatments19.The public health impact
of harms associated with medicines and treatments is a growing
area of investigation, given the expanding pharma industry and
widespread availability of drugs and different medical
treatments around the world. Current evidence suggests that
use of medicines is associated with side effects. Exploring
the relationship between drug side-effects and therapeutic
indications demonstrates that 69% of drugs have between 10 and
100 different side effects; 22% of drugs have more than 100
side-effects; only 9% of drugs have less than 10 side-effects.
The public health impact of potential harm associated with medicines and treatments is a growing area of investigation, given the expanding pharma industry and widespread availability of drugs and different medical treatments around the world. For example, exploring the relationship between drug side-effects and therapeutic indications demonstrates that 69% of drugs have between 10 and 100 different side effects10.
Our research and development program includes:
[[Image Removed]] Developing wellness plant-based product portfolio & brands
across the range from scientific and research-based plants,
such as herbal extracts, medicinal mushrooms, and other
natural ingredients
[[Image Removed]] Developing complementary products portfolio & brands for
balancing selected side effects caused by medicines,
treatments, cannabis, aging, stress, and an unbalanced
lifestyle
[[Image Removed]] Researching and developing pharma solutions with the mission
of developing plant-based medicines and botanical drugs
[[Image Removed]] Building patent portfolio
[[Image Removed]] Building clinical trials program & portfolio
[[Image Removed]] Registering products for regulatory approval
[[Image Removed]] Building the infrastructure for production and innovation
centers to leverage IP & competitive advantage in developing
and manufacturing wellness to pharma plant-based products
10P. Zhang,
22
Provisional Patent Application
In
In
Oral cavity side effects are common. The overall estimated prevalence of dry mouth is over one in four people in the general population with higher prevalence rates observed in studies conducted with elderly people11. Research shows that oral cavity-related symptoms are linked to different factors, such as using medicines, treatments, aging, an unbalanced or unhealthy lifestyle, various chronic diseases, psychological reasons, stress, and more12.
The Company already developed and launched the SmokLyTM sprays for the oral cavity dry mouth side effect addressing the market of cannabis users and tobacco smokers and plans to develop additional lines of natural wellness and pharma products for oral cavity symptoms and side effects resulting from using medicines, treatments, aging, for patients receiving chemotherapy, various chronic diseases, or an unhealthy lifestyle.
The patent application targets solutions for oral cavity side effects and is in line with the Company's strategy to bring to market a broad array of plant-based wellness and pharma complementary solutions targeting to address selected side effects caused by using medicines, treatments, or an unbalanced lifestyle.
Our mission includes developing plant-based medicines for the plant-derived drug
market that is expected to reach
The Green Vision Center Production &
The Green Vision Center is part of our strategy to create 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.
As demand for plant-based products in industries ranging from wellness, to pharma, to cosmetics, to food continues to increase, Green Vision Center will provide all facilities needed for bringing to market 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
? Manufacturing facilities for botanicals and nutritional supplements
? Manufacturing facilities for pharma plant-based products & botanical drugs
? Manufacturing facilities for healthy snacks & beverages
? Manufacturing facilities for plant-based cosmetics
? Manufacturing facilities for medical cannabis and related products
? R&D laboratories for development, clinical studies, and quality control
testing
? Distribution and global logistics center
? Management and consultant offices
? Conference, training & visitor center
11 How Common is Dry Mouth? Systematic Review and Meta-Regression Analysis of
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13 2018-2026, G. and 2018-2026, G., 2022. Botanical and Plant Derivative Drug
Market - Global Forecast 2018-2026. [online]
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Green Vision Center Israel was designed by
Our mission is to become a leading worldwide production and innovation center
and bring together partners, market leaders, companies, technologies, and
scientific collaborations from
Recent Developments (i) InMay 2022 we appointed Prof.Itamar Grotto , a world-renowned expert in Public Health as Director inCannovation Center Israel Ltd. and President of Green Vision Center Israel.Professor Grotto brings his extensive expertise in the health, pharma and wellness industries and will promote the company's strategy to bring to market innovative plant-based wellness and pharma solutions, Research and Development activities, clinical trials, regulation, and business collaborations with pharma and wellness companies from all over the world. Upon his appointment, the Prof, Itamar Gruto, was granted options under the 2018 Plan to purchase 2,356,420 shares of our common stock a per share exercise price of$0.05 . The options vest over a three year period, in three annual instalments beginning onJune 1, 2023 and thereafter on each subsequent anniversary, subject to his continued service to the Company (ii) InJune 2022 we filed a Registration Statement on Form S-1 with theU.S. Securities and Exchange Commission relating to a proposed underwritten public offering of securities. The terms of the offering have not been finalized. (iii) OnJune 10 , 2022, certain of the Company's stockholders representing more than 50% of the Company's outstanding share capital (the "Majority Consenting Stockholders") approved an amendment to the Company's Certificate of Incorporation (the "Reverse Stock Split Certificate of Amendment") in order to effect a reverse stock split of the Company's common stock pursuant to a range of between 50-to-1 and 700-to-1 (the "Reverse Stock Split"). Pursuant to the Reverse Stock Split, each fifty or seven hundred shares of common stock (or any whole number within such range), as shall be determined by the Board at a later time, will be automatically converted, without any further action by the stockholders, into one share of common stock. No fractional shares of common stock will be issued as the result of the Reverse Stock Split. Instead, each stockholder of the Company will be entitled to receive one share of common stock in lieu of the fractional share that would have resulted from the Reverse Stock Split. The Reverse Stock Split Certificate of Amendment will be effective upon receipt of approval from theFinancial Industry Regulatory Authority ("FINRA") and the filing with the Secretary of theState of Delaware , both of which were not completed as of the date of the approval of the financial statements (iv) OnJuly 15, 2022 , Citrine 9 LP, (hereinafter "Citrine 9"), one of the related entities and a signatory lender (to the Convertible Note Purchase Agreement entered into by the Company and several related parties (hereinafter the "Buyers") inApril 2020 , as subsequently amended (the "CL Agreement") agreed to honor a Draw Down Notice for, and has advanced to the Company,$100,000 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 payments on the Note are due onJuly 31, 2023 and are to 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 8,333,333Series A warrants and 8,333,333Series B warrants for shares of common stock, where the Series A warrants are exercisable beginningJanuary 15, 2023 throughJuly 15, 2024 and the Series B warrants are exercisable beginningJanuary 15, 2023 throughJuly 15, 2025 , in each case at an exercise price of$0.5 per share OnAugust 9, 2022 , the Company's board of directors agreed to extend the maturity date on the loans toOctober 31, 2023 , subject to approval of Citrine 9, and to extend the exercise period of the warrants throughAugust 9, 2027 . (v) InJuly 2022 , the Company's subsidiary,Cannovation Center Israel Ltd , has filed a provisional patent application inthe United States Patent and Trademark Office (USPTO) for "COMPOSITIONS AND METHODS FOR TREATING, AMELIORATING, ALLEVIATING, MITIGATING OR BALANCING SIDE-EFFECTS IN THE ORAL CAVITY ASSOCIATED WITH THE USE OF MEDICINES, TREATMENTS, AGING OR UNBALANCED/UNHEALTHY LIFESTYLE", patent Application No. 63/388,361, in theU.S. Patent & Trademark Office . The patent application targets solutions for oral cavity side effects and is in line with the Company's strategy to bring to market a broad array of plant-based wellness and pharma complementary solutions targeting to address selected side effects caused by using medicines, treatments, or an unbalanced lifestyle. (vi) OnAugust 9, 2022 , the board of directors of the Company agreed to the following: 1. The maturity date on all outstanding convertible loans under the CL Agreement was extended toOctober 31, 2023 (fromJuly 31, 2023 ), subject to agreement of the lending entities under the CL Agreement to the extension of such maturity date; and 2. The exercise period on all of the outstanding Series A and Series B warrants issued to date in connection with the convertible loans under the CL Agreement was extended toAugust 9, 2027 . 24 (vii) OnAugust 9, 2022 , the Board agreed to issue to the related entities who advanced an aggregate of$1,170,000 in convertible loans under the CL Agreement on or beforeJune 15, 2020 warrants for a total 5,589,172 shares of common stock, exercisable throughAugust 9, 2027 at a per share exercise price of$0.05 , in replacement of the Series A warrants for an identical number of shares issued inJune 2020 in connection with such loans. (viii) OnAugust 9, 2022 , the Company's board of directors determined to increase the number of shares reserved for issuance under the 2018 Stock Incentive Plan (the "2018 Plan") by 90 million shares to a total of 180,000,000 shares of common stock thereunder and onAugust 12, 2022 the Company shareholders approved the same. (ix) OnAugust 9, 2022 , the Board also determined to grant to the directors and officers set forth below options under the 2018 Plan. The options are exercisable at a per share price of$0.02 and through the seventh anniversary of the grant date, except in the case ofOra Elharar Soffer , the Company's chief executive officer, the per share exercise price is 0.022 and the exercise period is five years from the date of grant. The options are scheduled to vest over a three year period, in twelve (12) equal installments, with the first instalment vesting on the third month anniversary of the date of grant and each further instalment on each subsequent third month anniversary, subject to such individual's continued service with the Company. In the event of a change in control, the vesting schedule is accelerated and all unvested options vest. Director/Officer Number of OptionsOra Elharar Soffer (Chairperson, CEO) 47,128,400Ilanit Halperin (Director, CFO) 18,851,360Ilan Ben Ishay (Director) 18,851,360Doron Birger (Director) 2,356,420David Kretzmer 2,356,420 (x) OnAugust 9, 2027 , Mr.David Kretzmer's fee in respect of services provided to us was reduced from$7,000 per month to$1,500 per month.Mr. Kretzmer's monthly fee for services rendered to Cannovation Center Israel at the rate of$2,000 per month was unaffected.
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
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
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? 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 re-measurement of monetary balance sheet items denominated in non-dollar currencies. Other financial expenses include bank's fees and interest on long term loans.
Comparison of the Three Months Ended
The following table presents our results of operations for the three months endedJune 30, 2022 and 2021 Three Months Ended June 30 2022 2021 Revenues - - Cost of sales - - Operating loss - - Research and development expenses (31,000 ) -
Marketing, general and administrative expenses (355,000 ) (204,000 ) Operating loss
(386,000 ) (204,000 )
Income (expenses) related to convertible loan terms 386,000 (702,000 )
Other financing expenses, net (6,000 ) 47,000
Net loss (6,000 ) (859,000 )
Revenues. Revenues for the three months ended
Research and Development. Research and development expenses for the three months
ended
Marketing, general and Administrative Expenses. Marketing, general and
administrative expenses consist primarily of professional services, share-based
compensation expenses and other non-personnel related expenses such as legal
expenses. Marketing, general and administrative expenses increased from
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Financing Expenses, Net. Financing income, net for the three months ended
Net Loss. Net loss for the three months ended
Comparison of the Six Months Ended
The following table presents our results of operations for the six months endedJune 30, 2022 and 2021 Six Months Ended June 30 2022 2021 Revenues - - Cost of sales - - Operating loss - - Research and development expenses (56,000 ) -
Marketing, general and administrative expenses (669,000 ) (2,179,000 ) Operating loss
(725,000 ) (2,179,000 )
Income (expenses) related to convertible loan terms 7,000 (797,000 ) Other financing expenses, net
(17,000 ) 17,000
Net loss (735,000 ) (2,959,000 )
Revenues. Revenues for the six months ended
Research and Development. Research and development expenses for the six months
ended
Marketing, general and Administrative Expenses. Marketing, general and
administrative expenses consist primarily of professional services, share-based
compensation expenses and other non-personnel related expenses such as legal
expenses. Marketing, general and administrative expenses decreased from
Financing Expenses, Net. Financing expenses, net for the six months ended
Net Loss. Net loss for the six months ended
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
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At
At
On
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.
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