Forward-Looking Statements
The following discussion should be read in conjunction with the financial
statements and related notes contained elsewhere in this Quarterly Report on
Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year ended
December 31, 2021 as filed with the Securities and Exchange Commission (the
"SEC") on April 14, 2022. Certain statements made in this discussion are
"forward-looking statements" within the meaning of the private securities
litigation reform act of 1995,. These statements are based upon beliefs of, and
information currently available to, the Company's management as well as
estimates and assumptions made by the Company's management. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
are only predictions and speak only as of the date hereof. When used herein, the
words "anticipate," "believe," "estimate," "expect," "forecast," "future,"
"intend," "plan," "predict," "project," "target," "potential," "will," "would,"
"could," "should," "continue" or the negative of these terms and similar
expressions as they relate to the Company or the Company's management identify
forward-looking statements. Such statements reflect the current view of the
Company with respect to future events and are subject to risks, uncertainties,
assumptions, and other factors, including the risks relating to the Company's
business, industry, and the Company's operations and results of operations and
the effects that the COVID-19 outbreak, or similar pandemics, could have on our
business. Should one or more of these risks or uncertainties materialize, or
should the underlying assumptions prove incorrect, actual results may differ
significantly from those anticipated, believed, estimated, expected, intended,
or planned.
The full extent to which the COVID-19 pandemic may directly or indirectly impact
our business, results of operations and financial condition will depend on
future developments that are uncertain, including as a result of new information
that may emerge concerning COVID-19 and the actions taken to contain it or treat
COVID-19, as well as the economic impact on local, regional, national and
international customers and markets. We have made estimates of the impact of
COVID-19 within our financial statements, and although there is currently no
major impact, there may be changes to those estimates in future periods. Actual
results may differ from these estimates.
Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance, or achievements. Except as required by
applicable law, including the securities laws of the United States, the Company
does not intend to update any of the forward-looking statements to conform these
statements to actual results.
Our financial statements are prepared in accordance with accounting principles
generally accepted in the United States ("GAAP"). These accounting principles
require us to make certain estimates, judgments and assumptions. We believe that
the estimates, judgments and assumptions upon which we rely are reasonable based
upon information available to us at the time that these estimates, judgments and
assumptions are made. These estimates, judgments and assumptions can affect the
reported amounts of assets and liabilities as of the date of the financial
statements as well as the reported amounts of revenues and expenses during the
periods presented. Our financial statements would be affected to the extent
there are material differences between these estimates and actual results. The
following discussion should be read in conjunction with our financial statements
and notes thereto appearing elsewhere in this report.
Business Overview
World Health Energy Holdings, Inc. ("we" "us" "our" the "Company" or "WHEN")
WHEN is a diversified energy, health, and cybersecurity technology company. On
April 27, 2020, WHEN completed a reverse triangular merger pursuant to the
Agreement and Plan of Merger (the "Merger Agreement") among the Company, R2GA,
Inc., a Delaware corporation and a wholly owned subsidiary of the Company
("Sub"), UCG, Inc., a Florida corporation ("Seller"), SG 77 Inc., a Delaware
corporation and wholly-owned subsidiary of Seller ("SG"), and RNA Ltd., an
Israeli company and a wholly owned subsidiary of SG ("RNA"). Under the terms of
the Merger Agreement, R2GA merged with and into SG, with SG remaining as the
surviving corporation and a wholly-owned subsidiary of the Company (the
"Merger"). The Merger became effective as of April 29, 2020. Each of Gaya
Rozensweig and George Baumeohl, directors of the Company, are also the sole
shareholders and directors of UCG.
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RNA is primarily a research and development company that has been performing
software design services in the field of cybersecurity. SG is primarily engaged
in the marketing and distribution of cybersecurity related products. In
anticipation of the transaction contemplated under the Merger Agreement, SG was
formed and all of the cybersecurity rights and interests held by UCG, including
the share ownership of RNA, were assigned to SG.
Following the closing, each of SG 77 and RNA became wholly-owned subsidiaries of
the Company.
Recent Developments
(i) On March 22, 2022 the Company, CrossMobile Sp zoo, a company formed under
the laws of Poland ("CrossMobile") and the shareholders of CrossMobile (of which
our CEO, Giora Rosenzweig, holds 40.67% and George Baumeohl, a director, holds
3.33%, of the issued preferred share capital of CrossMobile), entered into an
Investment Agreement (the "Agreement") pursuant to which the Company is to
purchase 26% of the outstanding common share capital of CrossMobile on a fully
diluted basis, in consideration of the issuance by the Company to CrossMobile of
10,000,000,000 restricted shares of Company common stock (the "Initial
Investment"). The acquisition is subject to the registration with the Polish
Companies Registrar of the shares issuable to the Company in respect of the
Initial Investment, as required under local law. Upon the registration of the
Company shareholdings in CrossMobnile, the closing of the Initial Investment
will be deemed to have occurred and the 10,000,000,000 Company shares of common
stock will be issued to CrossMobile. In addition, for 18 months following the
date of the Agreement, the Company has the option to purchase additional shares
of CrossMobile, such that following such additional purchase, the Company shall
hold approximately 51% of CrossMobile's outstanding share capital on a fully
diluted basis. In the event the Company shall choose to exercise the option, the
Company shall issue such number of restricted shares of common stock of the
Company calculated based on pre-money valuation of CrossMobile as determined by
an independent appraiser agreed between the Company and CrossMobile.
Under the Agreement, upon the closing of the Initial Investment, Giora
Rosenzweig, is to be appointed to the CrossMobile board of directors. The
Agreement provides that either party may terminate the Agreement and the
transactions is the Initial Investment has not closed by September 30, 2022.
The preferred share capital of CrossMobile provides certain privileges,
including the right to participate in CrossMobile shareholder meetings at a rate
of two votes for each preferred share and preference as to distribution of
dividends at a rate equal to twice the dividends distributed to the holders of
the common shares in CrossMobile.
We believe that the acquisition of CrossMobile provides an opportunity in our
evolution and provides us with a strong foothold in the European market.
CrossMobile is part of a limited group of licensed operators in the EU.
CrossMobile is planning to roll-out a comprehensive suite of value-added
services for B2B and B2C customers in the telecom industry.
With our involvement in CrossMobile, we expect to provide advanced cybersecurity
solutions and other next-generation value-added services to CrossMobile's future
product offerings as well the access to the EU market for our CyberSecurity
products.
Key Financial Terms and Metrics
The following discussion summarizes the key factors our management believes are
necessary for an understanding of our consolidated financial statements.
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Revenues
We currently generate revenues primarily from software license fees.
Research and Development Expenses
The process of researching and developing our product candidates is lengthy,
unpredictable, and subject to many risks. We expect to continue incurring
substantial expenses through 2023 as we continue to develop our product
offerings and adapt them to our new MVNO business. We are unable, with any
certainty, to estimate either the costs or the timelines in which those expenses
will be incurred..
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
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 March 31, 2022 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 32,542 32,649
Operating Expenses - -
Research and development expenses (123,506 ) (172,771 )
General and administrative expenses (1,549,128 ) (124,485 )
Operating loss
(1,640,092 ) (264,607 )
Financing income (expenses), net 3,296 (1,484 )
Net loss (1,636,796 ) (266,091 )
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Revenues. Revenues for the three months ended March 31, 2022 and 2021 were
$32,542 and $32,649, respectively. Revenues were comprised primarily of software
license fees.
Research and Development. Research and development expenses consist of salaries
and related expenses, consulting fees, service providers' costs, related
materials and overhead expenses. Research and development expenses decreased to
$123,506 in the three months ended March 31, 2022 from $172,771 during the
corresponding period in 2021. The decrease resulted primarily from salaries and
related expenses.
General and Administrative Expenses. General and administrative expenses consist
primarily of share base compensation expenses, salaries and related expenses and
other non-personnel related. General and administrative expenses increased to
$1,549,128 for the three months ended March 31, 2022 from $124,485 during the
corresponding period in 2021. The increase is primarily attributable to the
increase in share base compensation expenses.
Financing Expenses, Net. Financing income, net for the three months ended March
31, 2022 amounted to $3,296. Financing expenses, net for the three months ended
March 31, 2021 amounted to $1,484. The increase is mainly due to currency
exchange differences between the Dollar and the New Israeli Shekel.
Net Loss. Net loss for the three months ended March 31, 2022 was $1,636,796 and
is primarily attributable to research and development and general and
administrative expenses.
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 31 and 2022 and 2021, we had
current assets of $1,551,868 and $202,433 respectively, and total assets of
$1,815,794 and $483,459 respectively. The increase in total assets is due to an
increase in Prepaid share based payment to service providers balance offset by
decrease in right of use asset arising from operating lease. We had current
liabilities of $758,598 as compared to $592,050 as of March 31, 2022 and 2021,
respectively and total liabilities of $3,087,605 as compared to $2,440,712 as of
March 31, 2022 and 2021, respectively. The increase is mainly attributed to the
increase in the balance of employees and related institutions, accrued expenses,
and increase in loans received from a related party offset by decrease in right
of use liabilities arising from operating lease.
At March 31, 2022, we had a cash balance of $385,957 compared to the cash
balance of $46,022 as of December 31, 2021. We have no cash equivalents.
At March 31, 2022, we had a working capital of $793,270 as compared with a
working capital of $547,972 at December 31, 2021.
During March 2022, the Company and certain investors entered into subscription
agreements for a private placement of units of the Company securities in an
aggregated amount of $500,000, where each unit (a "Unit" and collectively the
"Units") is comprised of (i) one (1) share of the Company's Common Stock and
(ii) one common stock purchase warrant to purchase an additional share of the
Company's Common Stock through the second anniversary thereof at a per share
exercise price of $0.0002. The price per unit is $0.0001. In consideration
thereof the holders are entitled to 5,000,000,000 shares of Common Stock and
warrants for an additional 5,000,000,000 shares of Common Stock, of which to
date 2,500,000,000 shares of Common Stock and warrants for an additional
2,500,000,000 shares of Common Stock have been issued.
We expect that our existing cash and cash equivalents as well as expected
revenues will enable us to fund our operations and capital expenditure
requirements through year end 2022. Our requirements for additional capital
during this period will depend on many factors.
We may seek to raise any necessary additional capital through a combination of
private or public equity offerings, debt financings, collaborations, strategic
alliances, licensing arrangements and other marketing and distribution
arrangements. To the extent that we raise additional capital through marketing
and distribution arrangements or other collaborations, strategic alliances or
licensing arrangements with third parties, we may have to relinquish valuable
rights, future revenue streams, or product candidates or to grant licenses on
terms that may not be favorable to us. If we raise additional capital through
private or public equity offerings, the ownership interest of our existing
stockholders will be diluted, and the terms of these securities may include
liquidation or other preferences that adversely affect our stockholders' rights.
If we raise additional capital through debt financing, we may be subject to
covenants limiting or restricting our ability to take specific actions, such as
incurring additional debt, making capital expenditures or declaring dividends.
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Going Concern
The accompanying consolidated financial statements have been prepared assuming
that we will continue as a going concern. We have a stockholders' deficit of
$1,271,811 and a working capital of $793,270 at March 31, 2022 as well as
negative operating cash flows. These conditions raise substantial doubt about
our ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might be necessary if we are
unable to continue as a going concern.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that
have or are reasonably likely to have a current or future effect on the
Company's financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital
resources that is material to stockholders.
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WORLD HEALTH ENERGY HOLDINGS, INC. 
