This Quarterly Report contains forward-looking statements that are subject to a
number of risks and uncertainties, many of which are beyond our control, which
may include statements about our:
? business strategy;
? financial strategy;
? intellectual property;
? production;
? future operating results; and
? plans, objectives, expectations and intentions contained in this report
that are not historical.
All statements, other than statements of historical fact included in this
report, regarding our strategy, intellectual property, future operations,
financial position, estimated revenues and losses, projected costs, prospects,
plans and objectives of management are forward-looking statements. When used in
this report, the words "could," "believe," "anticipate," "intend," "estimate,"
"expect," "project" and similar expressions are intended to identify
forward-looking statements, although not all forward-looking statements contain
such identifying words. All forward-looking statements speak only as of the date
of this report. You should not place undue reliance on these forward-looking
statements. Although we believe that our plans, intentions and expectations
reflected in or suggested by the forward-looking statements we make in this
report are reasonable, we can give no assurance that these plans, intentions or
expectations will be achieved. These statements may be found under "Management's
Discussion and Analysis of Financial Condition and Results of Operations," as
well as in this report generally. Actual events or results may differ materially
from those discussed in forward-looking statements as a result of various
factors. In light of these risks and uncertainties, there can be no assurance
that the forward-looking statements contained in this filing will in fact occur.
Organizational History
Creations, Inc. was incorporated in May 2019. On July 1, 2019, Creations, Inc,
acquired a 100% interest in Ocean Yetsira Ltd. (previously called Yetsira
Holdings Ltd. (until April 28, 2021)) (hereinafter: "Ocean Yetsira"), through a
share swap agreement. Ocean Yetsira is an Israeli Corporation incorporated in
December 2017 which in turn owns 100% of Yetsira Investment House ("Yetsira"),
which was incorporated in November 2016.
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On August 19, 2020, the Company purchased 7.5% of the outstanding and issued
shares of Ocean Partners Y.O.D.M Ltd., an Israeli corporation ("Ocean") for
total cash consideration of approximately $87,000. On September 7, 2020, the
Company entered into a share exchange agreement by and among Yetsira, Ocean, and
certain shareholders of Ocean, pursuant to which the Company acquired the
remaining 92.5% of the capital stock of Ocean in exchange for an aggregate of
1,254,498 shares of common stock of the Company, $0.001 par value, and 1,254,498
warrants to purchase shares of common stock of the Company (the "Warrants")
issued to the certain Ocean shareholders by the Company. The Warrants are
convertible into shares of our common stock over a period of three-years at an
exercise price of $1.00 per share. The Company completed the acquisition on
September 28, 2020.
Following the acquisition of Ocean, all the investment management business of
the group is managed through Ocean.
The acquisition implements the Company's vision of becoming a leading investment
company in Israel and delivering high quality asset management and value to its
clients and shareholders. By combining the two businesses, Yetsira and Ocean,
the Company will be able to expand its variety of mutual funds and more than
double its AUM. Moreover, Ocean has a large base of private clients with a high
degree of customer loyalty which can be used as a platform to grow the Company's
privet client's portfolio management business. Furthermore, the acquisition is
intended to diversify the experience, skills, and abilities of the Company's
investment managers team, including marketing expertise that can be used to
advance the Company forward.
The company continue to focus on its mutual fund management business, while
increasing our number of managed funds and private portfolio which resulted in
accelerated growth of our AUM. Part of our growth depends on the strength of our
brand, which the Company intends to continue to strengthen by increasing our
exposure to the general public, especially through investment advisors in the
commercial banks, and by other public relations activities and advertising.
The board of directors examines from time to time expanding the companies areas
of activities by locating synergistic opportunities for our existing areas of
activity and establishing additional parallel investment opportunities. In
addition, we may pursue the acquisition of other unrelated businesses in the
financial sector.
Through our wholly owned subsidiary, Ocean, we operate as a portfolio manager.
Ocean is licensed by the Israel Securities Authority ("ISA"). Ocean currently
offers and manages ten mutual funds branded as Ocean-Yetsira funds, and 87
private clients' portfolios with approximately $266M in assets, currently under
management ("AUM").
We generate revenue primarily from management fees paid by our unitholders or
clients, which fees are based upon a certain percentage of their assets under
management. Our expenses are mainly comprised of payments for distribution
commissions to banks, third-party platform user fees, salaries, employees and
third parties commissions and expenses, and ISA and the Israeli Stock Exchange
fees. We conduct our business exclusively through Ocean Yetsira and exercise
effective control over the operations of Ocean and Yetsira pursuant to a series
of contractual arrangements, under which we are entitled to receive
substantially all of its economic benefits.
On May 2021 the name of Yetsira Holding ltd. was changed to Ocean Yetsira Ltd in
accordance with our brand name.
Recently Issued Accounting Pronouncements
Management reviewed currently issued pronouncements during the three months
ended September 30, 2021, and does not believe that any recently issued, but not
yet effective, accounting standards if currently adopted would have a material
effect on the accompanying condensed financial statements.
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Results of Operations for the nine Months Ended September 2021 compared to nine
month Ended September 30, 2020 (In Thousands)
Revenue
For the nine months ended September 30, 2021, and 2020, the Company generated
revenues in the amount of $1,455 and $252 respectively. The revenue growth
attributable to AUM growth due to organic growth and Ocean acquisition in the
last quarter of 2020 that added $95.3M to the company AUM, which led to an
increase in investment management fees.
Assets Under Management and Investment Performance
The following table reflects the changes in our AUM for the nine Months ended
September 30, 2021, and 2020.
(In millions)
For the nine For the nine
months ended months ended
September 30, 2021 September 30, 2020
Beginning Balance $ 174.49 $ 63.20
Gross inflows / outflows, net 62.77 (6.37 )
Market appreciation (depreciation) (1) 28.44 (2.19 )
End Balance $ 265.70 $ 54.64
(1) Market appreciation (depreciation) includes investment gains (losses) on
assets under management, the impact of foreign exchange rates and net
reinvested dividends.
Our total AUM increased by $91.21 million during the nine months ended June 30,
2021, from $174.49 million as of January 1, 2021, to $265.70 million as of
September 30, 2021, or a 52.27% increase on our total AUM. The increase was a
result of net AUM inflows of $62.77 million and market appreciation of $28.43
million.
Cost of Revenues
For the nine months ended September 30, 2021, and 2020, cost of revenues was
$849 and $282 respectively. The increase in these expenses was mainly
attributable to an increase in the number of managed funds and increase in the
AUM.
Marketing Expenses
For the nine months ended September 30, 2021, our marketing expenses were $159,
compared to $7, respectively. The Increase in these expenses was mainly
attributable to increase in sales employees and marketing activities.
General and Administrative Expenses
For the nine months ended September 30, 2021, our general and administrative
expenses were $611, compared to $581 for the period ended September 30, 2020, an
approximate 5.16% increase. The increase in these expenses was mainly attributed
to service and professional fees, payments to the management and employees as
shown in the table below.
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The following table provides a year-over-year breakout of the material
components of our general and administrative expenses:
For nine For nine
months ended months ended
September 30, 2021 September 30, 2020
(in thousands) (in thousands)
Components of G&A Expenses: $ $
Wages 51 62
Travel and vehicle expenses 11 18
Communication and office expenses 62 21
Services and professional fees (1) 365 348
One off expense (2) 29 65
Office rent 44 35
Insurance Fees 39 21
Other expenses 10 11
Total G&A expenses $ 611 $ 581
(1) The increase in services and professional fees is primarily due to the
following event:
On September 28, 2020, the share swap agreement between Ocean and Creations was
consummated and contributed to an increase in professional services, management
fees, wages, and other expenses.
(2) Nine months ended September 30, 2020, include one-off expenses of $29 due to
a VAT assessment. Nine months ended September 30, 2020, include one-off expenses
of $65 thousand for services fee for the S1 process.
Net Loss
The Company realized a net loss of $149 for the nine months ended September 30,
2021, compared to a net loss of $546 for the nine months ended September 30,
2020. The decrease in net loss, attributed to the increase in revenue.
After taking into account foreign currency translation adjustments, which
resulted in other comprehensive expense of $4 and income of $13 for the nine
months ended September 30, 2021, and 2020, respectively, the Company realized a
net loss after other comprehensive expenses of $153 and $533 for the nine months
ended September 31, 2021, and 2020, respectively.
Liquidity and capital resources
As of September 30, 2021, the Company had cash in the amount of $452 compared to
cash in the amount of $625 as of December 31, 2020.
Stockholders' equity as of September 30, 2021, was $1,466, as compared to
stockholders' equity of $1,619 as of December 31, 2020.
The Company's accumulated deficit was $1,798 and $1,649 on September 30, 2021,
and December 31, 2020, respectively.
Liquidity and capital resources
The Company's operating activities resulted in net cash used of $72 for the nine
months ended September 30, 2021, compared to net cash used of $539 for the nine
months ended September 30, 2020. The decrease in net cash used was mainly
attributable to an increase of our AUM and revenue.
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The Company's investing activities used net cash of $101 for the nine months
ended September 30, 2021, compared to $12 investing activities used for the nine
months ended September 30, 2020.
Off- Balance Sheet Arrangements
The Company currently does not have any off-balance sheet arrangements.
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