The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") covers information pertaining to the Company for
the year ended December 31, 2020 and should be read in conjunction with the
audited financial statements and related notes of the Company as of and for the
year ended December 31, 2020. Except as otherwise noted, the financial
information contained in this MD&A and in the financial statements has been
prepared in accordance with accounting principles generally accepted in the
United States of America. All amounts are expressed in U.S. dollars unless
otherwise noted. This discussion contains forward-looking statements that
involve risks and uncertainties. Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of certain
factors.
OVERVIEW
As a result of the notice of termination of the License Agreement on January 10,
2019, the Company no longer has business operations. The Company believes that
it will continue to experience losses and increased negative working capital and
negative cash flows in the near future and will not be able to return to
positive cash flow without either obtaining additional financing in the near
term or completing a business transaction. The Company has experienced
difficulties accessing the equity and debt markets and raising capital and there
can be no assurance that the Company will be able to raise such additional
capital on favorable terms, or at all, or be able to complete a business
transaction. If additional funds are raised through the issuance of equity
securities or completing a business transaction, the Company's existing
stockholders will experience significant dilution. In order to conserve the
Company's cash and manage its liquidity, the Company has implemented
cost-cutting initiatives including the reduction of employee headcount and
overhead costs.
The Company's Board of Directors is exploring strategic alternatives, which may
include future acquisitions, a merger with another company or the sale of the
public shell company.
TAXES
We have not recorded any income tax benefit for any period from inception to
December 31, 2018. We did record an income tax benefit of $53 for the year ended
December 31, 2019 and an income tax benefit of $53 for the year ended December
31, 2020.
CRITICAL ACCOUNTING POLICIES
There are no critical accounting policies for the years ended December 31, 2020
and 2019.
RESULTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2020 COMPARED TO THE
PERIOD ENDED DECEMBER 31, 2019 (dollars in thousands)
REVENUES. The Company did not have revenue-producing operations for the fiscal
year ended December 31, 2020, or the fiscal year ended December 31, 2019.
COST OF REVENUES. The Company had no cost of revenues for the fiscal year ended
December 31, 2020, or the fiscal year ended December 31, 2019, due to the fact
that the Company has no business operations.
PROFIT FROM SALE OF OPERATIONS, NET. We did not incur a profit from the sale of
operations in the fiscal year ended December 31, 2020, or the fiscal year ended
December 31, 2019.
RESEARCH AND DEVELOPMENT EXPENSES. We did not incur any research and development
expenses for the fiscal year ended December 31, 2020, or for the fiscal year
ended December 31, 2019, due to the termination of the License Agreement
resulting in the Company no longer having business operations.
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SELLING AND MARKETING EXPENSES. Selling and marketing expenses were $0 for the
fiscal year ended December 31, 2020, and $0 for the fiscal year ended December
31, 2019, due to the Company being in its developmental stage and having no
substantive operations.
GENERAL AND ADMINISTRATIVE EXPENSES. Our general and administrative expenses
consisted primarily of compensation costs for administrative, finance and
general management personnel, insurance, legal, accounting and administrative
costs.
General and administrative expenses for the fiscal year ended December 31, 2020,
decreased by 1% to $167 from $168 for the fiscal year ended December 31, 2019.
The decrease is attributable mainly to the decrease in administrative expenses.
FINANCIALEXPENSE, NET. We recognized financial income of $7 for the fiscal year
ended December 31, 2020, compared to financial expense, net of $6 for the fiscal
year ended December 31, 2019.
OTHER EXPENSES. Other expenses consist primarily of capital losses in respect of
the sale of fixed assets. We incurred no capital losses in the fiscal year ended
December 31, 2020, or the fiscal year ended December 31, 2019.
NET LOSS. We incurred a net loss of $121 in the fiscal year ended December 31,
2020 and for the fiscal year ended December 31, 2019. These net losses were
primarily related to our operational and financial expenses. The loss for the
fiscal year ended December 31, 2020 is mainly due to the fact that the Company
has no business operations.
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LIQUIDITY AND CAPITAL RESOURCES (dollars in thousands)
As of December 31, 2020, and as of December 31, 2019, we had an accumulated
deficit of $2,318 and $2,197, respectively, and a negative working capital
(current assets less current liabilities) of $345 in 2020 as compared to a
negative working capital of $135 in 2019. Losses will probably continue in the
foreseeable future.
We do not have any material capital commitments for capital expenditures as of
December 31, 2020, or December 31, 2019.
We have sustained significant operating losses in recent periods, which have
resulted in a significant reduction in our cash reserves. Due to the termination
of the License Agreement, the Company no longer has any business operations. The
Company believes that it will continue to experience losses and negative cash
flows in the near future and will not be able to return to positive cash flow
without obtaining additional financing in the near term or entering into a
business transaction. The Company has experienced difficulties accessing the
equity and debt markets and raising capital or entering into a business
transaction, and there can be no assurance that the Company will be able to
raise such additional capital on favorable terms or at all or entering into a
business transaction. If additional funds are raised through the issuance of
equity securities or entering into a business transaction, the Company's
existing stockholders will experience significant further dilution. In order to
conserve the Company's cash and manage its liquidity, the Company has
implemented cost-cutting initiatives including the reduction of employee
headcount and overhead costs.
On May 15, 2019, the Company issued two unsecured promissory notes (each, a
"Note" and collectively the "Notes") in the aggregate principal amount of
$100,000. In that regard, one Note, with a principal aggregate balance of
$50,000, was issued to KNRY Ltd., an entity related to Nadav Kidron, the natural
person with voting and dispositive power over the securities held by Tonak Ltd.,
the Company's largest shareholder. $20,000 of the funds relating to KNRY Ltd.'s
Note were received by the Company on March 22, 2019. The balance of the funds
relating to KNRY Ltd.'s Note was received by the Company on April 4, 2019. In
addition, one Note, with an aggregate principal balance of $50,000, was issued
to Cutter Mill Capital LLC, an existing shareholder of the Company. Each Note
accrues interest at a rate of 6% per annum until the Note is repaid in full. All
payments of principal, interest and other amounts under each Note are payable by
June 30, 2021. The proceeds of the Notes were used by the Company for general
working capital purposes.
As of December 31, 2020 and December 31, 2019, we had accumulated liabilities
of $356 and $260, respectively.
As of December 31, 2020 and December 31, 2019, we had cash and cash equivalents
of $1 and $2 respectively, and negative cash flow from operating activities of
$1 and $108, respectively, for the years and periods then ended. The negative
cash flow from operating activities in the year ended December 31, 2020 is
attributable mainly to a net loss of $121, share-based compensation expenses of
$14, a decrease in accounts receivable and prepaid expenses of $10, an increase
in accrued expenses of $89 and an increase in related parties expenses of $7.
CONTRACTUAL OBLIGATIONS AND COMMITMENTS
None.
OFF-BALANCE SHEET ARRANGEMENTS
None.
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