UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2016December 31, 2020

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________________to ____________________

_____________ to _____________

333-208814

Commission file number

GRCR Partners Inc.

SEEDO CORP.

(Exact name of registrant as specified in its charter)

Delaware 47-2847446
(State or other jurisdiction of
incorporation or organization)		 (I.R.S. Employer
Identification No.)
   
1771 Post Rd East #178 Westport CT

#3 Bethesda Metro Center, #700

Bethesda, Md 20814

 06880
(Address of principal executive offices) (Zip Code)
317.468.2779

(800) 608-6432

Registrant’s telephone number, including area code

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, par value $0.0001

Indicate by check mark whether the registrant (1) has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 day.[X]

☒ Yes   [   ]☐ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [ ]☐   No [  ]

(Does not currently apply to the Registrant)
☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 ifof the Exchange Act.

Large accelerated filter  ☐filer
☐		Accelerated filter  filer☐
Non-accelerated filter  ☐ (Do not check if a smaller reporting company)filer
☐		Smaller reporting company☒
Emerging growth company☐
Non-accelerated filter (Do

If an emerging growth company, indicate by check mark if the registrant has elected not check if a smaller reporting company) Smaller reporting companyto use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes __☐   No X

☒

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date.

Class Outstanding January 13, 2017December 31, 2020
Common Stock, $0.001 par value per share 2,926,50031,665,566 shares

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve a number of risks and uncertainties. Although our forward-looking statements reflect the good faith judgment of our management, these statements can be based only on facts and factors of which we are currently aware. Consequently, forward-looking statements are inherently subject to risks and uncertainties. Actual results and outcomes may differ materially from results and outcomes discussed in the forward-looking statements.

Forward-looking statements can be identified by the use of forward-looking words such as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. These statements include, but are not limited to, statements under the captions “Risk Factors,” “Management’s Discussion and Analysis or Plan of Operation” and “Description of Business,” as well as other sections in this report. Such forward-looking statements are based on our management’s current plans and expectations and are subject to risks, uncertainties and changes in plans that may cause actual results to differ materially from those anticipated in the forward-looking statements. You should be aware that, as a result of any of these factors materializing, the trading price of our common stock may decline. These factors include, but are not limited to, the following:

 ●the availability and adequacy of capital to support and grow our business;
 ●economic, competitive, business and other conditions in our local and regional markets;
 
●
actions taken or not taken by others, including competitors, as well as legislative, regulatory
judicial and other governmental authorities;
bodies
 ●competition in our industry;
 ●Changes in our business and growth strategy, capital improvements or development plans;
 
●the availability of additional capital to support development; and
 ●other factors discussed elsewhere in this annual report.

The cautionary statements made in this annual report are intended to be applicable to all related forward-looking statements wherever they may appear in this report.

We urge you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward looking-statements, whether as a result of new information, future events or otherwise.

i

TABLE OF CONTENTS

Item 1.Business.1
Item 1A.Risk Factors.3
Item 1A.1B.Risk Factors.Unresolved Staff Comments.3
Item 1B.2.Unresolved Staff Comments.Properties.3
Item 2.3.Properties.Legal Proceedings.3
Item 3.4.Legal Proceedings.Mine Safety Disclosures.3
Item 4.Submission of Matters to a Vote of Security Holders3
Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.4
Item 6.Selected Financial Data.5
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations.45
Item 7A.Quantitative and Qualitative Disclosures About Market Risk.910
Item 8.Financial Statements and Supplementary Data.9F-1
Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.1011
Item 9A.Controls and Procedures.1011
Item 9B.Other Information.12
Item 10.Directors, Executive Officers and Corporate Governance. 13
Item 11.Executive Compensation.13
Item 11.Executive Compensation.16
Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.1417
Item 13.Certain Relationships and Related Transactions, and Director Independence. 1517
Item 14.Principal Accounting Fees and Services.1517
Item 15.Exhibits, Financial Statement Schedules. 1518
SIGNATURES 1619

ii

EXPLANATORY NOTE

Seedo, Corp. is filing this comprehensive annual report on Form 10-K for the three months ended December 31, 2018, the fiscal year ended December 31, 2019, the fiscal year ended December 31, 2020 and the quarterly periods ended March 31, 2020, June 30, 2020 and September 30, 2020 (the “Comprehensive Form 10-K”) as part of its effort to become current in its filing obligations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). This Comprehensive Form 10-K is our first periodic filing with the Securities and Exchange Commission (the “SEC”) since the filing of our quarterly report on Form 10-Q for the quarterly period ended September 30, 2019 filed on November 14, 2019. Included in this Comprehensive 10-K are our audited financial statements for the three months ended December 31, 2018, the fiscal year ended December 31, 2019 and the fiscal year ended December 31, 2020, which have not been previously filed with the SEC. In addition, the Comprehensive 10-K also includes unaudited quarterly financial statements for the quarterly periods ended March 31, 2020, June 30, 2020 and September 30, 2020

iii


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Report”) contains “forward-looking statements” within the meaning of the Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “predict,” “project,” “forecast,” “potential,” “continue”, negatives thereof or similar expressions. These forward-looking statements are found at various places throughout this Annual Report and include information concerning: possible or assumed future results of our operations; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future operations, future cash needs, business plans and future financial results; and any other statements that are not historical facts.

From time to time, forward-looking statements also are included in our other periodic reports on Forms 10-Q and 8-K, in our press releases, in our presentations, on our website and in other materials released to the public. Any or all the forward-looking statements included in this Annual Report and in any other reports or public statements made by us are not guarantees of future performance and may turn out to be inaccurate. These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Annual Report. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report.

Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.

For discussion of factors that we believe could cause our actual results to differ materially from expected and historical results see “Item 1A - Risk Factors” below.

iv

PART I

Item 1. BusinessBusiness..

SEEDO CORP. (f/k/a GRCR Partners Inc.) (the “Company”, “Our” or “We”) was formed on January 16, 2015 under the laws of the State of Delaware. We arePrior to September 14th, 2018, we were solely a provider of corporate governance, risk management compliance and regulatory reportingasset protection (“GRCR”RAP”) solutionsservices for businesses, (“GRCR Solutions”). Our offices are located at 1771 Post Rd East #178, Westport CT 06880. Our telephone number is 212-602-1437individuals and our website is www.grcrpartners.com

Currently, we provide GRCR Solutions through professional consulting servicesfamilies. On September 14th, 2018, (“the Company”) executed an Acquisition and Share Exchange Agreement with Eroll Grow Tech Ltd. (“Eroll”), an Israeli Corporation that was formed on a project-based fee arrangement. We deliver our services following our proprietary compliance architecture methodology. The skilled applicationMay 18th, 2015 under the laws of the fundamental principles governing compliancestate of Israel. On September 17, 2018, the Board of Directors adopted an Amendment to its Articles, changing the name of the Corporation to SEEDO CORP. The State of Delaware effectuated said change on September 21, 2018; and risk managementon November 5, 2018, FINRA granted effectiveness for said change and the new ticker Symbol ”SEDO”. Post-Acquisition, SEEDO CORP changed its main business focus to Eroll’s business activities while continuing with some RAP activities.

Eroll was focused on producing automated plant growing devices managed and controlled by an artificial intelligent algorithm, allowing consumers to grow their own herbs and vegetables from seed to plant, while providing optimal conditions to assure premium quality produce year-round.

During the third quarter of 2019, Eroll was experiencing financial and operational difficulties and on December 10, 2019, Mr. Zohar Levy, the Company’s CEO at the time, on behalf of Eroll filed a petition (the “Petition”) for a debt settlement in the Nazareth District Court (the “Court”), in accordance with Section 321 of Chapter A of Part G of the Israeli Insolvency and Economic Rehabilitation Law, seeking a debt settlement and a suspension of proceedings in order to protect Eroll’s creditors from economic damages and other future damages and to allow the Eroll to maintain its business while seeking a proposal of an acquisition of the Eroll and/or its activities and assets.

In the petition, Eroll requested that the Court authorize its entering into a loan agreement with a potential buyer, as a temporary solution until a definitive agreement is what we call compliance architecture. We are building-out our Compliance Architecture Platform (“CAP”signed, and to issue an order calling for a creditors’ meeting within 10 days and appointment of a trustee, who will negotiate a definitive agreement with the potential buyer.

The Company is not included in such proceedings and is not otherwise involved in any bankruptcy proceedings.

On December 11, 2019, Eroll received an offer to acquire Eroll and/or its assets and business from a potential buyer (the “Potential Buyer” and the “Acquisition Offer” respectively). As part of the Acquisition Offer, the Potential Buyer agreed to provide a bridge loan in the amount of $400,000 (the “Bridge Loan”) to be repaid within 20 days, which the Eroll will use for payroll, payment of debt to a certain Chinese manufacturer, and certain other enumerated urgent payments necessary to keep Eroll’s assets active.

To ensure the repayment of the loan within 20 days, if the Acquisition Offer is not approved and the loan is not repaid on time, the Potential Buyer was to receive the rights to all of the products in inventory and productions at the Chinese manufacture and Eroll’s warehouse. Additionally, the Potential Buyer was to receive an irrevocable power of attorney and authorization of Eroll to act directly with the Chinese manufacture.

On December 17, 2019, the Court approved Eroll’s entering into the Acquisition Offer, on condition that the Bridge Loan will be repaid by purchasing all of Eroll’s inventory in China, the United States, Canada and the Netherlands, and subject to the Court’s approval of any transfer of Eroll’s inventory. Additionally, the Court issued an order of suspension and stay of all legal proceedings against Eroll.

On December 19, 2019, the Court appointed a debt settlement manager, who will have the authority to determine if an alternative settlement is appropriate.

Due to the fact that Eroll was not able to secure the Bridge Loan under the conditions determined by the Court, on January 2, 2020, the Settlement Manager filed a request to the Court for entering into an interim funding agreement with the Potential Buyer (the “Interim Funding Agreement”). As part of the Interim Funding Agreement, the Potential Buyer agreed to provide a loan in the amount of $294,000 (the “Loan”), which the Eroll was to use for payroll, and certain other enumerated urgent payments necessary to keep Eroll’s assets active, until a creditors meeting is convened in order to approve a debt settlement based on a final acquisition offer from the Potential Buyer. To ensure the repayment of the Loan, the Potential Buyer was to receive a lien over certain intellectual property of Eroll, future payments to Eroll from PayPal and Eroll’s property.


On January 5, 2020, the Court approved the Settlement Managers’ request to enter into the Interim Funding Agreement.

Additionally, on January 8, 2020, the Court issued an order of stay of all legal proceedings against Eroll, and an order prohibiting any disposition of the Eroll’s property. Any transfer of any of Eroll’s property and rights, including patents, shall be done subject to the Courts approval. In addition, the Court ordered that Eroll will continue its activities temporarily, and appointed the Settlement Manager as Eroll’s trustee, who will, among others, convene a creditor’s meeting to approve a debt settlement based on a final acquisition offer from the Potential Buyer, to be convened no later than January 19, 2020.

On March 25, 2020, the Nazareth District Court of the State of Israel (the “Court”) approved the purchase of all of Eroll Grow Tech Ltd.’s (“Eroll”) assets by a non-related third-party entity named Seedo Agriculture Ltd. Therefore, from the closing of such purchase, the Company no longer has any legal ties nor privity with Eroll. The Company is focusing on its in-house research and development of agriculture technology products, among others, in the fields of exotic plants and mushrooms.

On July 19, 2020, the Company formed a new wholly-owned subsidiary in Israel, Hachevra Legiduley Pkaot Beisrael Ltd. (the “New Subsidiary”), to develop a fully automated GRCR management tool that streamlinesand remotely managed system for growing saffron and other vegetables. On November 5, 2020, the processNew Subsidiary changed its name to Saffron-Tech Ltd. (or “Saffron”).

The Company, through Saffron, plans to roll out its proof of GRCRconcept in the coming months. This technology will provide turnkey automated growing containers for businesses. Wehigh-quality, high-yield saffron all year round. The Company is in advanced stages of developing and testing a fully automated and remotely managed system for growing high-quality, high-yield saffron anywhere and anytime.

The Company’s technology offers a controlled environment based on the Company’s deep knowledge in plant biology. The technology provides optimal conditions for each stage of the plant’s development to reach optimal product quality.

The Company’s proof of concept utilizes the “Grow Next to Consumer” policy and is therefore sustainable and fit the COVID-19 restrictions on transport. It is also environmentally friendly, using economic levels of water, space, fertilizer, and energy. Accounting to the Company’s calculations, we believe that the controlled indoor growing area will produce ten times more yield compared to the same land area using traditional methods. The sealed environment eliminates the need for harmful pesticides and herbicides, producing a clean and safe product that is easy to control from anywhere. The Company’s solution is easily scalable and pre-designed to quickly grow operations.

Saffron is used in many industries, such as the food industry, particularly by combining expert consultingfamous chefs and GRCR software tools,Michelin starred restaurants, the natural cosmetics industry and the natural medicine industry and as a dye in the textile industry. Medicinal claims as an anti-depressant, antioxidant, and antiseptic are constantly increasing.

The global saffron market size was valued at $1 Billion in 2019 and is anticipated to attain a revenue based CAGR of 7.3% from 2020 to 2027. The market is expected to grow over the next few years on account of demand from the pharmaceutical sector, particularly in countries with rapid population expansion.

Since the incorporation Saffron Tech, Saffron Tech has hired one employee and several consultants to commence the roll out of our proof of concept. Saffron Tech has signed several agreements with Israeli companies, including Growin Ltd (“Growin”) and the Israeli Ministry of Agricultures research organization – The Volcani Center (“Volcani”). Growin is an owner of proprietary systems for indoor agriculture and Saffron Tech has acquired the exclusive right to market, sell and commercialize our product based on the Growin’s hydroponic machines. Volcani will assist Saffron Tech in writing the protocols required to grow saffron in a controlled and automated way, including the use of robotics and AI.

On August 7 and 11, 2020, the Company executed Securities Purchase Agreement of convertible debentures (“Convertible Debentures”), and ancillary agreements with YAII PN, Ltd., and Mr. Shmuel Yannay (collectively, the “Investors”) in the aggregate amount of $300,000 (the “Agreements”). Per the terms of the Agreements, the Convertible Debentures have a maturity date of August 7, 2022 (“Maturity Date”) and accrue annual interest at a rate of 10%.


The Convertible Debentures are convertible by the Investors into common stock of the Company, at their discretion, at the lower of a fixed price of $0.102 (the “Fixed Conversion Price”) or 80% of the lowest volume weighted average price (“VWAP”) of the Company’s common stock during the 10 trading days immediately preceding the conversion date (the “Market Conversion Price”).

Prior to the Maturity Date of the Convertible Debentures, provided that the VWAP of the Company’s common stock is below the Fixed Conversion Price and there is no Equity Conditions Failures as defined in the Agreements, the Company at its option, has the right to redeem in cash in part or in whole, the amounts outstanding under the Convertible Debentures plus a redemption premium equal to 10% of the amount being redeemed plus outstanding and accrued interest.

Pursuant to the Agreements we also issued to the Investors warrants to purchase 750,000 Shares’s common stock at an exercise price of $0.20 for a period of 5 years.

Pursuant to the Agreements, we shall use the net proceeds for immediate cash infusion for ordinary working capital purposes. The Agreement does not contain any right of first refusal, participation rights or penalties. YAII PN Ltd. has agreed that neither it nor any of its affiliates shall engage in any short-selling or hedging of our Common Stock during any time.

During November 2020 through to February 2021, the Company continued to raise funds to support its operations and received $855,000 from third party investors and issued convertible promissory notes in respect thereof (“Promissory Notes”). The Promissory Notes bear no interest, are convertible into Shares based on a fixed conversion price of $0.10 per share and mature between 12 and 24 months from the issuance date. Pursuant to Promissory Notes one of the investors received warrants to purchase 660,000 Shares’s common stock at an exercise price of $0.15 for a period of 1 year.

On December 24, 2020, Saffron Tech, announced its intention to raise up to 5 million New Israeli Shekels (“NIS”) (approximately $1.6 million) at a pre-money valuation of NIS 20 million (approximately $6.225 million) through the Israeli crowd funding platform – Pipelbiz “Crowd Funding Round”). Assuming the maximum amount is raised, the Company will help clients cost effectively build and maintain GRCR programs that reduce day-to-day and long term risks in their work environment.

own approximately 80% of the Saffron Tech. The Crowd Funding Round was closed on February 16, 2021 having raised the full amount

Item 1A. Risk Factors.

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 1B. Unresolved Staff Comments

None

None.

Item 2. Properties

We do not own any real estate or other properties.

None.

Item 3. Legal Proceedings

The Company is not a party to any pending

There are no legal proceedings and no such proceedings are known to be contemplated.

No director, officer, or affiliate ofinvolving the issuer and no owner of record or beneficiary of more than 5% of the securities of the issuer, or any security holder is a party adverse to the small business issuer or has a material interest adverse to the small business issuer.
Company.

Item 4. Submission of Matters to a Vote of Security Holders

None
Mine Safety Disclosures

Not applicable.


PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

There

We have one class of securities, Common Voting Equity Shares (“Common Stock”). The holders of our common stock have equal ratable rights to dividends from funds legally available if and when declared by our Board of Directors and are entitled to share pro-rata in all of our available assets for distribution to holders of common stock upon liquidation, dissolution or winding up of our affairs.

Our common stock is presently no established public trading marketquoted on the NASDAQ OTC Bulletin Board (“OTCBB”) under the symbol “SEDO”. As of December 31, 2020, the Company’s common stock was held by 67 shareholders of record, which does not include shares that are held in street or nominee name.

The closing share prices presented below represent prices between broker-dealers and do not include retail mark-ups and mark-downs or any commission to the dealer.

QUARTER ENDED HIGH  LOW 
December 31, 2020 $0.29  $0.04 
September 30, 2020 $0.10  $0.05 
June 30, 2020 $0.10  $0.02 
March 31, 2020 $0.12  $0.02 
December 31, 2019 $1.37  $0.08 
September 30, 2019 $2.25  $0.97 
June 30, 2019 $3.87  $2.00 
March 31, 2019 $4.35  $1.75 
December 31, 2018 $4.65  $0.55 
September 30, 2018 $0.05  $0.05 
June 30, 2018 $0.05  $0.05 
March 31, 2018 $0.05  $0.05 

Shareholders

Our shares of common stock are issued in registered form. The registrar and transfer agent for our shares of common stock.

Holders of Our Commonstock is Worldwide Stock
As of Transfer LLC; 1 University Plaza, Suite 505, Hackensack, NJ 07601

On December 31, 2020, the date of filing we had 32 shareholdersshareholders’ list of our shares of common stock.

Stock Option Grants
To date, we have not granted any stock options.
Transfer Agent and Registrar
As of the date of filing we do not have a transfer agent.
Dividends
Since inception we have not paid any dividends on our common stock. We currently do not anticipate paying any cash dividends in the foreseeable future on our common stock. Although we intend to retain our earnings, if any, to finance the exploration and growthshowed 67 registered holders of our business, our Board of Directors will have the discretion to declare and pay dividends in the future. Payment of dividends in the future will depend upon our earnings, capital requirements, and other factors, which our Board of Directors may deem relevant.
Recent Sales of Unregistered Securities
On October 13, 2016 the Company closed out its public offering. The company raised $36,900 and issued 369,000 shares at a price of $0.10. As part of the closing the Company deregistered 2,131,000 shares.
Stock-Based Compensation
On December 23, 2015, the Board of Directors approved an agreement with legal counsel for the Company which included; the issuance of 347,500 shares of common stock and 31,665,566 shares of common stock outstanding. The number of record holders was determined from the total paymentrecords of $15,000our transfer agent and does not include beneficial owners of shares of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.

On December 31, 2019, the shareholders’ list of our shares of common stock showed 56 registered holders of our shares of common stock and 20,535,354 shares of common stock outstanding. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of shares of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.

On December 31, 2018, the shareholders’ list of our shares of common stock showed 56 registered holders of our shares of common stock and 16,198,578 shares of common stock outstanding. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of shares of common stock whose shares are held in the names of various security brokers, dealers, and registered clearing agencies.

Dividend Policy

Our board of directors may declare and pay dividends on outstanding shares of common stock out of funds legally available there for in our sole discretion; however, to counseldate no dividends have been declared or paid on common stock.


Indemnification of Directors and Officers

Delaware Corporation Law allows for services rendered through the dateindemnification of officers, directors, and any corporate agents in terms sufficiently broad to indemnify such persons under certain circumstances for liabilities, including reimbursement for expenses, incurred arising under the Company’s S-1 filing is declared effective. For the year ended September 30, 20161933 Act. The Bylaws of the Company recorded $3,475provide that the Company will indemnify its directors and officers to the fullest extent authorized or permitted by law and such right to indemnification will continue as to a person who has ceased to be a director or officer of the Company and will inure to the benefit of his or her heirs, executors and Consultants; provided, however, that, except for proceedings to enforce rights to indemnification, the Company will not be obligated to indemnify any director or officer in stock-based compensation.

connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized by the Board of Directors. The right to indemnification conferred will include the right to be paid by the Company the expenses (including attorney’s fees) incurred in defending any such proceeding in advance of its final disposition.

The Company may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the Company similar to those conferred to directors and officers of the Company. The rights to indemnification and to the advancement of expenses are subject to the requirements of the 1940 Act to the extent applicable.

Furthermore, the Company may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Company or another company against any expense, liability or loss, whether or not the Company would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

Unregistered Sales of Equity Securities.

During the last quarter of 2020, three directors exercised 675,000 Restricted Share Units (“RSU’s”) and the Company issued 675,000 shares. During the first quarter of 2021, two former employees exercised 130,250 RSU’s and two directors exercised 250,000 RSU’s and the Company issues 270,250 shares.

Penny Stock Regulation

Our shares must comply with the Penny Stock Reform Act of 1990, which may potentially decrease our shareholders’ ability to easily transfer their shares. Broker-dealer practices in connection with transactions in “penny stocks” are regulated. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. In addition, the penny stock rules generally require that prior to a transaction in a penny stock, the broker-dealer make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for a stock that must comply with the penny stock rules. Since our shares must comply with such penny stock rules, our shareholders will in all likelihood find it more difficult to sell their securities.

Item 6. Selected Financial Data

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED FINANCIAL STATEMENTS AND THE RELATED NOTES THAT APPEAR ELSEWHERE IN THIS ANNUAL REPORT. THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT REFLECT OUR PLANS, ESTIMATES AND BELIEFS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW AND ELSEWHERE IN THIS ANNUAL REPORT.


FORWARD-LOOKING STATEMENTS

Certain statements made in this report may constitute “forward-looking statements on our current expectations and projections about future events”. These forward-looking statements involve known or unknown risks, uncertainties and other factors that may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties. Although we believe that the expectations reflected-in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. These forward-looking statements are made as of the date of this report, and we assume no obligation to update these forward-looking statements whether as a result of new information, future events, or otherwise, other than as required by law. In light of these assumptions, risks, and uncertainties, the forward-looking events discussed in this report might not occur and actual results and events may vary significantly from those discussed in the forward-looking statements.

Emerging Growth Company - We are an emerging growth company as defined in Section 2(a)(19) of the Securities Act. We will continue to be an emerging growth company until: (i) the last day of our fiscal year during which we had total annual gross revenues of $1,000,000,000 or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement under the Securities Act; (iii) the date on which we have, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or (iv) the date on which we are deemed to be a large accelerated filer, as defined in Section 12b-2 of the Exchange Act.


As an emerging growth company, we are exempt from:

●
Sections 14A(a) and (b) of the Exchange Act, which require companies to hold stockholder advisory votes on executive compensation and golden parachute compensation;
●
The requirement to provide, in any registration statement, periodic report or other report to be filed with the Securities and Exchange Commission (the “Commission” or “SEC”), certain modified executive compensation disclosure under Item 402 of Regulation S-K or selected financial data under Item 301 of Regulation S-K for any period before the earliest audited period presented in our initial registration statement;
●
Compliance with new or revised accounting standards until those standards are applicable to private companies;
●
The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002 to provide auditor attestation of our internal controls and procedures; and
●
Any Public Company Accounting Oversight Board (“PCAOB”) rules regarding mandatory audit firm rotation or an expanded auditor report, and any other PCAOB rules subsequently adopted unless the Commission determines the new rules are necessary for protecting the public.

●Sections 14A(a) and (b) of the Exchange Act, which require companies to hold stockholder advisory votes on executive compensation and golden parachute compensation;
●The requirement to provide, in any registration statement, periodic report or other report to be filed with the Securities and Exchange Commission (the “Commission” or “SEC”), certain modified executive compensation disclosure under Item 402 of Regulation S-K or selected financial data under Item 301 of Regulation S-K for any period before the earliest audited period presented in our initial registration statement;
●Compliance with new or revised accounting standards until those standards are applicable to private companies;
●The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002 to provide auditor attestation of our internal controls and procedures; and
●Any Public Company Accounting Oversight Board (“PCAOB”) rules regarding mandatory audit firm rotation or an expanded auditor report, and any other PCAOB rules subsequently adopted unless the Commission determines the new rules are necessary for protecting the public.

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1) of the Jumpstart Our Business Startups Act.

We are also a smaller reporting company as defined in Rule 12b-2 of the Exchange Act. As a smaller reporting company, we are not required to provide selected financial data pursuant to Item 301 of Regulation S-K, nor are we required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002. We are also permitted to provide certain modified executive compensation disclosure under Item 402 of Regulation S-K.

This form 10-K contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. For this purpose, any statements contained in this Form 10-K that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may”, “will”, “expect”, “believe”, “anticipate”, “estimate” or “continue” or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within our control. These factors include by are not limited to economic conditions generally and in the industries in which we may participate; competition within our chosen industry, including competition from much larger competitors; technological advances and failure to successfully develop business relationships.


This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results may differ materially from those anticipated in these forward-looking statements.

Summary

This discussion summarizes the significant factors affecting the consolidated financial statements, financial condition, liquidity, and cash flows of Business

Seedo, Corp, for the fiscal year ended December 31, 2020 and 2019 and the interim periods included herein. The following discussion and analysis should be read in conjunction with the consolidated financial statements and notes included elsewhere in this Form 10-K.

Executive Overview

SEEDO CORP. (f/k/a GRCR Partners Inc.) (the “Company”, “Our” or “We”), was formed on January 16, 2015 isunder the laws of the State of Delaware. Prior to September 14, 2018, we were solely a provider of corporate governance, risk management compliance and regulatory reportingasset protection (“GRCR”RAP”) solutionsservices for businesses, individuals and families. On September 14th, 2018, (“GRCR Solutions”the Company”). Currently, we provide GRCR Solutions through professional consulting services executed an Acquisition and Share Exchange Agreement with Eroll Grow Tech Ltd. (“Eroll”), an Israeli Corporation that was formed on a project-based fee arrangement. We deliver our services following our proprietary compliance architecture methodology. The skilled applicationMay 18, 2015 under the laws of the fundamental principles governing compliancestate of Israel. On September 17, 2018, the Board of Directors adopted an Amendment to its Articles, changing the name of the Corporation to SEEDO CORP. The State of Delaware effectuated said change on September 21, 2018; and risk management is what we call compliance architecture. We are building-out our Compliance Architecture Platform (“CAP”) to be an automated GRCR management tool that streamlines the process of GRCRon November 5, 2018, FINRA granted effectiveness for businesses. We believe that by combining expert consulting and GRCR software tools, we will help clients cost effectively build and maintain GRCR programs that reduce day-to-day and long term risks in their work environment.


Our Opportunity
We believe corporate governance, risk management, compliance and regulatory reporting has become a growing operational and financial burden, limiting a company’s ability to keep pace with business growth goals and objectives. We believe that to close that gap clients need to utilize the efficiencies driven through technology automationsaid change and the use of third-party subject-matter-expertsnew ticker Symbol ”SEDO”. Post-Acquisition, SEEDO CORP changed its main business focus to Eroll’s business activities while continuing with some RAP activities.

Eroll was focused on producing automated plant growing devices managed and GRCR service providers. We believe thatcontrolled by combining these solutions in one easyan artificial intelligent algorithm, allowing consumers to use platform allows us an opportunitygrow their own herbs and vegetables from seed to step inplant, while providing optimal conditions to meet a significant need for the cost-effective development and maintenance of a business’s GRCR program. 

Over the next twelve months we plan to;
-      Continue to standardize the processes of how our consulting services are provided. This is important to allow us to efficiently scale our operations with increased revenue. We anticipate this to be completed by the end of the third calendar quarter of 2017 at an estimated cost of $15,000.
-      Increase efforts to acquire new clients. We plan to do internet marketing that might include, search engine marketing, blogging, social media, affiliated marketing, organic and paid for search engine optimization. We may also employ certain traditional marketing tactics, including, mail, phone calls, content development, industry networking and direct selling. We plan to issue our first Internet marketing campaign in the third calendar quarter of 2017.
-     Expand our target customer base into other industry categories. We expect to begin these efforts during the second quarter 2017 at an estimated cost of $10,000 per industry segment.
    -     Complete version 2.0 of our CAP platform which is anticipated to occur duringassure premium quality produce year-round.

During the third quarter of 2017.   We estimate2019, Eroll was experiencing financial and operational difficulties and on December 10, 2019, Mr. Zohar Levy, the cost to complete our first versionCompany’s CEO at the time, on behalf of Eroll filed a petition (the “Petition”) for a debt settlement in the Nazareth District Court (the “Court”), in accordance with Section 321 of Chapter A of Part G of the CAP platformIsraeli Insolvency and Economic Rehabilitation Law, seeking a debt settlement and a suspension of proceedings in order to be approximately $15,000.   Additional featuresprotect Eroll’s creditors from economic damages and functionalityother future damages and to allow the Eroll to maintain its business while seeking a proposal of an acquisition of the platform beyond version 1.0 could cost upEroll and/or its activities and assets.

On March 25, 2020, the Nazareth District Court of the State of Israel (the “Court”) approved the purchase of all of Eroll Grow Tech Ltd.’s (“Eroll”) assets by a non-related third party entity named Seedo Agriculture Ltd. Therefore, from the closing of such purchase, the Company no longer has any legal ties nor privity with Eroll. The Company is focusing on its in-house research and development of agriculture technology products, among others, in the fields of exotic plants and mushrooms.

On July 19, 2020, the Company formed a new wholly-owned subsidiary in Israel, Hachevra Legiduley Pkaot Beisrael Ltd. (the “New Subco”), to develop a fully automated and remotely managed system for growing saffron and other vegetables. On November 5, 2020, the New Subco changed its name to Saffron-Tech Ltd (or “Saffron”).

The Company, through Saffron, plans to roll out its proof of concept in the coming months. This technology will provide turnkey automated growing containers for high-quality, high-yield saffron all year round. The Company is in advanced stages of developing and testing a fully automated and remotely managed system for growing high-quality, high-yield saffron anywhere and anytime.

The Company’s technology offers a controlled environment based on the Company’s deep knowledge in plant biology. The technology provides optimal conditions for each stage of the plant’s development to reach optimal product quality.

Our Business Operations during 2020

On July 19, 2020, the Company formed a new wholly-owned subsidiary in Israel, Hachevra Legiduley Pkaot Beisrael Ltd. (the “New Subsidiary”), to develop a fully automated and remotely managed system for growing saffron and other vegetables. On November 5, 2020, the New Subsidiary changed its name to Saffron-Tech Ltd. (or “Saffron Tech”).


The Company, through Saffron Tech, plans to roll out its proof of concept in the coming months. This technology will provide turnkey automated growing containers for high-quality, high-yield saffron all year round. The Company is in advanced stages of developing and testing a fully automated and remotely managed system for growing high-quality, high-yield saffron anywhere and anytime.

The Company’s technology offers a controlled environment based on the Company’s deep knowledge in plant biology. The technology provides optimal conditions for each stage of the plant’s development to reach optimal product quality.

The Company’s proof of concept utilizes the “Grow Next to Consumer” policy and is therefore sustainable and fit the COVID-19 restrictions on transport. It is also environmentally friendly, using economic levels of water, space, fertilizer, and energy. Accounting to the Company’s calculations, we believe that the controlled indoor growing area will produce ten times more yield compared to the same land area using traditional methods. The sealed environment eliminates the need for harmful pesticides and herbicides, producing a clean and safe product that is easy to control from anywhere. The Company’s solution is easily scalable and pre-designed to quickly grow operations.

Saffron is used in many industries, such as the food industry, particularly by famous chefs and Michelin starred restaurants, the natural cosmetics industry and the natural medicine industry and as a dye in the textile industry. Medicinal claims as an additional $15,000.

anti-depressant, antioxidant, and antiseptic are constantly increasing.

The global saffron market size was valued at USD 1 Billion in 2019 and is anticipated to attain a revenue based CAGR of 7.3% from 2020 to 2027. The market is expected to grow over the next few years on account of demand from the pharmaceutical sector, particularly in countries with rapid population expansion.

Since the incorporation Saffron Tech, Saffron Tech has hired one employee and several consultants to commence the roll out of our proof of concept. Saffron Tech has signed several agreements with Israeli companies, including Growin Ltd (“Growin”) and the Israeli Ministry of Agricultures research organization – The Volcani Center (“Volcani”). Growin is an owner of proprietary systems for indoor agriculture and Saffron Tech has acquired the exclusive right to market, sell and commercialize our product based on the Growin’s hydroponic machines. Volcani will assist Saffron Tech in writing the protocols required to grow saffron in a controlled and automated way, including the use of robotics and AI.

Our Business Operations during 2018 and 2019

We were a global Technology Company focusing on producing cutting edge technology for the agriculture markets for home, Commercial and medical use. We produced automated plant growing devices managed and controlled by an artificial intelligent algorithm, allowing consumers to grow their own herbs and vegetables effortlessly from seed to plant, while providing optimal conditions to assure premium quality produce year-round. As discussed above, Errol was placed into liquidation in December 2019 and the assets were sold in March 2020.

Results of Operations

Summary of Key Results
For during the audited year ending September 30, 2016ended December 31, 2020 as compared to the year ended December 31, 2019

Operating Expenses

Research and for the period from inception (January 16, 2015) to September 30, 2015

Revenues and Cost of Revenues
Total revenueDevelopment Expenses for the year ended September 30, 2016 and for the period from inception (January 16, 2015)December 31, 2020 amounted to September 30, 2015, was $137,522 versus $110,175, respectively. Revenues are from professional services.
Cost of revenue$107 thousand as compared to $nil for the year ended September 30, 2016December 31, 2019. During 2020, the Saffron Tech began its research and for the period from inception (January 16, 2015) to September 30, 2015, was $89,570 versus $57,207, respectively.   Cost of revenue included payment to third party independent contractors plus $8,870development expenses in Israel.

General and $4,650 paid to a related party for the year ended September 30, 2016 and for the period from inception (January 16, 2015) to September 30, 2015, respectively. Gross margins decreased from 48.1% to 34.9% for the period from inception (January 15, 2015) to September 30, 2015 versus the year ended September 30, 2016, respectively. The decrease was the extra use of third party independent contractors,


Operating Expenses
Total operatingAdministrative expenses for the year ended September 30, 2016 and for the period from inception (January 16, 2015)December 31, 2020 amounted to September 30, 2015, was $123,142 versus $32,971, respectively. The increase was primarily due$466 thousand as compared to increase professional services fees and included depreciation expense of $1,676 and $1,257$273 thousand for the year ended September 30, 2016 and for the period from inception (January 16, 2015) to September 30, 2015, respectively. The Company also recorded $3,475 in stock-based compensationDecember 31, 2019.

Financing expenses for the year ended September 30, 2016. Operating expenses included payments of $4,200 and $0December 31, 2020 amounted to a related party$1,377 thousand as compared to $3,004 thousand for the year ended September 30, 2016December 31, 2019. Financing expenses include interest on loans and convertibles loans, amortization of BCF and adjustments to the fair value of certain convertible loans.

Gain on liquation of subsidiary for the period from inception (January 16, 2015)year ended December 31, 2020 amount to September 30, 2015, respectively.$9,593 thousand as compared to nil for the year ended December 31, 2019. The increase related to Eroll being liquidated by the Israeli court thereby removing the liability form the Company’s balance sheet.


Liquidity and Capital Resources

As of September 30, 2016

Overview

Since inception on September 30, 2016,January 16, 2015, the Company had a cumulative net lossdeficit as of $55,513December 31, 2020 of $17,704 thousand and we have a working capital deficit of $1,475 at September 30, 2016. While we have a limited operating history, currently$2,013 thousand as mentioned above, we are generating revenue, however, ourof December 31, 2020. Our future growth inis dependent upon achieving sales growth,further purchase orders and execution, management of operating expenses and ability of the Company to obtain the necessary financing to fund future obligations, and upon profitable operations.

Historically, we have financed our cash flow and operations from the initial contribution of our majority shareholder and cash flow from operations. On January 16, 2015, we issued 17,000,000 shares to our majority shareholderby raising equity, convertible loans and director for a total equity investment of $15,000.

Since our inception (January 16, 2015) through September 30, 2016, we have generated total revenues of $247,697. warrants.

As of September 30, 2016,December 31, 2020, our cash balance was $13,973. We believe we will require a minimum of $50,000 in additional cash over the next 12 months to pay for the remainder of our total offering costs, maintain our regulatory reporting$411 thousand.

During November and filingsDecember 2020 and cover our operations costs. Should our revenues not increase as expected and if our costs and expenses prove to be greater than we currently anticipate, or should we change our current business plan in a manner that will increase or accelerate our anticipated costs and expenses, the depletion of our working capital would be accelerated. In the event that our revenues from operations are insufficient to meet our working capital needs, our major shareholder, Sean Conrad. has indicated that he may be willing to provide funds required to maintain the reporting status in the form of a non-secured loan for the next twelve months as the expenses are incurred if no other proceeds are obtained by the Company. However, there is no contract in place or written agreement securing this agreement. Management believes ifJanuary 2021, the Company cannot maintaincontinued to raise funds to support its reporting status with the SEC it will have to cease all efforts directed towards the Company. As such, any investment previously made would be lostoperations and received $855 thousand from third party investors and issued convertible promissory notes in its entirety.

As a matter of practice, we don’t intend to hire our independent consultants. Consultants will be engaged as independent contractors and will be paidrespect thereof (“Promissory Notes”). The Promissory Notes bear no interest, are convertible into Shares based on either a fixed or hourly basisconversion price of $0.10 per engagement as clients are retained. We believe this approach will allow usshare and mature between 12 and 24 months from the issuance date. On December 24, 2020, Saffron Tech, announced its intention to keep our fixed operating costs low.
raise up to 5 million New Israeli Shekels (“NIS”) (approximately $1.6 million) at a pre-money valuation of NIS 20 million (approximately $6.225 million) through the Israeli crowd funding platform – Pipelbiz “Crowd Funding Round”). The Crowd Funding Round was closed on February 16, 2021 having raised the full amount.

Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between usthe company and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the disinterestedexisting directors, are approved by vote of the stockholders, or are fair to us as a corporation as of the time it is us at is authorized, approved or ratified by the board.board or authorized officer. We will conduct an appropriate review of all related party transactions on an ongoing basis, and, where appropriate, we will utilize our audit committeereview the potential of conflicts of interest.

Year ended December 31, 2020

During the year ended December 31, 2020, the Company’s overall position of cash and cash equivalents increased by $409 thousand. This increase in cash can be attributed to the following:

The Company’s net cash used in operating activities during the year ended December 31, 2020 was $316 thousand as compared to $7,040 for the reviewyear ended December 31, 2019. This decrease is mostly due to a significant decrease in the operations of potential conflictsthe Company.

Cash provided by financing activities for the year ended December 31, 2020 was $725 thousand as compared to $7,032 thousand for the year ended December 31, 2019. Cash provided in 2020 was from the receipt of interest.


Off-balance sheet arrangements
convertible loans as compared to the receipt of convertible loans and the issuance of shares in 2019.

Off Balance Sheet Arrangements

The Company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect or change on the Company’s financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets. We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.


Recently Issued Accounting Pronouncements

For information with respect to recent accounting pronouncements, see Note 2 to the audited consolidated financial statements of SEEDO CORP. included elsewhere in this Form 10-K

Critical Accounting Policies

Our discussion and analysis of the financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements, so we consider these to be our critical accounting policies. Because of the uncertainty inherent in these matters, actual results could differ from the estimates we use in applying the critical accounting policies. Certain of these critical accounting policies affect working capital account balances, including the policies for revenue recognition, allowance for doubtful accounts, inventory reservesare fair value of convertible loans and income taxes. These policies require that we make estimates in the preparation of our financial statements as of a given date.

going concern.

Within the context of these critical accounting policies, we are not currently aware of any reasonably likely events or circumstances that would result in materially different amounts being reported.

Revenue Recognition
The Company derives its revenue from the sale of compliance, legal, risk management and management and public reporting consulting services. The Company utilizes written contracts as the means to establish the terms and condition services are sold to customers.
Consulting Services
Because the Company provides its applications as services, it follows the provisions of Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition. The Company recognizes revenue when all of the following conditions are met:
●there is persuasive evidence of an arrangement;
●the service has been provided to the customer;
●the collection of the fees is reasonably assured; and
●the amount of fees to be paid by the customer is fixed or determinable.
The Company recognizes revenue as services are performed or monthly based upon contract terms. Contracts may either be for a specific project or a monthly recurring fee.

Off-Balance Sheet Arrangements
We had no outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts. 

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined in Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.


Item 8. Financial Statements and Supplementary DataData..

SEEDO CORP.

GRCR PARTNERS INC

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED SEPTEMBER 30, 2016 AND INCEPTION (JANUARY 16, 2015) TO SEPTEMBER 30, 2015

GRCR PARTNERS INC

AS OF DECEMBER 31, 2020

IN THOUSANDS OF U.S. DOLLARS

INDEX TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2016

Page
Report of Independent Registered Public Accounting Firm F-2
   
Financial StatementsConsolidated Balance Sheets F-3
   
Balance Sheets asConsolidated Statements of September 30, 2016 and 2015comprehensive Income (loss) F-3F-4
   
Consolidated Statements of Operations for the year ended September 30, 2016 and from inception (January 16, 2015) to September 30, 2015Changes in Shareholders’ Deficit F-4F-5
   
Consolidated Statements of Stockholders’ (Deficit) for the year ended September 30, 2016 and from inception (January 16, 2015) to September 30, 2015Cash Flows F-5F-6
   
Statements of Cash Flows for the year ended September 30, 2016 and from inception (January 16, 2015)Notes to September 30, 2015Consolidated Financial Statements F-6
Notes to Financial StatementsF-7 - F-29

REPORT OF INDEPENDENT REGISTERED INDEPENDENT AUDITORS

PUBLIC ACCOUNTING FIRM

To the Board of Directors and
Stockholders Shareholders of GRCR Partners, Inc.


SEEDO CORP.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheetsheets of GRCR Partners, Inc.Seedo Corp. (the “Company”) as of September 30, 2016December 31, 2020, 2019 and 2015,2018, and the related statementconsolidated statements of operations, stockholders’ equity,comprehensive income (loss), changes in shareholders’ deficit and cash flows for each of the two years in the period for the year ended September 30, 2016December 31, 2020 and for the three months ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2020, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020 and for the three months ended December 31, 2018, in conformity with U.S. generally accepted accounting principles.

The Company’s Ability to Continue as a Going Concern

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1D to the financial statements, the Company has suffered recurring losses from January 16, 2015 (dateoperations, has a working capital deficiency, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management’s evaluation of inception) through September 30, 2015. GRCR Partners, Inc.’s management is responsiblethe events and conditions and management’s plans regarding these matters are also described in Note 1D. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for theseOpinion

These financial statements.statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on thesethe Company’s financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.misstatement, whether due to error or fraud. The companyCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included considerationAs part of our audits we are required to obtain an understanding of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’sCompany’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supportingregarding the amounts and disclosures in the financial statements, assessingstatements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement presentation.statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Halperin Ilanit

Certified Public Accountants (Isr.)

Tel Aviv, Israel

March 17, 2021

We have served as the Company’s auditor since 2020


SEEDO CORP.

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except per share data, except share and per share data

    December 31, 
  Note 2020  2019  2018 
ASSETS           
CURRENT ASSETS:           
Cash and cash equivalents   $411  $2  $10 
Other current assets    7   -   2 
               
Total current assets    418   2   12 
               
Total assets   $418  $2  $12 
               
LIABILITIES AND SHAREHOLDERS’ DEFICIT              
CURRENT LIABILITIES              
Short term loans 3  -   -   411 
Accounts payables   $51  $64  $3 
Convertible loans 4  1,128   700   829 
Fair Value of convertible component in convertible loans 4  610   -   - 
Other current liabilities    100   -   22 
Liabilities held for sale, net 1b  -   8,893   1,857 
               
Total current liabilities    1,889   9,657   3,122 
               
Fair Value of convertible component in convertible loans 4  502   677   - 
Convertible Loans 4  73   323   - 
               
Total long term liabilities    575   1,000   - 
               
SHAREHOLDER’S DEFICIT 5            
Ordinary Shares of $ 0.0001 par value:              
Authorized: 500,000,000 shares at December 31, 2020, 2019 and 2018; Issued and Outstanding: 31,665,566, 20,535,354 and 16,198,578 shares at December 31, 2020, 2019, and 2018, respectively    3   2   2 
Additional Paid in capital    15,409   14,443   5,410 
Accumulated deficit    (17,458)  (25,100)  (8,522)
               
Total shareholders’ deficit    (2,046)  (10,655)  (3,110)
               
Total liabilities and shareholders’ deficit   $418  $2  $12 

The accompanying notes are an integral part of the consolidated financial statements.


In our opinion,

SEEDO CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

U.S. dollars in thousands, except per share data, except share and per share data

    Year ended  Three months ended 
    December 31,  December 31, 
  Note 2020  2019  2018 
Operating expenses:           
            
Research and development   $(107) $-  $- 
               
General and administrative    (456)  (273)  (27)
               
Operating loss    (563)  (273)  (27)
               
Gain on liquidation of subsidiary 1b  9,593   -   - 
               
Financial expenses, net 7  (1,388)  (3,004)  (188)
               
Net Income (Loss) from continued operations   $7,642  $(3,277) $(215)
               
Net Loss from discontinued operations 1b $-  $(13,301) $(1,493)
               
Net Income (Loss)   $7,642  $(16,578) $(1,708)
               
Basic and diluted net Income (Loss) per share   $0.26  $(0.86) $(0.11)
               
Weighted average number of Ordinary shares used in computing basic and diluted loss per share    29,427,448   19,313,831   15,347,238 

The accompanying notes are an integral part of the consolidated financial statements.


SEEDO CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’DEFICIT

U.S. dollars in thousands, except per share data, except share and per share data

  Ordinary Shares  Additional
Paid		  Accumulated  Total
Shareholders’		 
  Number  Amount  in capital  deficit  Deficit 
Balance as of October 1, 2018  15,000,000   2   3,418   (6,814)  (3.394)
                     
Issuance of ordinary shares  821,740   *   317   -   317 
Conversion of convertible loans  349,338   *   307   -   307 
Share-based compensation to employees  2,500   *   12   -   12 
Share-based compensation to non-employees  25,000   *   25   -   25 
Issuance of warrants  -   -   581   -   581 
Beneficial conversion feature related to convertible loan  -   -   750   -   750 
Net Loss  -   -   -   (1,708)  (1,708)
Balance as of December 31, 2018  16,198,578  $2  $5,410  $(8,522) $(3,110)
                     
Issuance of Ordinary shares  1,820,575   *   4,404   -   4,404 
Conversion of convertible loan  1,988,299   *   2,318   -   2,318 
Share Based Compensation to non-employees  94,569   -   134   -   134 
Beneficial conversion feature related to convertible loan  -   -   550   -   550 
Issuance of warrants  -   -   927   -   927 
Exercise of warrants  433,333   -   700   -   700 
Net Loss  -   -   -   (16,578)  (16,578)
Balance as of December 31, 2019  20,535,354  $2  $14,443  $(25,100) $(10,655)
                     
Conversion of convertible loan  10,455,212   1   276   -   277 
Share Based Compensation to non-employees          43       43 
Beneficial conversion feature related to convertible loan  -   -   425   -   425 
Issuance of shares in respect of RSUs  675,000   -   128   -   128 
Issuance of warrants  -   -   94   -   94 
Net Income  -   -   -   7,642   7,642 
Balance as of December 31, 2020  31,665,566  $3  $15,409  $(17,458) $(2,046)

*)Represents an amount less than $1.

The accompanying notes are an integral part of the consolidated financial statements.


SEEDO CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands, except per share data

  Year ended
December 31,		  Three months ended
December 31,		 
  2020  2019  2018 
Cash flows from operating activities:         
Net Loss $7,642  $(16,578) $(1,708)
Adjustments to reconcile loss to net cash used in operating activities:            
Depreciation and amortization  -   -   40 
Share based compensation  171   134   37 
Financial expenses related to loans  855   433   161 
Change in fair value of convertible loans and warrants  94   1,894   89 
Change in fair value of convertible component in convertible loan  435   677   - 
Gain on liquidation of subsidiary  (9,593)  -   - 
             
Changes in assets and liabilities:            
Change in liabilities held for sale, net  -   6,359     
Increase in accounts receivable  (7)  2   (168)
Increase in inventory  -   -   (35)
Decrease in advances from customers  -   -   (45)
Increase (decrease) in trade payables  (13)  61   (189)
Increase (decrease) in other accounts Payable  100   (22)  (53)
Net cash used in operating activities  (316)  (7,040)  (1,871)
             
Cash flows from investing activities            
Purchase of property and equipment  -   -   (100)
Net cash used in investing activities  -   -   (100)
             
Cash flows from financing activities:            
Issuance of Shares  -   4,404   317 
Proceeds from convertible loans  725   1,540   1,250 
Proceeds from short term loans  -   388   369 
Exercise of warrants  -   700   - 
Issuance of warrants  -   -   581 
Repayment of short term loans          (69)
             
Net cash provided by financing activities  725   7,032   2,448 
             
Increase (Decrease) in cash and cash equivalents  409   (8)  477 
Cash and cash equivalents at the beginning of period  2   10   531 
Cash and cash equivalents at the end of the year $411  $2  $1,008 
             
Supplemental disclosures of cash flow information:            
Cash paid for interest $-  $35  $34 
             
Supplemental disclosures of non-cash flow information:            
Issuance of warrants  94   700     
Conversion of convertible loans $277  $2,300  $307 

The accompanying notes are an integral part of the consolidated financial statements.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 1:-GENERAL

a.Seedo Corp. (the “Company”), was incorporated on January 16, 2015, as GRCR Partners Inc., under the laws of Delaware. Prior to September 14, 2018, the Company was solely a provider of risk management and asset protection (“RAP”) services for businesses, individuals and families. On September 14, 2018, the Company acquired Eroll Grow Tech Ltd. (“Eroll”), an Israeli company incorporated on May 18, 2015 (the “Acquisition”). On September 17, 2018, the Company’s name was changed to Seedo Corp. Since the Acquisition of Eroll and through to December 31, 2019, Eroll produced a plant growing device managed and controlled by an artificial intelligent algorithm, allowing consumers to grow their own herbs and vegetables effortlessly from seed to plant, while providing optimal conditions to assure premium quality produce year-round.

On July 19, 2020, the Company formed a new wholly-owned subsidiary in Israel, Hachevra Legiduley Pkaot Beisrael Ltd. (the “New Subsidiary”), to develop a fully automated and remotely managed system for growing saffron and other vegetables. On November 5, 2020, the New Subsidiary changed its name to Saffron-Tech Ltd. (“Saffron Tech”).

The Company, through Saffron Tech, is focusing on its in-house research and development of agriculture technology products, among others, in the fields of exotic plants and mushrooms. Saffron Tech plans to roll out its proof of concept in the coming months. This technology will provide turnkey automated growing containers for high-quality, high-yield saffron all year round. The Company is in advanced stages of developing and testing a fully automated and remotely managed system for growing high-quality, high-yield saffron anywhere and anytime.

b.On September 14, 2018, following the Acquisition, Eroll survived the merger as a wholly-owned subsidiary of the Company.

Immediately following the transaction, Eroll shareholders held approximately 87.4% of the outstanding Ordinary Shares in exchange of 1,137 Ordinary shares of Eroll on a fully diluted basis while the pre-merger Company shareholders retained the remaining approximate 12.6%. The pre-merger Eroll shareholders hold their existing Shares’s Ordinary stock.

Pursuant to the terms and conditions of the Agreement, at the time of the Transaction, the Company issued 12,073,500 nonassessable shares of their Ordinary shares. Each of the holders of the pre-acquisition issued and outstanding Ordinary shares of Eroll received their pro-rata allotment of these shares according to their then current shareholding in the Eroll. At the closing of this transaction, there were 15,000,000 Ordinary Shares.

The Reverse Merger was accounted for as a reverse recapitalization which is outside the scope of ASC Topic 805, “Business Combinations” (“ASC 805”). Under reverse capitalization accounting, Eroll is considered the acquirer for accounting and financial reporting purposes and acquired the assets and assumed the liabilities of the Company. The assets acquired and liabilities assumed are reported at their historical amounts. The annual consolidated financial statements referredof the Company reflect the operations of the acquirer for accounting purposes together with a deemed issuance of shares, equivalent to above present fairly, in all material respects, the shares held by the former stockholders of the legal acquirer and a recapitalization of the equity of the accounting acquirer. The annual consolidated financial positionstatements include the accounts of GRCR Partners, Inc. asthe Company since the effective date of September 30, 3016 and 2015,the reverse capitalization and the resultsaccounts of Eroll since inception.

On December 10, 2019, Mr. Zohar Levy, on behalf of Eroll filed a petition (the “Petition”) for a debt settlement in the Nazareth District Court (the “Court”), in accordance with Section 321 of Chapter A of Part G of the Israeli Insolvency and Economic Rehabilitation Law, seeking a debt settlement and a suspension of proceedings in order to protect Eroll’s creditors from economic damages and other future damages and to allow the Eroll to maintain its operationsbusiness while seeking a proposal of an acquisition of the Eroll and/or its activities and assets.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 1:-GENERAL (Cont.)

In the petition, Eroll requested that the Court authorize its cash flowsentering into a loan agreement with a potential buyer, as a temporary solution until a definitive agreement is signed, and to issue an order calling for a creditors’ meeting within 10 days and appointment of a trustee, who will negotiate a definitive agreement with the potential buyer.

The Company is not included in such proceedings and is not otherwise involved in any bankruptcy proceedings.

On December 11, 2019, Eroll received an offer to acquire Eroll and/or its assets and business from a potential buyer (the “Potential Buyer” and the “Acquisition Offer” respectively). As part of the Acquisition Offer, the Potential Buyer agreed to provide a bridge loan in the amount of $400,000 (the “Bridge Loan”) to be repaid within 20 days, which the Eroll will use for payroll, payment of debt to a certain Chinese manufacturer, and certain other enumerated urgent payments necessary to keep Eroll’s assets active.

To ensure the repayment of the loan within 20 days, if the Acquisition Offer is not approved and the loan is not repaid on time, the Potential Buyer will receive the rights to all of the products in inventory and productions at the Chinese manufacture and Eroll’s warehouse. Additionally, the Potential Buyer will receive an irrevocable power of attorney and authorization of Eroll to act directly with the Chinese manufacture.

On December 17, 2019, the Court approved Eroll’s entering into the Acquisition Offer, on condition that the Bridge Loan will be repaid by purchasing all of Eroll’s inventory in China, the United States, Canada and the Netherlands, and subject to the Court’s approval of any transfer of Eroll’s inventory. Additionally, the Court issued an order of suspension and stay of all legal proceedings against Eroll.

On December 19, 2019, the Court appointed a debt settlement manager, who will have the authority to determine if an alternative settlement is appropriate.

Due to the fact that Eroll was not able to secure the Bridge Loan under the conditions determined by the Court, on January 2, 2020, the Settlement Manager filed a request to the Court for entering into an interim funding agreement with the Potential Buyer (the “Interim Funding Agreement”). As part of the Interim Funding Agreement, the Potential Buyer agreed to provide a loan in the amount of $294,000 (the “Loan”), which the Eroll will use for payroll, and certain other enumerated urgent payments necessary to keep Eroll’s assets active, until a creditors meeting is convened in order to approve a debt settlement based on a final acquisition offer from the Potential Buyer. To ensure the repayment of the Loan, the Potential Buyer will receive a lien over certain intellectual property of Eroll, future payments to Eroll from PayPal and Eroll’s property.

On January 5, 2020, the Court approved the Settlement Managers’ request to enter into the Interim Funding Agreement.

Additionally, on January 8, 2020, the Court issued an order of stay of all legal proceedings against Eroll, and an order prohibiting any disposition of the Eroll’s property. Any transfer of any of Eroll’s property and rights, including patents, shall be done subject to the Courts approval. In addition, the Court ordered that Eroll will continue its activities temporarily, and appointed the Settlement Manager as Eroll’s trustee, who will, among others, convene a creditor’s meeting to approve a debt settlement based on a final acquisition offer from the Potential Buyer, to be convened no later than January 19, 2020.

On March 25, 2020, the Court approved the purchase of Eroll’s assets by a non-related third party entity named Seedo Agriculture Ltd. Therefore, from the closing of such purchase, the Company no longer has any legal ties nor privity with Eroll. The Company is focusing on its in-house research and development of agriculture technology products, among others, in the fields of exotic plants and mushrooms.

During the year ended September 30, 2016 andDecember 31, 2020, following the period from January 16, 2015 (dateEroll Purchase Agreement, the Company recorded a gain on the liquidation of inception) through September 30, 2015 in conformity with accounting principles generally acceptedErrol in the United Statesamount of America.$9,593 thousand.



SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 1:-GENERAL (Cont.)

Following the cessation of Eroll’s operations, the Company classified to discontinued operations its 2019 and 2018 results of operation and balances relating to the Eroll operation.

Liabilities held for sale:

  As of December 31, 
  2019  2018 
Accounts payable and accrued liabilities $2,945  $861 
Employees payable  2,194   757 
Advances from customers  3,408   3,020 
Short term loan  388   - 
Accounts payable – related party  850   850 
Assets held for sale  (892)  (3,631)
Total $8,893  $1,857 

Loss from discontinued operations:

  Year ended
December 31,		  Three months ended
December 31,		 
  2019  2018 
Net revenue $703  $- 
Operating expenses  (13,808)  (1,488)
Interest expenses  (196)  (5)
Loss from discontinued operations $(13,301) $(1,493)

c.Effective December 31, 2018, the Company changed its fiscal year end from September 30 to December 31. This change is being made in order to align the Company’s fiscal year end with its subsidiaries following the reverse merger.
d.The Company has an accumulated deficit in the total amount of $17,458 as of December 31, 2020, the Company has negative operating cash flow in the total amount of $316 for the year ended December 31, 2020, further losses are anticipated in the development of its business. Those factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due.

The Company intends to finance operating costs over the next twelve months with existing cash on hand, reducing operating spend, and future issuances of equity and debt securities, or through a combination of the foregoing. However, the Company will need to seek additional sources of financing if the Company requires more funds than anticipated during the next 12 months or in later periods.

The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully discussedconcern, which contemplates the realization of assets and liabilities and commitments in Note 1the normal course of business.

The consolidated financial statements for the year ended December 31, 2020, do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the financial statements, the Company has a limited operating history and its continued growth is dependent upon obtaining additional financing to fund future obligations and pay liabilities arising from normal business operations. These conditions raise substantial doubt about itsCompany’s ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ Rosenberg Rich Baker Berman & Company

Somerset, New Jersey
January 13, 2017


GRCR PARTNERS INC
BALANCE SHEETS
AS OF SEPTEMBER 30, 2016 AND 2015
ASSETS
 
 
 
 
 
 
 
 
9/30/16
 
 
9/30/15
 
CURRENT ASSETS:
 
 
 
 
 
 
   Cash or cash equivalents
 $13,973 
 $18,483 
   Accounts receivable, net
  - 
  10,000 
  Prepaid expense
  - 
  5,000 
         TOTAL CURRENT ASSETS
  13,973 
  33,483 
 
    
    
Fixed assets, net
  838 
  2,514 
        TOTAL ASSETS
 $14,811 
 $35,997 
 
    
    
LIABILITIES AND STOCKHOLDERS' EQUITY
    
    
 
    
    
CURRENT LIABILITIES:
    
    
   Accounts payable and accrued expenses
 $15,129 
 $1,000 
   Accrued taxes
  320 
  3,599 
        TOTAL CURRENT LIABILITIES
  15,449 
  4,599 
 
    
    
        TOTAL LIABILITIES
  15,449 
  4,599 
 
    
    
STOCKHOLDERS' EQUITY (DEFICIT):
    
    
 
 Preferred stock, $.0001 par value, 15,000,000 shares authorized,
 
    
       none issued and outstanding
  - 
  - 
   Common stock, $.0001 par value, 500,000,000 shares authorized,
    
    
 
 17,347,500 and 17,000,000 shares issued and outstanding,
 
    
         as of September 30, 2016 and September 30, 2015
  1,735 
  1,700 
   Additional paid-in capital
  16,740 
  13,300 
   Common stock subscribed
  36,400 
  - 
   Retained earnings (deficit)
  (55,513)
  16,398 
        TOTAL STOCKHOLDERS' EQUITY (DEFICIT)
  (638)
  31,398 
        TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 $14,811 
 $35,997 

SEEDO CORP.

The accompanying notes to financial statements arean integral part of these statements.


GRCR PARTNERS INC
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2016 AND SINCE INCEPTION (JANUARY 16, 2015) TO SEPTEMBER 30, 2015
 
 
Year Ended
September 30, 2016
 
 
From Inception
(January 16, 2015) to September 30, 2015
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
Professional service revenues
 $130,000 
 $108,050 
Expense reimbursement
  7,522 
  2,125 
Total Revenues
  137,522 
  110,175 
 
    
    
Cost of revenues
  80,700 
  52,557 
Cost of revenues from a related party
  8,870 
  4,650 
Gross Profit
  47,952 
  52,968 
 
    
    
Operating expenses:
    
    
Stock based compensation
  3,475 
  - 
Depreciation
  1,676 
  1,257 
General and administrative
  113,791 
  31,714 
General and administrative costs from a related party
  4,200 
  - 
      Total operating expenses
  123,142 
  32,971 
 
    
    
Income (Loss) from operations
  (75,190)
  19,997 
 
    
    
Income (Loss) before taxes
  (75,190)
  19,997 
    Current income tax expense(benefit)
  (3,279)
  3,599 
    Deferred income expense (benefit)
  - 
  - 
Income tax (benefit)
  (3,279)
  3,599 
 
    
    
Net income (loss) applicable to common shareholders
  (71,911)
  16,398 
 
    
    
    Net income (loss) per share - basic and diluted
 $(0.00)
 $(0.00)
 
    
    
Weighted number of shares outstanding -
    
    
    Basic and diluted
  17,268,479 
  17,000,000 
The accompanying notes to financial statements are an integral part of these statements.

GRCR PARTNERS INC
STATEMENT OF STOCKHOLDERS' EQUITY(DEFICIT)
FOR THE YEAR ENDED SEPTEMBER 30, 2016 AND FROM INCEPTION (JANUARY 16, 2015) TO SEPTEMBER 30, 2015
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common
 
 
Retained
 
 
 
 
 
 
Preferred Stock
 
 
Common
 
 
Paid-In
 
 
Stock
 
 
Earnings
 
 
Stockholders'
 
 
 
Shares
 
 
Par Value
 
 
Shares
 
 
Par Value
 
 
Capital
 
 
Subscribed
 
 
(Deficit)
 
 
Equity(Deficit)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at Inception, January 16, 2015
  - 
 $- 
  0 
 $- 
 $- 
 $- 
 $- 
 $- 
 
    
    
    
    
    
    
    
    
Issuance of common stock
    
    
  17,000,000 
  1,700 
  13,300 
    
    
  15,000 
Net income for period
  - 
  - 
    
    
    
    
  16,398 
  16,398 
 
  - 
  - 
    
    
    
    
    
    
Balance September 30, 2015
  - 
 $- 
  17,000,000 
 $1,700 
 $13,300 
 $- 
 $16,398 
 $31,398 
 
    
    
    
    
    
    
    
    
Issuance of common stock for services
    
    
  347,500 
  35 
  3,440 
    
    
  3,475 
Common stock subscribed
    
    
    
    
    
  36,400 
    
  36,400 
Net loss for period
  - 
  - 
    
    
    
    
  (71,911)
  (71,911)
 
    
    
    
    
    
    
    
    
Balance September 30, 2016
  - 
 $- 
  17,347,500 
 $1,735 
 $16,740 
 $36,400 
 $(55,513)
 $(638)
The accompanying notes to financial statements are an integral part of these statements.

GRCR PARTNERS INC
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED SEPTEMBER 30, 2016 AND FROM INCEPTION
(JANUARY 16, 2015) TO SEPTEMBER 2015
 
 
For the year ended
September 30, 2016
 
 
From inception
(January 16, 2015) to September 30, 2015
 
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
Net income (loss)
 $(71,911)
 $16,398 
Adjustments to reconcile net income(loss) to cash (used in) provided by operating activities:
    
    
 
    
    
Stock based compensation
  3,475 
  - 
Depreciation
  1,676 
  1,257 
 
    
    
Change in operating assets and liabilities:
    
    
Accounts receivable
  10,000 
  (10,000)
Prepaid expenses
  5,000 
  (5,000)
Accounts payable and accrued expenses
  14,129 
  1,000 
Income tax payable
  (3,279)
  3,599 
Net cash (used in) provided by operating activities
  (40,910)
  7,254 
 
    
    
CASH FLOW FROM INVESTING ACTIVITIES:
    
    
Equipment purchases
  - 
  (3,771)
Net cash (used in) investing activities
  - 
  (3,771)
 
    
    
CASH FLOW FROM FINANCING ACTIVITIES:
    
    
Common stock subscribed
  36,400 
  - 
Proceeds from issuance of common stock
  - 
  15,000 
Net cash provided by financing activities
  36,400 
  15,000 
 
    
    
NET INCREASE (DECREASE) IN CASH
  (4,510)
  18,483 
 
    
    
CASH AND CASH EQUIVALENTS at beginning of period
  18,483 
  - 
CASH AND CASH EQUIVALENTS at end of period
 $13,973 
 $18,483 
 
    
    
Supplemental disclosure of cash flow information
    
    
   Cash paid for:
    
    
       Interest
  - 
  - 
       Income Taxes
  - 
  - 
The accompanying notes to financial statements are an integral part of these statements.

GRCR PARTNERS INC
NOTES TO FINANCIAL STATEMENTS
Note 1.

U.S. dollars in thousands, except per share data

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES

The Company History and Nature of the Business

GRCR Partners Inc. (the “Company”, “Our” or “We”), formed on January 16, 2015, is a provider of corporate governance, risk management, compliance and regulatory reporting (“GRCR”) solutions for businesses (“GRCR Solutions”). Currently, we provide GRCR Solutions through professional consulting services on a project-based fee arrangement. We deliver our services following our proprietary compliance architecture methodology. The skilled application of the fundamental principles governing compliance and risk management is what we call compliance architecture. We are building-out our Compliance Architecture Platform (“CAP”) to be an automated GRCR management tool that streamlines the process of GRCR for businesses. We believe that by combining expert consulting and GRCR software tools, we will help clients cost effectively build and maintain GRCR programs that reduce day-to-day and long term risks in their work environment.
Theconsolidated financial statements have been prepared using accounting principles generally acceptedin accordance with U.S Generally Accepted Accounting Principles in the United States of America applicable for a going concern, which assumesAmerica.

a.Use of estimates:

The preparation of the financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions. The Company’s management believes that the Company will realize itsestimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and discharge its liabilities inand disclosure of contingent assets and liabilities at the ordinary coursedates of business. Since inception, the Company has a retained deficitfinancial statements, and the reported amounts of $55,513 and has a working capital deficit of $1,476 at September 30, 2016. We have a limited operating history, we are currently generating revenue, however, our growth is dependent upon achieving sales growth, management of operating expenses and abilityduring the reporting period. Actual results could differ from those estimates.

b.Financial statements in U.S. dollars:

The costs of the Company are denominated in United States dollars (“dollars”). Some of the costs are incurred in New Israeli Shekels (NIS), however the selling prices are linked to obtain the necessaryCompany’s price list which is determined in dollars, the budget is managed in dollars, financing activities including loans and cash investments, are made in U.S. dollars and the Company’s management believes that the dollar is the primary currency of the economic environment in which the Company and each of its subsidiaries operate. Thus, the dollar is the Company’s and its subsidiaries’ functional and reporting currency.

Accordingly, transactions denominated in currencies other than the functional currency are re-measured to fund future obligationsthe functional currency in accordance with Accounting Standards Codification (“ASC”) No. 830, “Foreign Currency Matters” at the exchange rate at the date of the transaction or the average exchange rate in the relevant reporting period. At the end of each reporting period, financial assets and pay liabilities arising from normal businessare re-measured to the functional currency using exchange rates in effect at the balance sheet date. Non-financial assets and liabilities are re-measured at historical exchange rates. Gains and losses related to re-measurement are recorded as financial income (expense) in the consolidated statements of operations when they come due,as appropriate.

c.Principles of consolidation:

The consolidated financial statements include the financial statements of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated upon profitable operations.

We may need to either borrow funds from our majority shareholder or raise additional capital through equity or debt financings. We expect our current majority shareholder will be willing and able to provide such additional capital. However, we cannot be certain that such capital (from our shareholders or third parties) will be available to us or whether such capital will be available on termsconsolidation.

d.Cash and cash equivalents:

Cash equivalents are short-term highly liquid investments that are acceptablereadily convertible to us. Any such financing likely would be dilutive to existing stockholders and could result in significant financial operating covenants that would negatively impact our business. If we are unable to raise sufficient additional capital on acceptable terms, we will have insufficient funds to operate our business or pursue our planned growth.

Note 2. Summary of Significant Accounting Policies 
Cash and Cash Equivalents
For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturityoriginal maturities of three months or less, at the date acquired.

e.Restricted bank deposit: 

Restricted bank deposit includes a deposit with maturities of more than three months and up to one year. The restricted bank deposit is presented at its cost, including accrued interest and is composed of guarantees in respect of the Company’s credit card and manufacturing commitments.

f.Inventories, net:

Inventories are stated at the lower of cost or net realizable value. The cost of inventories comprises costs of purchase and costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the Ordinary course of business less estimated costs of completion and estimated selling costs.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

g.Property and equipment:

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, at the following annual rates:

%
Computers, Software and peripheral equipment33%
Mold & production Equipment10%
Office furniture and equipment10%

h.Impairment of long-lived assets:

The Company’s long-lived assets are reviewed for impairment in accordance with ASC No. 360, “Property, Plant and Equipment” whenever events or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability of assets (or asset group) to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. During the years ended December 31, 2020, 2019, and cash equivalents. The Company’sfor the three months ended 2018, no impairment losses have been recorded.

i.Concentration of credit risks:

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and restricted bank deposit. Cash and cash equivalents and restricted bank deposit are locatedinvested in major banks in Israel and the United States. Such funds in the Israel may be in excess of insured limits and are not insured in other jurisdictions. Management believes that the financial institutions that hold the Company and its subsidiary’ cash and cash equivalents have high credit ratings.

The Company, have no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

j.Research and development expenses:

Research and development costs are charged to the consolidated statement of operations as incurred.

ASC 985-20, “Costs of Software to Be Sold, Leased, or Marketed”, requires capitalization of certain software development costs subsequent to the establishment of technological feasibility.

Based on the Company’s product development process, technological feasibility is established upon the completion of a United States bank.working model. The Company does not incur material costs between the completion of a working model and the point at which the products are ready for general release. Therefore, research and development costs are charged to the consolidated statement of operations as incurred. The Company did not capitalized expenses as of December 31, 2020.

k.Severance pay:

Eroll and Saffron Tech’s liability for severance pay is pursuant to Section 14 of the Severance Compensation Act, 1963 (“Section 14”), pursuant to which all the Company’s employees are included under Section 14, and are entitled only to monthly deposits, at a rate of 8.33% of their monthly salary, made in the employee’s name with insurance companies. Under Israeli employment law, payments in accordance with Section 14 release the Company from any future severance payments in respect of those employees. The fund is made available to the employee at the time the employer-employee relationship is terminated, regardless of cause of termination. The severance pay liabilities and deposits under Section 14 are not reflected in the consolidated balance sheets as the severance pay risks have anybeen irrevocably transferred to the severance funds.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

l.Advances from customers:

Advances from customers include primarily unearned amounts received in respect of sale and service contracts, but not yet recognized as revenues and therefore are classified as a liability.

m.Fair value of financial instruments:

ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the inputs as follows:

Level 1 —Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access.
Level 2 —Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
Level 3 —Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

The carrying amounts of cash and cash equivalents, short term deposits, trade receivables, trade payables and short-term loan approximate their fair value due to the short-term maturity of such instruments.

The Company elected to measure some of the convertible loans under the fair value option (see note 4). Under the fair value option the convertible loans will be measured at fair value in each reporting period until they will be converted, with changes in the fair values being recognized in the Company’s consolidated statement of operations as financial income or expense. The proceeds received for the issuance of September 30, 2016 or September 30, 2015.


Accounts Receivable
the convertible loans were allocated at fair value conducted on an arm’s-length basis.

The Company’s accounts receivablefinancial assets and liabilities that are derived from direct customers. Collateral is not required for accounts receivable. measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:

  Balance as of December 31, 2020 
  Level 1  Level 2  Level 3  Total 
Liabilities:            
Fair Value of convertible component in convertible loan, net of discounts and debt issue costs $-  $-  $1,112  $1,112 
                 
Total liabilities $-  $-  $1,112  $1,112 


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

  Balance as of December 31, 2019 
  Level 1  Level 2  Level 3  Total 
Liabilities:            
Fair Value of convertible component in convertible loan, net of discounts and debt issue costs $-  $-  $677  $677 
                 
Total liabilities $-  $-  $677  $677 

n.Income Tax:

The Company maintains an allowanceaccount for potential credit losses as considered necessary.income taxes in accordance with ASC 740, “Income Taxes” which prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company performs ongoing reviewsprovides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value if it not is more likely than not that a portion or all of all customersthe deferred tax assets will be realized. Based on ASC 740, a two-step approach is used to recognize and measure uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that have breached their payment terms or for whom information has become available indicating a risk of non-recoverability. The Company recordsit is more likely than not that, on an allowance for bad debts for specific customers identified as well as an allowance based on its historical collection experience. The Company’s evaluation of the allowance for potential credit losses requirestechnical merits, the usetax position will be sustained on audit, including resolution of estimates andany related appeals or litigation processes.

The second step is to measure the actual results may differ from these estimates. At September 30, 2016, the allowance for potential credit losses was $0

Fixed Assets
Office equipment is stated at cost and depreciated over three years using the straight line method of accounting. For the year end September 30, 2016, and for the period from inception (January 16, 2015) to September 30, 2015 the Company recorded depreciation expense of $1,676 and $1,257, respectively.
Revenue Recognition
The Company derives its revenue from the sale of compliance, legal, risk management and management and public reporting consulting services. The Company utilizes written contractstax benefit as the meanslargest amount that is more than 50% likely to establishbe realized upon ultimate settlement. As of December 31, 2020,2019 and 2018, no liability for unrecognized tax positions has been recorded. Accordingly, no interest or penalties related to uncertain tax positions are recorded, either. It is the terms and condition services are sold to customers.
Consulting Services
Because the Company provides its applications as services, it follows the provisions of Securities and Exchange Commission Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition. The Company recognizes revenue when all of the following conditions are met:
Company’s policy that any interest or penalties associated with unrecognized tax positions would be reflected in income tax expense.

●there is persuasive evidence of an arrangement;
●o.the service has been provided to the customer;
●the collection of the fees is reasonably assured;Basic and
●the amount of fees to be paid by the customer is fixed or determinable. diluted net loss per share
The Company recognizes revenue as services are performed or monthly based upon contract terms. Contracts may either be for a specific project, or, a monthly recurring fee.
Reimbursements
The Company incurs certain out-of-pocket expenses that are reimbursed by its clients, which are accounted for as revenue in its Statement of Operations.

Net Income (Loss) per Common Share

Basic income (loss)net loss per share is computed by dividing the net income (loss) attributable to the common stockholdersloss by the weighted averageweighted-average number of shares of common stockOrdinary shares outstanding during the period. Fully diluted income

Diluted net loss per share is computed similarby giving effect to basic incomeall potential shares of Ordinary shares, to the extent dilutive, all in accordance with ASC No. 260, “Earning Per Share”.

For the years ended December 31, 2020, 2019 and for the three months ended December 31, 2018, all outstanding shares warrants have been excluded from the calculation of the diluted net loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstandingas all such securities are anti-dilutive for the period ended September 30, 2016.

Income Taxes
all years presented.

p.Legal and other contingencies:

The Company accounts for income taxes pursuant to FASBits contingent liabilities in accordance with ASC 740. Deferred tax assets450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classificationamount of the assets and liabilities generating the differences.

The Company maintains a valuation allowance withloss can be reasonably estimated. With respect to deferred tax assets. Thelegal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. As of December 31, 2020, 2019 and 2018, the Company establishesis not a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into considerationparty to any litigation that could have a material adverse effect on the Company’s business, financial position, and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carry-forward period under the Federal tax laws. Changesor cash flows. Legal costs incurred in circumstances, suchconnection with loss contingencies are expensed as the Company generating taxable income, could cause a changeincurred.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimates 

Fair Value of Financial Instruments
The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. As of September 30, 2016 the carrying value of accounts receivable, accounts payable-trade and accrued liabilities approximated fair value due to the short-term nature and maturity of these instruments.
Customer Concentration Disclosure.
For the year ended September 30, 2016, three customers make up 79% of our gross revenue. They represent 31%, 26% and 22% respectively. For the period from inception (January 16, 2016) to September 30, 2015, two customers made up 86% of our gross revenue, they represent 43% and 43% respectively. Two customers made up 100% of our accounts receivable balance as of September 30, 2015, each representing 50%.

Stock-Based Compensation
Stockthousands, except per share data

NOTE 2:-SIGNIFICANT ACCOUNTING POLICIES (Cont.)

q.Accounting for share-based payments:

Share-based compensation arrangements with non-employee service providers are accounted for in accordance ASC 505-50 Equity-Based Payments to Non-Employees, using a fair value approach. For the yearyears ended September 30, 2016December 31, 2020, December 31, 2019 and the three months ended December 31, 2018 the Company recorded $3,475$43, $134 and $37 in stock-based compensation.share-based compensation, respectively.

r.Recent accounting pronouncements:

In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. Topic 326 was adopted by the Company on January 1, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements.

In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU 2020-06), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from GAAP the liability and equity separation model for convertible instruments with a cash conversion feature and a beneficial conversion feature (“BCF”), and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be amortized into income as interest expense over the life of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS). ASU 2020-06 is effective for fiscal years beginning after December 15, 2021, with early adoption permitted for fiscal years beginning after December 15, 2020 and can be adopted on either a fully retrospective or modified retrospective basis. The adoption of this standard is not expected to result in a material impact to the Company’s financial statements.

s.Reclassification:

Certain financial statement data for prior years has been reclassified to conform to current year financial statement presentation.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 3:-SHORT-TERM LOANS
a.During September 7, 2018, Eroll entered into a loan agreement with Cannabics in the amount of $350 that has a one-year defined term and bears no interest. As part of the agreement Cannabics were also entitled to 3.6% of the Company’s shares of common stock, in return to services provided as part Reverse Merger. The liability and related interest expense is included in liabilities held for sale.

b.On December 11, 2018, the Company received a loan from a lender in the principal amount of $1,000 (out of which $50 was directly transferred as finder fee), to be repaid in full at the end of 180 days, and bearing an annualized interest at the rate of 17.5%, up to a maximum amount of approximately $175 (the “December 2018 Loan”).

The Company also granted the foregoing lender warrants to purchase 333,333 and 100,000 shares of common stock of the Company at an exercise price of $1.5 and $2 per share, respectively. The warrants were classified as shareholders’ equity.

The Company estimated the fair value of warrants in the amount of $581 using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:

  December 11,
2018		 
Share Price $4.58 
Dividend yield  0%
Risk-free interest rate  2.78%
Expected term (in years)  2 
Volatility  126.23%

The Company accounted for the December 2018 Loan in accordance with ASC 470, Debt. The Company allocated the consideration of the loan, the related warrants and the shares of common stock based on their relative fair value at the date of issuance, which is also the commitment date.

On June 19, 2019 the Company executed an amendment to the December 2018 Loan, according to which total debt was $1,175. The lender will exercise its 433,333 warrants pursuant to the original agreement for a total amount of $700, and the remaining debt of $475 will be paid in three equal monthly payments of $158,333 over the following three months. As of December 31, 2019, the loan was repaid in full.

On August 15, 2019 the Company issued 433,333 Shares in respect of exercise of 433,333 warrants granted.

During the year ended December 31, 2019 the Company recorded interest and financial expenses related to the loan in the amount of $800.

c.On August 18, 2019, the Eroll received a loan in the principal amount of $311 (NIS1,100) (out of which $9 was deducted as a finders’ fee), (“the August 2019 Loan”). The August 2019 Loan had a one-month term with a maturity date of September 19, 2019 (The “Maturity Date”), and bears interest at a monthly rate of 2%. In the event that Eroll does not repay the August 2019 Loan by the Maturity Date, the monthly interest rate increases to 5%.

As of December 31, 2019, Errol did not repay the August 2019 Loan but gave the lender a 7 days notice therefore entered the 5% interest period. Accordingly, the liability and related interest for the year ended December 31, 2019 in the amount of $388 is included in Liabilities held for sale.

d.On November 11, 2019, Eroll received a loan from a related party in the principal amount of approximately $286 (NIS 1,000) The principal amount shall bear no interest and was repayable in full at the lapse of 90 days from the loan date. The loan was never repaid and a claim was never submitted by the related party. Accordingly, the liability and related interest for the year ended December 31, 2019 in the amount of $289 is included as a gain in Loss from discontinued operations.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 4:-CONVERTIBLE LOANS

a.On June 6, 2018, Eroll entered into a convertible loan agreement (the “June 2018 Loan Agreement”) with a third party (the “June 2018 Lender”), in a total amount of $500 (the “June 2018 Loan”). The June 2018 Loan bears interest at a monthly rate of 2%, for a period of one year. To the extent that Eroll merges with public company, the June 2018 Lender has the right to convert the June 2018 Loan and interest into equity securities of the public company, at a price per share equal to the lower of (i) a valuation of the Company of $15,000, or (ii) the fair market value of the Company as shall be evaluated as of the Company’s first raising via equity issuance. According ASC 470 the Company did not record a BCF.

With respect to convertible loan since the contingent BCF shall not be recognized in earnings until the contingency is resolved.

On March 5, 2019, the June 2018 Loan was converted into 500,000 Shares.

During the year ended December 31, 2019, the Company recorded an interest expenses in the total amount of $10.

b.During July 2018, Eroll entered into a convertible loan agreement (the “July 2018 Agreement”) with a third party (the “July 2018 Lender”), in a total amount of $250 (the “July 2018 Loan”). The July 2018 Loan bears interest at a monthly rate of 2%, for a period of one year. Pursuant to the terms of the July 2018 Agreement, to the extent that Eroll merges with a public company the July 2018 Lender has the right to convert the July 2018 Loan and interest into equity securities of the public Company, at a price per share equals to the lower of (i) a valuation of the Company of $25,000, or (ii) the fair market value of the Company as shall be evaluated as of the Company’s first raising via equity issuance. If the future event will not occur, Eroll shall pay the loan and interest within one year from the closing date.

According to ASC 470 the Company did not record a BCF with respect to July Loan since the contingent BCF shall not be recognized in earnings until the contingency is resolved.

During the year ended December 31, 2019, the Company recorded an interest expenses in the total amount of $4.

On April 10, 2019, the July 2018 Loan was converted into 150,000 Shares.

c.

On August 10, 2018, Eroll entered into a convertible loan agreement with Cannabics Pharmaceuticals Inc. (“Cannabics”), a U.S. public company and one of the Company’s shareholders, which was amended on September 12, 2018 (the “Cannabics Loan Agreement”). The Cannabics Loan Agreement is comprised of three parts, as follows: (i) Convertible loan, (ii) warrants, and (iii) royalties.

(i) Convertible Loan (“Cannabics Convertible Loan”)

Cannabics was obligated to invest up to $2,000 in Eroll as follows: (i) $500 upon execution of the Cannabics Loan Agreement (“First Tranche”), (ii) $500 within 90 days and (iii) $1,000 (the “Third Tranche”), 90 days following that.

Following the investment of the Third Tranche, the Company shall issue Cannabics an amount of shares such that Cannabics shall hold 10% of the outstanding shares on a fully-diluted basis of the Company.

On August 13, 2018, the Company received $500 and on September 26, 2018, the Company received the Second $500. On November 6, 2018 and December 10, 2018, the Company received the Third Tranche ($1,000).

The Company accounted for the Cannabics Loan in accordance with ASC 470-20, Debt with conversion and other Options. According to ASC 470-20-30-8, since the intrinsic value of the BCF exceeds the entire proceeds of the loan, the Company allocated the entire proceeds of $250 related to the convertible loan to the BCF as additional paid in capital.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 4:-CONVERTIBLE LOANS (Cont.)

On September 27, 2018 the First Tranche was converted into 1,500,000 Shares.

On January 15, 2019, the Third Tranche was converted into 770,397 Shares. As a result, the Company recorded financial expenses related to the loan in the amount of $942 which are included in discontinued operations.

(ii) Warrants

In addition, according to the Cannabics Loan Agreement, Cannabics shall issue to the Company 1,000,000 warrants with an exercise price of $2 per share, of the Cannabics shares, for a period of 12 months. The warrants were issued on August 14, 2018. The warrants were classified as an asset and are evaluated every report date. During the year ended December 31, 2019 the Company recorded expenses due to the change in fair value of the warrant in the amount of $1. As of December 31, 2020, December 31, 2019, and December 31, 2018 the warrants fair value amount was $nil and $1, respectively.

(iii) Royalties

Eroll shall pay to Cannabics royalties in an amount equal to a percentage of the Eroll’s revenues commencing from January 2019 of between 2.5% - 5%, subject to certain conditions.

Notwithstanding the above, for the first year following the Cannabics Loan Agreement closing date, Eroll shall pay Cannabics minimum royalties of not less than $500. In the event the Cannabics Loan is converted into shares, the aggregate royalties to be paid will not be greater than $8,000.

Eroll recorded a provision for royalties in a total amount of $500 which is included in the ended December 31, 2019, included Liabilities held for Sale.

d.On December 3, 2018, the Company received a convertible loan from third party (the “December 2018 Lender”) the loan has two year term, in the principal amount of $550 which bears 10% annual interest rate (out of which $50 was directly transferred as finder fee) (“December 2018 Loan”).

The Company at its option shall have the right to redeem, in part or in whole, outstanding principal and interest under prior to the maturity date. The Company shall pay an amount equal to the principal amount being redeemed plus a redemption premium equal to 20% of the outstanding principal amount being redeemed plus outstanding and accrued interest.

The December 2018 Lender shall be entitled to convert at its option any portion of the outstanding and unpaid conversion amount into fully paid and nonassessable shares of common stock, at the lower of the fixed conversion price then in effect or the market conversion price. The number shares of common stock issuable upon conversion of any conversion amount shall be determined by dividing (x) such conversion amount by (y) the fixed conversion price of $1.2 or (z) 80% of the lowest the volume-weighted average price of the Company’s shares of common stock during the 10 trading days immediately preceding the conversion date.

The Company accounted for the convertible loan in accordance with ASC 470-20, Debt with conversion and other Options. According to ASC 470-20-30-8, since the intrinsic value of the BCF exceeds the entire proceeds of the loan, the Company allocated the entire proceeds to the BCF as additional paid in capital.

On April 3, 2019, the December 2018 Loan and the accrued interest in the amount of $568 were converted to 473,025 Shares.

During the year ended December 31, 2019, the Company recorded interest and financial expenses related to the December 2018 Loan in the amount of $543.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 4:-CONVERTIBLE LOANS (Cont.)

e.On February 21, 2019, the Company received a convertible loan from third party (“February 2019 Lender”), the loan has two year term, in the principal amount of $550 which bears 10% annual interest rate out of which $50 was directly transferred as finder fee (“February 2019 Loan”).

The Company at its option shall have the right to redeem, in part or in whole, outstanding principal amount and interest under this loan agreement prior to the maturity date. The Company shall pay an amount equal to the principal amount being redeemed plus a redemption premium equal to 20% of the outstanding principal amount being redeemed plus outstanding and accrued interest.

The February 2019 Lender shall be entitled to convert at its option any portion of the outstanding and unpaid principal or accrued interest into fully paid and nonassessable of shares of common stock, at the lower of the fixed conversion price then in effect or the market conversion price. The number of shares of common stock issuable upon conversion of any conversion amount shall be determined by dividing (x) such conversion amount by (y) the fixed conversion price of $2 or (z) 80% of the lowest the volume-weighted average price of the Company’s shares of common stock during the 10 trading days immediately preceding the conversion date.

The Company also granted the February 2019 Lender a warrant to purchase 137,500 shares of common stock of the Company at an exercise price of $2 per share, such exercise price is subject to any future price-based anti-dilution adjustments. As the Company early adopted ASU 2017-11 the warrants were classified in shareholders equity.

The Company estimated the fair value of warrants using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:

  February 21,
2019		 
Share Price $2.35 
Dividend yield  0%
Risk-free interest rate  2.49%
Expected term (in years)  3 
Volatility  123.90%

The fair value of the warrants granted was $242.

The Company accounted for the February 2019 Loan in accordance with ASC 470-20, Debt with conversion and other Options. The intrinsic value of the BCF was calculated and the Company allocated $550 to the BCF as additional paid in capital.

During the year ended December 31, 2020, a portion of the February 2019 Loan in the amount of $190 and $87 accrued interest was converted into 10,455,212 Shares.

During the year ended December 31, 2020 and 2019, the Company recorded interest and financial expenses related to February 2019 Loan in the amount of $343 and $527, respectively.

f.On October 15, 2019, the Company received a convertible loan from a third party (“October 2019 Lender”) in the principal amount of $1,100 that bears an annual 10% interest rate (“October 2019 Loan”). The October 2019 Loan has a two year term. Prior to the maturity date of the October 2019 Loan, the Company, at its option, has the right to redeem, in cash, in part or in whole, the amounts outstanding provided that as of the date of the redemption notice (i) the volume-weighted average price of the Company’s ordinary shares is less than $1.25 and (ii) there is no equity condition failures as defined therein. In the event that the Company wishes to redeem any amount under the convertible loan, the Company shall pay an amount equal to the principal amount being redeemed plus a redemption premium equal to 20% of the outstanding amount being redeemed in addition to outstanding and accrued interest.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 4:-CONVERTIBLE LOANS (Cont.)

The October 2019 Lender shall be entitled to convert the principal loan and the outstanding interest (the “Conversion Amount”) into such number of ordinary shares determined by dividing (x) such Conversion Amount by (y) the fixed conversion price of $1.25 or (z) 80% of the lowest the volume-weighted average price of the Company’s ordinary shares during the 10 trading days immediately preceding the conversion date.

The Company also granted the October 2019 Lender a warrant to purchase 440,000 shares of common stock of the Company at an exercise price of $1.25 per share, such exercise price is subject to any future price-based anti-dilution adjustments. As the Company early adopted ASU 2017-11 the warrants were classified in shareholders equity.

The Company estimated the fair value of warrants using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:

  October 15,
2019		 
Share price $1.00 
Dividend yield  0%
Risk-free interest rate  1.59%
Expected term (in years)  5 
Volatility  172.66%

The fair value of the warrants granted was $414.

The Company accounted for the October 2019 Loan in accordance with ASC 470-20, Debt with conversion and other Options. The intrinsic value of the BCF was calculated and valued at $1,322, and the Company allocated $1,322 to the BCF as a liability. As of December 31, 2020 and December 31, 2019, the BCF was revalued at $610 and $676, accordingly.

The Company estimated the fair value of BCF using the Monte Carlo option pricing model using the following weighted average assumptions:

  October 15,
2019		  December 31,
2019		  December 31,
2020		 
Share price $1.00  $0.11  $0.15 
Dividend yield  0%  0%  0%
Risk-free interest rate  1.61%  1.58%  0.1%
Expected term (in years)  2   1.79   0.79 
Volatility  155.58%  158.99%  133.48%

During the year ended December 31, 2020 and 2019, the Company recorded interest and financial expenses related to October 2019 Loan in the amount of $594 and $127, respectively.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 4:-CONVERTIBLE LOANS (Cont.)

g.On October 14, 2019, the Company entered into a binding Memorandum of Understanding (the “MOU”) with Spanky’s Clothing Inc. (“Spanky’s Clothing”), a company affiliated with Mr. Calvin Cordozar Broadus Jr., professionally known as “Snoop Dogg” (“Snoop Dogg”), with respect to services that Snoop Dogg was to provide to the Company as its brand ambassador for a period of six months. In return, the Company was to (i) pay Snoop Dogg and/or his affiliates aggregate cash payments of $1,000 over the term of the MOU, (ii) pay expenses related to the Company sponsored VIP event and the marketing and personal services provided by Snoop Dogg and a marketing budget for the Company’s product, and (iii) issue to Snoop Dogg and/or his affiliates convertible debentures (the “Debentures”) with an aggregate original principal amount of $1,400, half of which were to be issued upon signing of the MOU (“First MOU Debenture”), and the remainder were to be issued on or before the date that is six (6) months following the signing of the MOU.

The Debentures are unsecured, have a maturity date six months from the month following the signing of the respective Debenture, bear no interest and may be converted, at the election of the holder, into Shares at a conversion price of the lesser of (x) $1.40 per share, or (y) the closing bid price of the Company’s common stock on the trading day immediately preceding the date of the applicable notice of conversion. The Debentures contain anti-dilution protection during the period which the Debentures are outstanding, for decrease in share price and additional issuances, to maintain the aggregate percentage of equity holdings of the holders of all Debentures at 4.99%.

The First MOU Debenture was issued upon signing that MOU and recorded as a short-term loan as of December 31, 2019. In addition, during the year ended December 31, 2019, the Company paid $550 of the $1,000.

During the second quarter of 2020, the First MOU Debenture expired without being converted to Shares and the Company recorded a gain on liquidation of subsidiary of debt in the Consolidated Statement of Operations in the amount of $700 during the year ended December 31, 2020. As of the date of this report, there are no further obligations of the Company under the MOU.

h.On August 7, 2020 and August 11, 2020, the Company received two convertible loans from two third parties (“August 2020 Lenders”) in the aggregate amount of $300 (the “August 2020 Loan”). Per the terms of the Agreements, the August 2020 Loans have a maturity date of August 7, 2022 and August 11, 2020 (“Maturity Date”) and accrue annual interest at a rate of 10%

The August 2020 Loans are convertible by the August 2020 Lenders into Shares, at their discretion, at the lower of a fixed price of $0.102 (the “Fixed Conversion Price”) or 80% of the lowest volume weighted average price (“VWAP”) of the Company’s common stock during the 10 trading days immediately preceding the conversion date (the “Market Conversion Price”).

The Company also granted the August 2020 Investors warrants to purchase 750,000 shares of common stock of the Company at an exercise price of $0.20 per share, such exercise price is subject to any future price-based anti-dilution adjustments. Accordance with ASU 2017-11 the warrants were classified in shareholders equity.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 4:-CONVERTIBLE LOANS (Cont.)

The Company estimated the fair value of warrants using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:

  August
2020		 
Share price $0.086 
Dividend yield  0%
Risk-free interest rate  0.21%
Expected term (in years)  5 
Volatility  176.96%

The fair value of the warrants granted was $53.

The Company accounted for the August 2020 Loan in accordance with ASC 470-20, Debt with conversion and other Options. The combined intrinsic value of the BCF for the August 2020 Loan was calculated and valued at $378, and the Company allocated $378 to the BCF as a liability. As of December 31, 2020, the BCF was revalued at $502.

The Company estimated the fair value of BCF using the Monte Carlo option pricing model using the following weighted average assumptions:

  August
2020		  December 31,
2020		 
Share price $0.086  $0.15 
Dividend yield  0   0%
Risk-free interest rate  0.11%  0.12%
Expected term (in years)  2   

1.58

 
Volatility  164.04%  142.65%

During the year ended December 31, 2020, the Company recorded interest and financial expenses related to August 2020 Lenders in the amount of $327.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 4:-CONVERTIBLE LOANS (Cont.)

i.During November 2020 through to December 31, 2020, the Company received $425 from third party investors from the issuance of convertible promissory notes in respect thereof (“Promissory Notes”). The Promissory Notes bear no interest, are convertible into Shares based on a fixed conversion price of $0.10 per share and mature between 6 and 24 months from the issuance date. Pursuant to Promissory Notes one of the investors received warrants to purchase 330,000 Shares at an exercise price of $0.15 for a period of one year. 

The Company estimated the fair value of warrants using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:

  December 17,
2020		 
Share price $0.19 
Dividend yield  0%
Risk-free interest rate  0.1%
Expected term (in years)  2 
Volatility  176%

The fair value of the warrants granted was $41, is included in the warrants as additional paid in capital.

The Company accounted for the Promissory Notes in accordance with ASC 470-20, Debt with conversion and other Options. The intrinsic value of the BCF was calculated and the Company allocated $425 to the BCF as additional paid in capital.

During the year ended December 31, 2020, the Company recorded interest and financial expenses related to Promissory Notes in the amount of $65.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 5:-SHAREHOLDERS’ EQUITY

a.As of December 31, 2020, 2019, and 2018, the Company’s share capital is composed as follows:

  December 31,
2020		  December 31,
2019		  December 31,
2018		 
  Authorized  Issued and outstanding  Issued and
outstanding		  Issued and
outstanding		  Authorized  Issued and outstanding 
  Number of shares 
Shares of common stock of $0.0001 par value each “Shares”  500,000,000   31,665,566   500,000,000   20,535,354   500,000,000   16,198,578 

Each Ordinary share is entitled to receive dividend, participate in the distribution of the Company’s net assets upon liquidation and to receive notices of participate and vote (at one vote per share) at the general meetings of the Company on any matter upon which the general meeting is authorized.

b.Issuance of shares:

1.

On October 23, 2018 the Company converted a loan in the amount of $250 to 250,000 Shares with $0.0001 par value with a fair value of $208.

2.On October 23, 2018 the Company converted a loan in the amount of $100 to 99,338 Shares with $0.0001 par value.
3.On December 10, 2018 the Company issued 51,570 Shares with $0.0001 par value to a new investor, for a total amount of $67.
4.On December 11, 2018 the Company issued 2,500 Shares with $0.0001 par value to 25 of its employees, each employee was entitled for 100 shares. As a result, the Company recorded expenses in the amount of $12. 
5.On December 23, 2018, the Company issued 25,000 Shares with $0.0001 par value to one of its consultants, the fair value of the services received are $25. 
6.On December 23, 2018, the Company issued 770,170 Shares to Cannabics as part of the Second Loan transfer with a relative fair value of $250.

7.On January 15, 2019 the Company converted a loan in the amount of $1,000 to 770,397 Shares

8.On January 28, 2019 the Company issued 50,000 Shares to one of its consultants, in exchange for services rendered whose fair value was $47.

9.On March 5, 2019, the Company converted a loan in the amount of $500 to 500,000 Shares.

10.On April 3, 2019, the Company converted a loan received on December 3, 2018, to 473,025 Shares.

11.On April 10, 2019, the Company converted a loan received on July 18, 2018, to 150,000 Shares.

12.On April 11, 2019 the Company issued 1,493,908 Shares to 26 investors as part of investment round in a private placement in a total amount of $4,107. The Company also issued 11,236 Shares to broker involved in the investment round, and the Company recorded an expense in a total amount $32.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 5:-SHAREHOLDERS’ EQUITY (Cont.)

13.On March 11, 2019, the company signed agreement with new investor for a total consideration of $216, accordingly, on April 11, 2019, the Company issued 120,000 Shares. The Company also granted the investor warrants to purchase 70,000 Shares at a price of $3 per share for a period of 24 months.

14.On March 11, 2019, the company signed agreement with new investor for a total consideration of $100, accordingly, on April 11, 2019, the Company issued 66,667 Shares.

15.On March 12, 2019, the Company signed agreement with an investor pursuant to which, on April 11, 2019, the Company issued 140,000 Shares for a total consideration of $252. The Company also granted the investor warrants to purchase 70,000 Shares at a price of $3 per share for a period of 24 months.

16.On April 12, 2019, the Company issued 33,333 Shares, which were granted as part of a loan agreement received on December 11, 2018.

17.On August 15, 2019, the company issued 433,333 shares in respect of exercise of 433,333 warrants granted as part of the December 2018 Loan signed on December 11, 2018.

18.On November 11, 2019, the Company issued 75,000 shares in respect to 75,000 RSU’s.  
19.On November 15, 2019, Company issued 19,877 Share to an investor as a result of a rachet clause from a previous investment.
20.During the year ended December 31, 2020, a portion of the February 2019 Loan in the amount of $190 and accrued interest in the amount of $87 was converted into 10,455,212 Shares.
21.On December 23, 2020, the Company issued 600,000 shares in respect to the exercise of 600,000 RSU’s.

c.Warrants:

A summary of warrant activity during the years ended December 31, 2020, 2019 and for the three months ended 2018 is as follows:

  Number  Average
exercise price		 
Warrants outstanding at October 1, 2018  -  $- 
Granted  533,333   1.69 
Exercised  -   - 
Forfeited/Cancelled  -   - 
Warrants outstanding at January 1, 2019  533,333  $1.69 
Granted  1,050,833   1.67 
Exercised  433,333   1.62 
Forfeited/Cancelled  -   - 
Warrants outstanding at December 31, 20219  1,150,833  $1.69 
Granted  1,080,000  $0.18 
Exercised  -   - 
Forfeited/Cancelled  (100,000)  2.00 
Warrants outstanding at December 31, 2020  2,130,833  $0.81 


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 5:-SHAREHOLDERS’ EQUITY (Cont.)

The following warrant issues took place during the years ended December 31, 2020, 2019 and the three months ended December 31, 2018 and are outstanding as of December 31, 2020:

Issuance date Warrants
outstanding		  Exercise
price per
warrant		  Warrants
outstanding and
exercisable		  Expiry date
February 21, 2019  137,500  $2.00   137,500  February 21, 2022
March 11, 2019  70,000  $3.00   70,000  March 11, 2021
March 11, 2019  333,333  $1.50   333,333  March 11, 2021
March 12, 2019  70,000  $3.00   70,000  March 12, 2021
October 15, 2019  440,000  $1.25   440,000  October 15, 2024
August 7, 2020  500,00  $0.20   500,000  August 7, 2025
August 11, 2020  250,00  $0.20   250,000  August 11, 2025
December 17, 2020  330,000  $0.15   330,000  December 17, 2021
               
   2,130,833       2,130,833   

d.Share option plans:

On April 1, 2019, the Company’s board of directors adopted the Seedo Corp. 2018 Share Options Plan (the “2018 Plan”).

Awards granted under the 2018 Plan are subject to vesting schedules and unless determined otherwise by the administrator of the 2018 Plan, generally vest following a period of four years from the applicable vesting commencement date, such that the awards vest in four annual equal installments and/or generally vest following a period of one year from the applicable vesting commencement date, such that the awards vest in four quarterly equal installments.

Subject to the discretion of the 2018 Plan administrator, if an award has not been exercised within seven years after the date of the grant, the award expires.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 5:-SHAREHOLDERS’ EQUITY (Cont.)

(i) A summary of employee share options activity during the years ended December 31, 2020, 2019 and the three months ended December 31, 2018 is as follows:

  Number  Average weighted exercise price 
Options outstanding at October 30, 2018 and December 31, 2018      
Granted  1,635,880  $1.00 
Exercised  -   - 
Forfeited  (30,000)  - 
Options outstanding at December 31, 2019  1,605,880   1.00 
Granted (i) – (iv)  1,660,000   0.11 
Exercised  -   - 
Forfeited  (1,605,882)  - 
         
Options outstanding at December 31, 2020  1,660,000  $0.11 
         
Options exercisable at December 31, 2020  1,322,500     

The following option issues took place during the years ended December 31, 2020 and 2019:

i.On September 1, 2020, the Company, signed a contract with a consultant pursuance to which they were granted 150,000 options to purchase 150,000 shares at $0.07 per share, in 12 equal quarterly installments commencing from December 1, 2020. The options expire on September 1, 2025. The fair value of the stock options issued is $13 and was determined using the Black-Scholes option pricing model and the following assumptions: share price - $0.0835; exercise price - $0.07; expected life – 5 years; annualized volatility – 296%; dividend yield – 0%; risk free rate – 0.26%. During the year ended December 31, 2020, the Company recorded share-based expenses related to the options in the amount of $4.
ii.On October 11, 2020, the Company granted a consultant 10,000 options to purchase 10,000 shares at a price of $0.30 per share. The options expire on March 11, 2021. The fair value of the stock options issued is $1 and was determined using the Black-Scholes option pricing model and the following assumptions: share price - $0.06475; exercise price - $0.3; expected life – 1.07 years; annualized volatility – 285%; dividend yield – 0%; risk free rate – 0.27%. During the year ended December 31, 2020, the Company recorded share-based expenses related to the options in the amount of $nil.

iii.On October 13, 2020, the Company, through Saffron, signed a contract with a consultant pursuant to which they were granted 1,000,000 options to purchase 1,000,000 shares at $0.10 per share. 250,000 options vest immediately, and the remaining 750,000 vest in three equal amounts every six months thereafter. The options expire on October 13, 2023. The fair value of the stock options issued is $60 and was determined using the Black-Scholes option pricing model and the following assumptions: share price - $0.061; exercise price - $0.1; expected life – 3 years; annualized volatility – 286%; dividend yield – 0%; risk free rate – 0.31%. During the year ended December 31, 2020, the Company recorded share-based expenses related to the options in the amount of $27.

iv.

On November 3, 2020, the Company, through Saffron, signed a contract with a consultant pursuant to which they were granted 500,000 options to purchase 500,000 shares. 250,000 options are exercisable at $0.10 per Share and 250,000 options are exercisable at $0.15 per share. The options vest quarterly over one year. The fair value of the stock options issued is $25 and was determined using the Black-Scholes option pricing model and the following assumptions: share price - $0.051; exercise price - $0.1 and $0.15; expected life – 4.93 years; annualized volatility – 278%; dividend yield – 0%; risk free rate – 0.39%. During the year ended December 31, 2020, the Company recorded share-based expenses related to the options in the amount of $9.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 5:-SHAREHOLDERS’ EQUITY (Cont.)

e.Restricted Share Units:

RSUs under the 2018 Plan may be granted upon such terms and conditions, no monetary payment (other than payments made for applicable taxes) shall be required as a condition of receiving the Company’s shares pursuant to a grant of RSUs, and unless determined otherwise by the Company, the aggregate nominal value of such RSUs shall not be paid and the Company shall capitalize applicable profits or take any other action to ensure that it meets any requirement of applicable laws regarding issuance of shares for consideration that is lower than the nominal value of such shares. If, however, the Company’s board of directors determines that the nominal value of the shares shall not be waived and shall be paid by the grantees, then it shall determine procedures for payment of such nominal value by the grantees or for collection of such amount from the grantees by the Company.

Shares issued pursuant to any RSUs units may (but need not) be made subject to exercise conditions, as shall be established by the Company and set forth in the applicable notice of grant evidencing such award. During any restriction period in which shares acquired pursuant to an award of RSUs remain subject to exercise conditions, such shares may not be sold, exchanged, transferred, pledged, assigned or otherwise disposed of unless otherwise provided in the 2018 Plan. Upon request by the Company, each grantee shall execute any agreement evidencing such transfer restrictions prior to the receipt of shares hereunder and the Company may place appropriate legends evidencing any such transfer restrictions on the relevant share certificates.

A summary of RSU activity during the years ended December 31, 2020, 2019 and the three months ended December 31, 2018 is as follows:

Number
RSU outstanding at October 31, 2018 and December 31, 2018
Granted1,023,450
Exercised-
Forfeited(893,200)
RSU outstanding at December 31, 2019130,250
Granted (i) (ii)1,035,000
Exercised(675,000)
Forfeited-
RSU’s outstanding at December 31, 2020490,250
RSU’s exercisable at December 31, 2020490,250

 

(i)On September 1, 2020, the Company, the Company granted the CFO 360,000 RSU’s with an exercise price of nil. The RSU’s vest quarterly over three years. The fair value of the RSU’s at the date of the grant was $30. During the year ended December 31, 2020, the Company recorded share-based expenses related to the RSU’s in the amount of $3.
(ii)On November 24, 2020, The Company granted two directors 300,000 RSU’s each, and one director 75,000 RSU’s. All these RSU’s vest immediately and have an exercise price of nil. The fair value of the RSU’s at the date of the grant was $128.

Estimates

SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 6:-TAXES ON INCOME

The Company’s subsidiaries are separately taxed under the domestic tax laws of the jurisdiction of incorporation of each entity.

a.Corporate tax rates in U.S.:

On December 22, 2017, the U.S. Tax Cuts and Jobs Act (“the TCJA”) was signed into law, permanently lowering the corporate federal income tax rate from 35% to 21%, effective January 1, 2018. The company is subject to U.S. income tax laws. There are no significant provisions for U.S. federal, state or other taxes for any period.

b.Corporate tax rates in Israel:

The Israeli statutory corporate tax rate and real capital gains were 23% in 2018-2020.

c.Deferred income taxes:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:

  December 31, 
  2020  2019  2018 
Deferred tax assets:         
Carry forward tax losses $1,174  $2,380  $1,061 
             
Net deferred tax asset before valuation allowance  1,174   2,380   1,061 
Valuation allowance  (1,174)  (2,380)  1,061 
             
Net deferred tax asset $-  $-  $- 

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized. Based on consideration of these factors, the Company recorded a full valuation allowance at December 31, 2020, 2019 and 2018.

d.Net operating carry-forward losses for tax purposes:

As of December 31, 2020, the carry-forward losses amounting to approximately $5,600, which can be carried forward for an indefinite period.


SEEDO CORP.

NOTES TO FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 7:-FINANCIAL EXPENSES, NET

  Year ended  Year ended  Three months ended 
  December 31,  December 31,  December 31, 
  2020  2019  2018 
Bank commissions $4  $-  $- 
Financial expenses related to revaluation of convertible component in convertible loans  435   677   - 
Financial expenses related to interest and revaluation of warrants  949   2,327   188 
Foreign currency transactions and other      -   - 
             
  $1,388  $3,004  $188 

NOTE 8:-RELATED PARIES

a.The Company signed an agreement with the CFO, effective July 1, 2020, pursuant to which the CFO will received $3.5 per month.
b.The Company signed an agreement with the CEO, effective November 1, 2020, pursuant to which the CEO will received $7.4 per month.
c.

On September 1, 2020, the Company, the Company granted the CFO 360,000 RSU’s with an exercise price of nil. The RSU’s vest quarterly over three years.

d.On November 24, 2020, The Company granted two directors 300,000 RSU’s each, and one director 75,000 RSU’s.

NOTE 9:-SUBSEQUENT EVENTS

a.During January 2021 and February 2021, the Company continued to raise funds through the issuance of Promissory Notes in the amount of $430.

b.In February 17, 2021, the Company granted two directors 250,000 restricted share units that vested immediately.
c.On December 24, 2020, Saffron Tech, announced its intention to raise up to 5 million New Israeli Shekels (“NIS”) (approximately $1.6 million) at a pre-money valuation of NIS 20 million (approximately $6.225 million) through the Israeli crowd funding platform – Pipelbiz “Crowd Funding Round”). Assuming the maximum amount is raised, the Company will own approximately 80% of the Saffron Tech. The Crowd Funding Round was closed on February 16, 2021 having raised the full amount


SEEDO CORP.

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except per share data, except share and per share data

  March 31,
2020		  December 31,
2019		 
     (audited) 
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $2  $2 
         
Total current assets  2   2 
         
Total assets $2  $2 
         
LIABILITIES AND SHAREHOLDERS’ DEFICIT        
CURRENT LIABILITIES        
         
Accounts payable  64   64 
Convertible loans  963   700 
         
Liabilities held for sale, net  -   8,893 
         
Total current liabilities  1,027   9,657 
         
Fair Value of convertible component in convertible loans  700   677 
Convertible Loan  218   323 
         
Total long term liabilities  918   1,000 
         
SHAREHOLDER’S DEFICIT        
Ordinary Shares of $ 0.0001 par value:        
Authorized: 500,000,000 shares at March 31, 2020 and December 31, 2019; Issued and Outstanding: 23,544,814 and 20,535,354 shares at March 31, 2020, and December 31, 2019, respectively  2   2 
Additional Paid in capital  14,589   14,443 
Accumulated deficit  (16,534)  (25,100)
         
Total shareholders’ deficit  (1,943)  (10,655)
         
Total liabilities and shareholders’ deficit $2  $2 

The accompanying notes are an integral part of the interim consolidated financial statements.


SEEDO CORP.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

U.S. dollars in thousands, except per share data, except share and per share data

  Three months ended  Three months ended 
  March 31,
2020		  March 31,
2019		 
Operating expenses:      
       
General and administrative $-  $(94)
         
Operating loss  -   (94)
         
Gain on liquidation of subsidiary  8,893     
         
Financial expenses, net  (327)  (2,146)
         
Net Income (loss) from continued operations  8,566   (2,240)
         
Net Loss from discontinued operations  -   (1,351)
         
Net Income (loss) $8,566  $(3,591)
         
Basic and diluted net loss per share $0.36  $(0.21)
         
Weighted average number of Ordinary shares used in computing basic and diluted loss per share  22,737,274   17,028,124 

The accompanying notes are an integral part of the interim consolidated financial statements.


SEEDO CORP.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands, except per share data

  Three months ended 
  March 31, 
  2020  2019 
Cash flows from operating activities:      
Net Gain (Loss) $8,566  $(3,591)
Adjustments to reconcile loss to net cash used in operating activities:        
Depreciation and amortization  -   43 
Change in fair value of convertible component in convertible loans  23   - 
Financial expenses related to convertible loans  303   579 
Financial expenses related to short-term loans  -   369 
Financial expenses related to loans from related party  -   942 
Loss from change of fair value of warrants  -   1 
Gain on liquidation of subsidiary  (8,893)  - 
         
Changes in assets and liabilities:        
Increase in other accounts receivable  -   (31)
Increase in inventory  -   (119)
Decrease in advances from customers  -   (133)
Increase in trade payables  -   168 
Increase in other accounts Payable  -   3 
         
Net cash used in operating activities  -   (1,769)
         
Cash flows from investing activities        
Purchase of property and equipment  -   (50)
Net cash used in investing activities  -   (50)
         
Cash flows from financing activities:        
Issuance of Shares      3,017 
Proceeds from convertible loans  -   258 
         
Net cash provided by financing activities  -   3,275 
         
Increase in cash and cash equivalents  -   1,456 
Cash and cash equivalents at the beginning of period  2   1,008 
Cash and cash equivalents at the end of period $2  $2,464 
         
Supplemental disclosures of cash flow information:        
Cash paid for interest  -   35 
         
Supplemental disclosures of non-cash flow information:        
Conversion of convertible loans  146   2,050 
Receipt on account of shares and issuance of warrants  -   3,017 
Gain on liquidation of subsidiary  8,893   - 

The accompanying notes are an integral part of the interim consolidated financial statements.


SEEDO CORP.

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except per share data, except share and per share data

  June 30,
2020		  December 31,
2019		 
     (audited) 
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $2  $2 
         
Total current assets  2   - 
         
Total assets $2  $- 
         
LIABILITIES AND SHAREHOLDERS’ DEFICIT        
CURRENT LIABILITIES        
         
Other accounts payables  64   64 
Convertible loans  277   700 
Liabilities held for sale, net  -   8,893 
         
Total current liabilities  341   9,657 
         
Fair value component of convertible loan  711   677 
Convertible loan  396   323 
         
Total long term liabilities  1,107   1,000 
         
SHAREHOLDER’S DEFICIT        
Ordinary Shares of $ 0.0001 par value:        
Authorized: 500,000,000 shares at June 30, 2020 and December 31, 2019; Issued and Outstanding: 29,503,030 and 20,535,354 shares at June 30, 2020, and December 31, 2019, respectively  3   2 
Additional Paid in capital  14,666   14,443 
Accumulated deficit  (16,115)  (25,100)
         
Total shareholders’ deficit  (1,446)  (10,655)
         
Total liabilities and shareholders’ deficit $2  $2 

The accompanying notes are an integral part of the interim consolidated financial statements.


SEEDO CORP.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

U.S. dollars in thousands, except per share data, except share and per share data

  Three months ended  Six months ended 
  June 30,
2020		  June 30,
2019		  June 30,
2020		  June 30,
2019		 
Operating expenses:            
             
General and administrative $*  $(40) $-  $(134)
                 
Operating loss  -   (40)  -   (134)
                 
Gain on liquidation of subsidiary  700   -   9,593   - 
                 
Financial expenses, net  (281)  (513)  (608)  (2,659)
                 
Net Income (loss) from continued operations $419   (553) $8,985  $(2,793)
                 
Net Loss from discontinued operations $-   (3,046) $-  $(4,397)
                 
Net Loss (gain) $419   (3,599) $8,985  $(7,190)
                 
Basic and diluted net gain per share $0.01   (0.18) $0.30  $(0.39)
                 
Weighted average number of Ordinary shares used in computing basic and diluted loss per share  28,895,409   19,744,022   25,173,336   18,403,800 

Gain on expiration of convertible debenture

The accompanying notes are an integral part of the interim consolidated financial statements.


SEEDO CORP.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands, except per share data

  Six months ended 
  June 30, 
  2020  2019 
Cash flows from operating activities:      
Net Gain (Loss) $8,985  $(7,190)
Adjustments to reconcile loss to net cash used in operating activities:        
Depreciation and amortization  -   86 
Financial expenses related to convertible loans  574   622 
Financial expenses related to short-term loans  -   800 
Financial expenses related to loans from related party  -   942 
Gain on liquidation of subsidiary  (9,593)    
Share based compensation  -   1,011 
Other  -   1 
Change in fair value of convertible component in convertible loans  34   - 
Loan based compensation        
         
Changes in assets and liabilities:        
Increase in other accounts receivable  -   (1,312)
Increase in inventory  -   (98)
Increase in advances from customers  -   (136)
Increase in trade payables  -   413 
Increase in other accounts Payable  -   12 
         
Net cash used in operating activities  -   (4,849)
         
Cash flows from investing activities        
Purchase of property and equipment  -   (62)
Net cash used in investing activities  -   (62)
         
Cash flows from financing activities:        
Proceeds from issuance of Shares  -   4,404 
Proceeds from convertible loans  -   258 
Issuance of warrants  -   514 
         
Net cash provided by financing activities  -   5,176 
         
Increase (Decrease) in cash and cash equivalents  -   265 
Cash and cash equivalents at the beginning of period  2   1,008 
Cash and cash equivalents at the end of period $2  $1,273 
         
Supplemental disclosures of cash flow information:        
Cash paid for interest  -   35 
         
Supplemental disclosures of non-cash flow information:        
Conversion of convertible loans  223   2,300 
Gain on liquidation of subsidiary  9,593   - 
Exercise of warrants  -   700 

The accompanying notes are an integral part of the interim consolidated financial statements.


SEEDO CORP.

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands, except per share data, except share and per share data

  September 30,
2020		  December 31,
2019		 
     (audited) 
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents $239  $2 
Other current assets  1   - 
         
Total current assets  240   2 
         
Total assets $240  $2 
         
LIABILITIES AND SHAREHOLDERS’ EQUITY        
CURRENT LIABILITIES        
         
Accounts payables  69   64 
Convertible loans  339   700 
Other accounts liabilities  59   - 
Liabilities held for sale, net  -   8,893 
         
Total current liabilities  467   9,657 
         
Fair value component of convertible loan  978   677 
Convertible loan  603   323 
         
Total long term liabilities  1,581   1,000 
         
SHAREHOLDER’S DEFICIT        
Ordinary Shares of $ 0.0001 par value:        
Authorized: 500,000,000 shares at September 30, 2020 and December 31, 2019; Issued and Outstanding: 29,503,030 and 20,535,354 shares at September 30, 2020, and December 31, 2019, respectively  3   2 
Additional Paid in capital  14,719   14,443 
Accumulated deficit  (16,530)  (25,100)
         
Total shareholders’ deficit  (1,808)  (10,655)
         
Total liabilities and shareholders’ deficit $240  $2 

The accompanying notes are an integral part of the interim consolidated financial statements.


SEEDO CORP.

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

U.S. dollars in thousands, except per share data, except share and per share data

  Three months ended  Nine months ended 
  September 30,
2020		  September 30,
2019		  September 30,
2020		  September 30,
2019		 
Operating expenses:            
             
Research and development $(2)  -  $(2) $- 
General and administrative  (123)  (17)  (123)  (151)
                 
Operating loss  (125)  (17)  (125)  (151)
                 
Gain on liquidation of subsidiary  -   -   9,593   - 
                 
Financial expenses, net  (290)  (83)  (898)  (2,742)
                 
Net Income (loss) from continued operations $(415)  (100) $8,570  $(2,893)
                 
Net Loss from discontinued operations $-   (3,025) $-  $(7,422)
                 
Net Income (loss) $(415)  (3,125) $8,570  $(10,315)
                 
Basic and diluted net loss per share $(0.02)  (0.16) $0.29  $(0.54)
                 
Weighted average number of Ordinary shares used in computing basic and diluted loss per share  26,632,090   20,001,386   29,502,030   19,019,390 

The accompanying notes are an integral part of the interim consolidated financial statements.


SEEDO CORP.

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands, except per share data

  Nine months ended 
  September 30, 
  2020  2019 
Cash flows from operating activities:      
Net Gain (Loss) $8,570  $(10,315)
Adjustments to reconcile loss to net cash used in operating activities:        
Depreciation and amortization  -   131 
Change in fair value of convertible component in convertible loans  301   - 
Financial expenses related to convertible loans  596   640 
Financial expenses related to short-term loans  -   657 
Financial expenses related to loans from related party  -   942 
Gain from liquidation of subsidiary  (9,593)  - 
Share based compensation  -   1,921 
Other      1 
         
Changes in assets and liabilities:        
Increase in other accounts receivable  (1)  (660)
Increase in inventory  -   (386)
Increase in advances from customers  -   (574)
Increase in trade payables  5   1,245 
Increase in other accounts payable  59   358 
         
Net cash used in operating activities  (63)  (6,040)
         
Cash flows from investing activities        
Purchase of property and equipment  -   (62)
Net cash used in investing activities  -   (62)
         
Cash flows from financing activities:        
Proceeds from issuance of Shares  -   4,404 
Proceeds from convertible loans  300   258 
Proceeds from short term loans  -   463 
Repayment of short term loan  -   (300)
Issuance of warrants  -   514 
         
Net cash provided by financing activities  300   5,339 
         
Increase (Decrease) in cash and cash equivalents  237   (763)
Cash and cash equivalents at the beginning of period  2   1,008 
Cash and cash equivalents at the end of period $239  $245 
         
Supplemental disclosures of cash flow information:        
Cash paid for interest  -   210 
         
Supplemental disclosures of non-cash flow information:        
Conversion of convertible loans  223   2,300 
Gain from liquidation of subsidiary  9,593   - 
Exercise of warrants  -   700 

The accompanying notes are an integral part of the interim consolidated financial statements.


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 1 - GENERAL

Seedo Corp. (the “Company”), was incorporated on January 16, 2015, as GRCR Partners Inc., under the laws of Delaware. Prior to September 14, 2018, the Company was solely a provider of risk management and asset protection (“RAP”) services for businesses, individuals and families. On September 14, 2018, the Company acquired Eroll Grow Tech Ltd. (“Eroll”), an Israeli company incorporated on May 18, 2015 (the “Acquisition”). On September 17, 2018, the Company’s name was changed to Seedo Corp. Since the Acquisition of Eroll and through to December 31, 2019, Eroll produced a plant growing device managed and controlled by an artificial intelligent algorithm, allowing consumers to grow their own herbs and vegetables effortlessly from seed to plant, while providing optimal conditions to assure premium quality produce year-round.

On July 19, 2020, the Company formed a new wholly-owned subsidiary in Israel, Hachevra Legiduley Pkaot Beisrael Ltd. (the “New Subsidiary”), to develop a fully automated and remotely managed system for growing saffron and other vegetables. On November 5, 2020, the New Subsidiary changed its name to Saffron-Tech Ltd. (“Saffron Tech”).

The Company, through Saffron Tech, is focusing on its in-house research and development of agriculture technology products, among others, in the fields of exotic plants and mushrooms. Saffron Tech plans to roll out its proof of concept in the coming months. This technology will provide turnkey automated growing containers for high-quality, high-yield saffron all year round. The Company is in advanced stages of developing and testing a fully automated and remotely managed system for growing high-quality, high-yield saffron anywhere and anytime.

Going Concern

The Company has a history of losses, an accumulated deficit, have negative working capital and have not generated cash flow from our operations to support a meaningful and ongoing business plan. It is management’s opinion that these conditions raise substantial doubt about the Company’s ability to continue as a going concern.

In view of these matters, the Company’s ability to continue as a going concern is dependent upon the development, marketing and sales of a viable product to achieve a level of profitability. The Company intends on financing future development activities and working capital needs largely from the sale of private and public equity securities with additional funding from other traditional financing sources, including term notes, until such time that funds provided by operations are sufficient to fund working capital requirements. The unaudited, interim financial statements aredo not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classifications of liabilities that might be necessary should we be unable to continue as a going concern.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

Unaudited Interim Financial Statements

The accompanying unaudited financial statements include the accounts of the Company, prepared on the basis ofin accordance with accounting principles generally accepted in the United States.States of America (“GAAP”) and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the for three-months ended March 31, 2020, the six months ended June 30, 2020 and the nine-months ended September 30, 2020. However, these results are not necessarily indicative of results for any other interim period or for the year ended December 31, 2020. The preparation of financial statements in conformity with GAAP requires the Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.

Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the U.S. Securities and Exchange Commission (“SEC”). The accompanying unaudited condensed financial statements should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on March 17, 2021 (the “Annual Report”). For further information, reference is made to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Cont.)

Use of Estimates

The preparation of unaudited condensed financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets and liabilities as of September 30, 2016 and cumulative expenses from inception.the date of the financial statements. Actual results could differ from those estimates made by management.

Recentestimates. Estimates are used when accounting pronouncements
for Warrants and Convertible Note and Going Concern.

Derivative and Fair Value of Financial Instruments

Fair value accounting requires bifurcation of embedded derivative instruments such as conversion features in convertible debt or equity instruments and measurement of their fair value for accounting purposes. In March 2016,assessing the Financial Accounting Standards Board issued Accounting Standards Codification Update No. 2016-09 Compensation – Stock Compensation (Topic 718). The amendmentsconvertible debt instruments, management determines if the convertible debt host instrument is conventional convertible debt and further if there is a beneficial conversion feature requiring measurement. If the instrument is not considered conventional convertible debt under ASC 470, the Company will continue its evaluation process of these instruments as derivative financial instruments under ASC 815.

Once determined, derivative liabilities are adjusted to reflect fair value at each reporting period end, with any increase or decrease in this update affect all entities that issue share-based payment awardsthe fair value being recorded in results of operations as an adjustment to their employees. The areas for simplification in this Update involve several aspectsfair value of derivatives.

Fair value of certain of the Company’s financial instruments including cash, accounts receivable, accounts payable, accrued expenses, notes payables, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with ASC 820, “Fair Value Measurements and Disclosure” defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting for share-based payment transactions, includingprinciples and expands disclosures about fair value measurements.

Fair value, as defined in ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise. The fair value of a liability should reflect the risk of nonperformance, which includes, among other things, the Company’s credit risk.

Valuation techniques are generally classified into three categories: the market approach; the income tax consequences, classificationapproach; and the cost approach. The selection and application of awardsone or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as either equityfollows:

Level 1:Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2:Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3:Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.

Fair value measurements are required to be disclosed by the Level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in Level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or liabilities,losses for the period (realized and classification onunrealized), segregating those gains or losses included in earnings, and a description of where those gains or losses included in earning are reported in the statement of cash flows. For public business entities,income.


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except per share data

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Cont.)

The Company’s financial assets and liabilities that are measured at fair value on a recurring basis by level within the amendmentsfair value hierarchy are as follows:

  Balance as of March 31, 2020 
  Level 1  Level 2  Level 3  Total 
Liabilities:            
Fair Value of convertible component in convertible loan, net of discounts and debt issue costs $        -  $        -  $700  $700 
                 
Total liabilities $-  $-  $700  $700 

  Balance as of June 30, 2020 
  Level 1  Level 2  Level 3  Total 
Liabilities:            
Fair Value of convertible component in convertible loan, net of discounts and debt issue costs $-  $-  $711  $711 
                 
Total liabilities $-  $-  $711  $711 

  Balance as of September 30, 2020 
  Level 1  Level 2  Level 3  Total 
Liabilities:            
Fair Value of convertible component in convertible loan, net of discounts and debt issue costs $        -  $        -  $978  $978 
                 
Total liabilities $-  $-  $978  $978 

The Company estimated the fair value of BCF using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:

  March 31,
2020		  June 30,
2020		  September 30,
2020		 
Dividend yield  0%  0%  0%
Risk-free interest rate  0.2%  0.16%  0.12-0.13%
Expected term (in years)  1.54   1.29   1.04-1.83 
Volatility  171.37%  174.65%  161.46-175.3%


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Cont.)

Recent Accounting Standards announced

In June 2016, FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. ASU 2016-13 amends the impairment model to utilize an expected loss methodology in this Update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods.

place of the currently used incurred loss methodology, which will result in the more timely recognition of losses. Topic 326 was adopted by the Company on January 1, 2020. The adoption did not have a material impact on the Company’s consolidated financial statements.

In May 2014,August 2020, the FASB issued ASU 2014-09, Revenue fromNo. 2020-06, Accounting for Convertible Instruments and Contracts with Customers which modifies how all entities recognize revenue and various other revenue accounting standards for specialized transactions and industries. This update is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflectsEntity’s Own Equity (ASU 2020-06), which simplifies the consideration to whichaccounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts in an entity’s own equity. Among other changes, ASU 2020-06 removes from GAAP the entity expects toliability and equity separation model for convertible instruments with a cash conversion feature and a beneficial conversion feature (“BCF”), and as a result, after adoption, entities will no longer separately present in equity an embedded conversion feature for such debt. Similarly, the embedded conversion feature will no longer be entitled in exchange for those goods or services. In August 2015,amortized into income as interest expense over the FASB issued ASU 2015-14, which deferred the effective datelife of the instrument. Instead, entities will account for a convertible debt instrument wholly as debt unless (1) a convertible instrument contains features that require bifurcation as a derivative under ASC Topic 815, Derivatives and Hedging, or (2) a convertible debt instrument was issued at a substantial premium. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share (EPS). ASU 2020-06 is effective for fiscal years beginning after December 15, 2017,2021, with early adoption permitted for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years.can be adopted on either a fully retrospective or modified retrospective basis. The Companyadoption of this standard is currently evaluating the possible impact of ASU 2014-15, but does not anticipate that it will haveexpected to result in a material impact onto the Company's consolidatedCompany’s financial statements.

NOTE 3 – SIGNIFICANT EVENTS DURING THE PERIOD

a.During the three months ended March 31, 2020, the Company converted a portion of the February 2019 Loan in the amount of $95 and accrued interest in the amount of $51 to 3,009,460 Shares.

During the three months ended June 30, 2020, the Company converted a portion of the February 2019 Loan in the amount of $65 and accrued interest in the amount of $13 to 5,957,216 Shares.

On July 19, 2020, the Company formed a new wholly-owned subsidiary in Israel, Hachevra Legiduley Pkaot Beisrael Ltd. (the “New Subsidiary”), to develop a fully automated and remotely managed system for growing saffron and other vegetables. On November 5, 2020, the New Subsidiary changed its name to Saffron-Tech Ltd (or “Saffron”).

b.On August 7, 2020 and August 11, 2020, the Company received two convertible loans from two third parties (“August 2020 Lenders”) in the aggregate amount of $300 (the “August 2020 Loan”). Per the terms of the Agreements, the August 2020 Loans have a maturity date of August 7, 2022 and August 11, 2020 (“Maturity Date”) and accrue annual interest at a rate of 10%

The August 2020 Loans are convertible by the August 2020 Lenders into Shares, at their discretion, at the lower of a fixed price of $0.102 (the “Fixed Conversion Price”) or 80% of the lowest volume weighted average price (“VWAP”) of the Company’s common stock during the 10 trading days immediately preceding the conversion date (the “Market Conversion Price”).

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.


3. Common Stock
On January 16, 2015,also granted the Company issued 17,000,000August 2020 Investors warrants to purchase 750,000 shares of common stock toof the SCM Holdings II, LLC (“SCM”)Company at par valuean exercise price of $0.0001$0.20 per share, for an equity investment of $15,000. The sole owner of SCMsuch exercise price is the current CEO, CFO and sole director of the Company.
On December 23, 2015, the Board of Directors approved an agreement with legal counsel forsubject to any future price-based anti-dilution adjustments. As the Company which included;early adopted ASU 2017-11 the issuance of 347,500 shares of common stock and the total payment of $15,000 to counsel for services rendered through the date the Company’s S-1 filing is declared effective. warrants were classified in shareholders equity.


NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SIGNIFICANT EVENTS DURING THE PERIOD (Cont.)

The $15,000 will be paid the sooner of any combination of; (i) the sum of $500 per month commencing November 1, 2015, (ii) the first use of proceeds from the S-1 offering, or (iii) the change of control of the Company. We are required to estimateCompany estimated the fair value of warrants using the common stock underlying our stock compensation. Black-Scholes-Merton option pricing model using the following weighted average assumptions: 

  August 
2020		 
Share price $0.086 
Dividend yield  0%
Risk-free interest rate  0.21%
Expected term (in years)  5 
Volatility  176.96%

The fair value of the common stock underlyingwarrants granted was $53.

The Company accounted for the stock awards to counselAugust 2020 Loan in accordance with ASC 470-20, Debt with conversion and other Options. The combined intrinsic value of the BCF for the August 2020 Loan was determined by our boardcalculated and valued at $378, , and the Company allocated $378to the BCF as a liability. As of directors, with input frommanagement December 31, 2020, the BCF was revalued at a proce of $0.01. We believe that our board of directors has the relevant experience and expertise to determine$502.

The Company estimated the fair value of our common stock. InBCF using the absence of a public trading market, our board of directors, with input frommanagement, exercised significant judgment and considered numerous subjective and objective factors.


4. Income Taxes
The provision for income taxes forMonte Carlo option pricing model using the following weighted average assumptions:

  August
2020		  December 31,
2020		 
Share price $0.086  $0.15 
Dividend yield  0   0%
Risk-free interest rate  0.11%  0.12%
Expected term (in years)  2   1.58 
Volatility  164.04%  142.65%

During the year ended September 30, 2016December 31, 2020, the Company recorded interest and since inception (January 16, 2015)financial expenses related to September 30, 2015 was as follows (assuming a 15%, and 3% effective tax rate for federal and state taxes, respectively):August 2020 Lenders in the amount of $327.


 
 
For the year ended
September 30,
2016
 
 
From inception
(January 16, 2015) to
September 30,
2015
 
 
 
 
 
 
 
 
Tax Provision (Benefit):
 
 
 
 
 
 
Current Federal-State
  (3,279)
  3,599 
Deferred Tax Benefit
  (9,992)
  - 
Change in valuation allowance
  9,992 
  - 
Total tax provision (benefit)
  (3,279)
  3,599 
 
    
    
The Company had deferred income tax benefit as September 30 2016 as follows:
 
    
    
   Loss carry-forwards
    
 $(9,992)
   Less - valuation allowance
    
  9,992 
 
    
    
Total net deferred tax assets
    
 $- 

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – SIGNIFICANT EVENTS DURING THE PERIOD (Cont.)

c.During November 2020 through to December 31, 2021, the Company received $425 from third party investors from the issuance of convertible promissory notes in respect thereof (“Promissory Notes”). The Promissory Notes bear no interest, are convertible into Shares based on a fixed conversion price of $0.10 per share and mature between 6 and 24 months from the issuance date. Pursuant to Promissory Notes one of the investors received warrants to purchase 660,000 Shares at an exercise price of $0.15 for a period of 1 year.

The Company has net operating lossesestimated the fair value of $55,513 to carry-forward that expirewarrants using the Black-Scholes-Merton option pricing model using the following weighted average assumptions:

Share Price$0.15-$0.29
Dividend yield0%
Risk-free interest rate0.1%
Expected term (in years)0.5-2
Volatility176%

The fair value of the warrants granted was $42, is included in 2036.

the warrants as additional paid in capital.

The Company did not identify any material uncertain tax positions.accounted for the Promissory Notes in accordance with ASC 470-20, Debt with conversion and other Options. The Company did not recognize any interest or penalties for unrecognized tax benefits.

The federal income tax returnsintrinsic value of the BCF was calculated and the Company are subjectallocated $425 to examination by the IRS, generally for three years after they are filed. All returns since inception are still subject to examination.

5. Related Party Loans and Transactions
The Company hasBCF as additional paid the sole shareholder, officer and director $13,070 and $4,650 forin capital.

During the year ended September 30, 2016December 31, 2020, the Company recorded interest and for the period since inception (January 16, 2015)financial expenses related to September 30, 2016, respectively. Such amounts were for professional services and general management expenses and have been includedPromissory Notes in the costamount of revenue and general and administrative related party costs. For the year ended September 30, 2016 and for the period from inception (January 16, 2015) to September 30, 2015, the Company allocated such costs between cost of revenue $8,870 and $4,650, and $4,200 and $0, general and administrative expenses respectively. The Company has no formal contract in place with its sole officer and director and no monies where owed as of September 30, 2016.$65.

NOTE 4:-RELATED PARIES

a.The Company signed an agreement with the CFO, effective July 1, 2020, pursuant to which the CFO will received $3.5 per month,
b.The Company signed an agreement with the CEO, effective November 1, 2020, pursuant to which the CEO will received $7.4 per month.
c.

On September 1, 2020, the Company, the Company granted the CFO 360,000 RSU’s with an exercise price of nil. The RSU’s vest quarterly over three years.

d.On November 24, 2020, The Company granted two directors 300,000 RSU’s each, and one director 75,000 RSU’s.

NOTE 5:-SUBSEQUENT EVENTS

a.During January 2021 and February 2021, the Company continued to raise funds through the issuance of Promissory Notes in the amount of $430.

b.In February 17, 2021, the Company granted two directors 250,000 restricted share units that vested immediately.
c.On December 24, 2020, Saffron Tech, announced its intention to raise up to 5 million New Israeli Shekels (“NIS”) (approximately $1.6 million) at a pre-money valuation of NIS 20 million (approximately $6.225 million) through the Israeli crowd funding platform – Pipelbiz “Crowd Funding Round”). Assuming the maximum amount is raised, the Company will own approximately 80% of the Saffron Tech. The Crowd Funding Round was closed on February 16, 2021 having raised the full amount

6. Subsequent Events
On October 13, 2016 the Company closed out its public offering. The Company raised $36,900 and issued 369,000 shares at a price of $0.10.
On November 1, 2016 the Company’s majority shareholder and counsel retired 14,495,000 and 295,000 shares , respectively. Post the retirement the majority shareholder had 2,505,000 shares, and counsel had 52,500 shares, representing 85.6% and 1.8% of the Company, respectively.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None

Effective as of October 12, 2020, the Company dismissed Ernst & Young Global (“EY”, as its independent registered public accounting firm and engaged Ilanit Halperin, CPA as the as the independent registered public accounting firm to audit the Company’s financial statements for the fiscal year ended December 31, 2020, 2019 and the three month period ended December 31, 2018.

EY audit reports on the Company’s financial statements for the fiscal years ended September 30, 2018 and September 30, 2017 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the reports contained an explanatory paragraph noting that there was substantial doubt as to the Company’s ability to continue as a going concern. During the years ended September 30, 2018 and September 30, 2017 and the subsequent interim period through the date of EY’s dismissal, there were no disagreements with EY on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of EY would have caused it to make reference to the subject matter thereof in connection with its report.

Item 9A. Controls and ProceduresProcedures..

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of our Annual Report on Form 10-K, an evaluation was carried out by management, with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (Exchange Act) as of September 30, 2016.December 31, 2019. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.


During evaluation of disclosure controls and procedures as of September 30, 2016December 31, 2019 conducted as part of our annual audit and preparation of our annual financial statements, management conducted an evaluation of the effectiveness of the design and operations of our disclosure controls and procedures and concluded that our disclosure controls and procedures were not effective. Management determined that at September 30, 2016, we had a material weakness that relates to the relatively small number of employees who have bookkeeping and accounting functions and therefore prevents us from segregating duties within our internal control system.

Management’s Report on Internal Control over Financial Reporting

Management is responsible for the preparation and fair presentation of the financial statements included in this annual report. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and reflect management’s judgment and estimates concerning effects of events and transactions that are accounted for or disclosed.

Management is also responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting includes those policies and procedures that pertain to our ability to record, process, summarize and report reliable data. Management recognizes that there are inherent limitations in the effectiveness of any internal control over financial reporting, including the possibility of human error and the circumvention or overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement presentation. Further, because of changes in conditions, the effectiveness of internal control over financial reporting may vary over time.

In order to ensure that our internal control over financial reporting is effective, management regularly assesses controls and did so most recently for its financial reporting as of September 30, 2016. This assessment was basedDecember 31, 2019.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on criteriaa timely basis.


The material weaknesses identified are described below.

Procedures for effectiveControl Evaluation. Management has not established with appropriate rigor the procedures for evaluating internal controls over financial reporting. Due to limited resources and lack of segregation of duties, documentation of the limited control structure has not been accomplished.

Lack of Audit Committee. To date, the Company has not established an Audit Committee. It is management’s view that such a committee, including a financial expert, is an utmost important entity level control over the financial reporting process.

Insufficient Documentation of Review Procedures We employ policies and procedures for reconciliation of the financial statements and note disclosures.

Insufficient Information Technology Procedures. Management has not established methodical and consistent data back-up procedures to ensure loss of data will not occur.

As a result of the management evaluation of company internal control over financial reporting described inabove, the Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission. Based on this assessment,Company’s management has concluded that, as of September 30, 2016, we had a material weakness that relates toDecember 31, 2020, the relatively small number of employees who have bookkeeping and accounting functions and therefore prevents us from segregating duties within ourCompany’s internal control system. The inadequate segregation of duties is a weakness because it could lead toover financial reporting was not based on the untimely identification and resolution of accounting and disclosure matters or could lead to a failure to perform timely and effective reviews.

criteria in Internal Control – Integrated Framework issued by COSO.

This annual report filed on Form 10-KAnnual Report does not include an attestation report of the Company’sour independent registered public accounting firm regarding internal control over financial reporting. Management’s report wasWe were not subjectrequired to attestation byhave, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to temporarythe rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.


Annual Report.

Changes in Internal Control Over Financial Reporting

As of the end of the period covered by this report, there have been no changes in internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the year ended December 31, 2020, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Item 9B. Other InformationInformation..

None


None

PART III

Item 10. Directors, Executive Officers and Corporate GovernanceGovernance..

The following table sets forth the name and age of officers and director as of the date hereof. Our executive officers are elected annually by our board of directors. Our executive officers hold their offices until they resign, are removed by the Board, or his successor is elected and qualified.

Our management consists of:

NameAgeTitle
Gil Feiler 60Chairman of the Board of Directors
Sean ConradDavid Freidenberg35Chairman, 43Chief Executive Officer (principal executive officer) and
Gadi Levin48Chief Financial Officer (principal financial officer)
Mr. Conrad

Gil Feiler, 60, has been a director of the Corporation and chairman of the board of directors since June 2020. Gil serves as the Director Bank of Georgia (LSE: BGEO), Partner at Forest Investment House ($1 Billion AUM). Dr. Feiler serves as Head of Scientific Advisory Board of Cannabics Inc. (OTC: CNBX). He has served as our President, Sole Director, CFO, CEO since our inception (January 16, 2015).   Mr. Conrada Board Member of Advanced Vision Technology (VSJ), the Board of Habenleumi Bank Mutual Fund Division (Dikla); advisor for the Government of Ras al-Khemah, United Arab Emirates. Dr. Feiler has been involvedpublished extensively on business opportunities and is a frequent speaker in world events including the insuranceWorld Economic Forum at Davos. Dr. Feiler holds a PhD in Middle East Economics from Tel Aviv University (1989), and risk management advisory business for over 15 years. From 2009 through today, Mr. Conrad has spent mostis a graduate of his time advising businesses and individuals on risk management. During that time, Mr. Conradthe International Management Program of the Technion (2002)

David Freidenberg, 43, has been a registered insurance agent whose responsibilities included business development, recruiting, clientDirector of the Corporation since June 2020, and on October 25, 2020 he was appointed the CEO of the Saffron Tech Ltd (“Saffron Tech”), the Corporation’s wholly owned subsidiary in Israel. Mr. Freidenberg has spent the last few months advancing Saffron Tech’s activities in Israel. He also has extensive experience in the telecommunications and information technology (IT) industries including Vice President of Sales & Business Development at Trigyn Technologies, an IT services provider with $130 million in annual revenue. Past posts include CEO and chief operating officer.

Director of POMM Inc.; CEO and Director of Chip Pc; COO of Nidam Communication as well as a Director and manager for Hot cable TV, and Bezeq (Israeli National telephone company). David received both his BA in Economics (2003) and MBA in finance and accounting (2007) from Hebrew University.

Gadi Levin, CA, MBA, Chief Financial Officer and Secretary, was appointed Chief Financial Officer and Secretary of the Company on February 1, 2016. Mr. Levin has also served as Chief Financial Officer and Director of Vaxil Bio Ltd since March 1, 2016 Mr. Levin has also serves as the Finance Director of Eco (Atlantic) Oil & Gas Ltd. since December 1, 2016. Mr. Levin has over 15 years of experience working with public US, Canadian and multi-jurisdictional public companies. Previously, Mr. Levin served as Chief Financial Officer of DarioHeath Corp from November 2013 through January 2015. Mr. Levin also served as the Vice President of Finance and Chief Financial Officer for two Israeli investment firms specializing in private equity, hedge funds and real estate. Mr. Levin began his CPA career at the accounting firm Arthur Andersen, where he worked for nine years, specializing in U.S. listed companies involved in IPOs. Mr. Levin has a Bachelor of Commerce degree in Accounting and Information Systems from the University of the Cape Town, South Africa, and a post graduate diploma in Accounting from the University of South Africa. He received his Chartered Accountant designation in South Africa and has an MBA from Bar Ilan University in Israel.

Board of Directors

The minimum number of directors we are authorized to have is one, and the maximum is three.  In no event may we have less than one director. Althoughalthough we anticipate appointing additional directors in the near future, as of the date hereof we have one director, Mr. Sean Conrad. We considered Mr. Conrad’s prior insurance and risk management consulting experience were important factors in concluding that he was qualified to serve as one of our directors.

director. Directors on our Board of Directors are elected for one-year terms and serve until the next annual security holders’ meeting or until their death, resignation, retirement, removal, disqualification, or until a successor has been elected and qualified. All officers are appointed annually by the Board of Directors and serve at the discretion of the Board. Currently, directors receive no compensation for their services on our Board.
All directors will be reimbursed by us for any accountable expenses incurred in attending directors meetings provided that During the next year we have the resourcesintend to pay these fees. We will consider applying for officers and directors liability insurance at such time when we have the resources to do so.
Committees of the Board of Directors
Concurrent with having sufficient members and resources,strengthen our Board of Directors intendsby expanding it and recruiting world class Key Members.


Committees of the Board

All proceedings of the board of directors for the fiscal year ended December 31, 2019 were conducted by resolutions consented to establishin writing by our board of directors and filed with the minutes of the proceedings of our board of directors. Our company currently does not have nominating, compensation or audit committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by the board of directors.

The Company does not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. The Company’s board of directors believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. The Company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. The board of directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

A shareholder who wishes to communicate with the Company’s board of directors may do so by directing a written request addressed to any of our Directors at the address appearing on the first page of this registration statement.

Audit Committee Financial Expert

We do not have a standing audit committee. Our directors perform the functions usually designated to an audit committee. Our board of directors has determined that we do not have a board member that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K, nor do we have a board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Securities Exchange Act of 1934, as amended, and as defined by Rule 4200(a)(14) of the NASD Rules.

We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. Our board of directors does not believe that it is necessary to have an audit committee and a compensation committee. Thebecause management believes that the functions of an audit committee will review the results and scope of the audit and other services providedcommittees can be adequately performed by the independent auditors and review and evaluate the systemboard of internal controls. The compensation committee will review and recommend compensation arrangements for the officers and employees. No final determination has yet been made as to the memberships of these committees or whendirectors. In addition, we will have sufficient members to establish committees. We believe that we will need a minimumretaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the stage of three independent directors to have effective committee systems.

As ofour development and the date hereof,fact that we have not establishedgenerated positive cash flow to date.

As we generate revenue in the future, we intend to form a standing audit committee and identify and appoint a financial expert to serve on our audit committee.

Code of Ethics

The Company has adopted a Code of Ethics for Senior Financial Officers that is applicable to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.

Indemnification

Under our Articles of Incorporation and Bylaws of the corporation, we may indemnify an officer or director who is made a party to any Board committees.

proceeding, including a law suit, because of his position, if he acted in good faith and in a manner he reasonably believed to be in our best interest. We may advance expenses incurred in defending a proceeding. To the extent that the officer or director is successful on the merits in a proceeding as to which he is to be indemnified, we must indemnify him against all expenses incurred, including attorney’s fees. With respect to a derivative action, indemnity may be made only for expenses actually and reasonably incurred in defending the proceeding, and if the officer or director is judged liable, only by a court order. The indemnification is intended to be to the fullest extent permitted by the laws of the State of Delaware.

Regarding indemnification for liabilities arising under the Securities Act of 1933, which may be permitted to directors or officers under Delaware law, we have been advised that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Act and is, therefore, unenforceable.


Family Relationships

No family relationship exists between any director, executive officer, or any person contemplated to become such.

Director Independence

We currently do not have any independent directors serving on our board of directors.

Possible Potential Conflicts

The OTCBB on which we plan to havewhere our shares of common stock is quoted does not currently have any director independence requirements.

No member of managementthe Board of Directors will be required by us to work on a full timefull-time basis. Accordingly, certain conflicts of interest may arise between us and our officer(s) and director(s) in that they may have other business interests in the future to which they devote their attention, and they may be expected to continue to do so although managementDirectors time must also be devoted to our business. As a result, conflicts of interest may arise that can be resolved only through their exercise of such judgment as is consistent with each officer'sofficer’s understanding of his/her fiduciary duties to us.

Currently we have only one officer and one director (both of whom are the same person),two, and will seek to add additional officer(s) and/or director(s) as and when the proper personnel are located and terms of employment are mutually negotiated and agreed, and we have sufficient capital resources and cash flow to make such offers.

We cannot provide assurances that our efforts to eliminate the potential impact of conflicts of interest will be effective.

Involvement in Certain Legal Proceedings

None of our directors or executive officers has, during the past ten years:

●has had any bankruptcy petition filed by or against any business of which he was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time;

●been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);

●been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities;

●been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;

●been subject or a party to or any other disclosable event required by Item 401(f) of Regulation S-K.


●
has had any bankruptcy petition filed by or against any business of which he was a general partner or executive officer, either at the time of the bankruptcy or within two years prior to that time;
●
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
●
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities, futures, commodities or banking activities;
●
been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
●
been subject or a party to or any other disclosable event required by Item 401(f) of Regulation S-K.
Code of Business Conduct and Ethics
We currently do not have a Code of Business Conduct and Ethics.

Item 11. Executive CompensationCompensation..

EXECUTIVE COMPENSATION

Summary Compensation Table

The following table presents summary information regarding the total compensation awarded to, earned by, or paid to each of the named executive officers for services rendered:

          Stock  All Other    
Name and Principal Position Year Salary  Bonus  Awards  Compensation  Total 
                 
David Grossman, CEO(1) 2019 $           -  $           –              –  $         –  $          - 
  2020 $-  $–   14  $–  $- 
                      
David Freidenberg, CEO(2) 2019 $-  $–   –  $–  $- 
  2020 $-  $–   57  $22  $77 
                      
Gadi Levin, CEO(4) 2019 $-  $–   –  $–  $- 
  2020 $-  $–   3  $17  $20 

Name and
principal
position (a)
(3)
YePeriod
Salary ($)
Bonus ($)
Stock Awards ($)
Option Awards ($)
Non-Equity Incentive Plan
Compensation ($)
Nonqualified Deferred Compensation Earnings
($)
All Other Compensation ($)
Total ($)
Sean Conrad
CEO, CFO and Director
Inception (January 16, 2015)From June 24, 2020 to September 30, 20154,650-------
Year ended September 30, 201613,070-------December 24, 2020

(4)As of December 24, 2020
(5)As of September 1, 2020

Other than as set forth in the table above, there has been no cash or non-cash compensation awarded to, earned by or paid to any of our officers and directors since inception. We do not intend to pay salaries in the next twelve months. We do not currently have a stock option plan, non-equity incentive plan or pension plan.

Director Compensation

Our directors will not receive a fee for attending each board of directors meeting or meeting of a committee of the board of directors. All directors will be reimbursed for their reasonable out-of-pocket expenses incurred in connection with attending board of director and committee meetings.


Employment Agreement
There is no formal employment arrangement with Mr. Conrad at this time. As the date of this filing we have no permanent staff other than our President, Sean Conrad who is employed elsewhere and has the flexibility to work on the Company up to 10 hours per week. He is prepared to devote more time to our operations as may be required and as our finances permit. Mr. Conrad’s compensation has not been fixed or based on any percentage calculations. He will make all decisions determining the amount and timing of his compensation and, for the immediate future, has elected not to receive any compensation which permits us to meet our financial obligations. Mr. Conrad’s compensation amount may be formalized if and when the Company obtains future financing beyond the offering or if the Company generates sufficient cash flow to support his salary. Until such time, Mr. Conrad will be paid for select client delivery or other management services provided.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersMatters..

We

As of December 31, 2020, we had 17,347,50031,665,566 shares of common stock outstanding which arewas held by two62 shareholders. The chart below sets forth the ownership, or claimed ownership, of certain individuals and entities. This chart discloses those persons known by the board of directors to have, or claim to have, beneficial ownership of more than 5% of the outstanding shares of our common stock as of September 30 2016;December 31, 2020; of all directors and executive officers of GRCR;SEEDO CORP; and of our directors and officers as a group.

Name Number of
Shares (1)		  % Ownership 
David Freidenberg  300,000   0.95%
Gil Feiler  700,000   2.21%
Gadi Levin  -   - 
All officers and directors  1,000,000   3.16%
Cannabics Pharmaceutical Inc.  3,521,743   11.12%

 
Name
 
Number of 
Shares(1)
 
 
 % Ownership
 
 
 
 
 
 
 
 
SCM Holdings II, LLC (2)
  17,000,000 
  98%
All officers and directors
  17,000,000 
  98%

(1)The percent of common stock owned is calculated using the sum of (A) the number of shares of common stock owned and (B) the number of warrants and options of the Beneficial Owner that are exercisable within 60 days, as the numerator, and the sum of (Y)divided by the total number of shares of common stock outstanding (and the numberas of warrants and options of the Beneficial Owner that are exercisable within 60 days, as the denominator.December 31, 2020.
(2)Mr. Conrad is the sole officer and director of the Company. His address is the address of the Company

Item 13. Certain Relationships and Related Transactions, and Director IndependenceIndependence..

Presently, our sole officer and director provides office space to the

The Company forhas no charge. However, we do not have a written lease agreement. Our mailing address is 1771 Post Rd East #178, Westport CT 06880.

On January 17, 2015, the Company issued 17,000,000 shares of its common stock to its sole officer and director, Mr. Sean Conrad, in exchange for the sum of $15,000 and for certain services rendered by Mr. Conrad during the formation and organization of the Company.
Except as set forth above, none of the following persons hasbusiness relations or activity with any direct or indirect material interest in any transaction to which we are a party since our incorporation or in any proposed transaction to which we are proposed to be a party:
(A)Any of our directors or officers;
(B)Any proposed nominee for election as our director;
(C)Any person who beneficially owns, directly or indirectly, shares carrying more than 10% of the voting rights attached to our common stock; or
(D)Any relative or spouse of any of the foregoing persons, or any relative of such spouse, who has the same house as such person or who is a director or officer of any parent or subsidiary of our company. 
affiliates.

Item 14. Principal Accounting Fees and ServicesServices..

The following table indicates the fees paid by us for services performed for the:

  Year Ended December 31,
2020		  Year Ended December 31,
2019		 
Auditing fees  50,000   50,000 
         
Total  50,000   50,000 


 
 
 
 
Year Ended
September 30, 2016
 
 
Since inception (1/16/15) through September
30, 2015
 
 
 
 
 
 
 
 
Audit Fees
 $8,500 
 $7,500 
All Other Fees
  1,500 
  1,000 
 
    
    
Total
 $10,000 
 $7,500 

PART IV

Item 15. Exhibits, Financial Statement SchedulesSchedules..

The following exhibits are incorporated into this Form 10-K Annual Report:


Report:

Exhibit
Number
 Description
31.1* 
31.1*
Rule 13a-14(a) Certification of the Chief Executive and Financial Officer
32.1*
31.2*		 Rule 13a-14(a) Certification of the Chief Financial Officer
32.1*Section 1350 Certification of Chief Executive andOfficer
32.2*Section 1350 Certification of Chief Financial Officer
101.INS*XBRL Instance Document
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document

 

*Filed along with this document
Principal Financial Officer
Principal Accounting Officer


SIGNATURES

In accordance with

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 
GRCR PARTNERS INC
Dated: January 13, 2017By:/s/SEAN CONRAD
Sean Conrad
Chief Executive and Financial Officer, DirectorSeedo Corp.
   
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated.
Signature
Date: March 17, 2021
Title
By:
Date/s/ David Freidenburg
/s/Sean Conrad
Sean Conrad
David Freidenburg
Title:

Chief Executive Officer and Accounting
(Principal Executive Officer)

Date: March 17, 2021By:/s/ Gadi Levin
Gadi Levin
Title:

Chief Financial Officer Director

January 13, 2017

(Principal Financial Officer)

19

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