10-Q: Citrine Global Q1 Loss Narrows Amid Strategic Shift to UAVs

Citrine Global, soon to be SkyTech Orion Global, reported a reduced net loss for Q1 2024 while pivoting its strategic focus from plant-based wellness to defense-grade UAV and drone solutions.

Summary

• Net loss for the three months ended March 31, 2024, significantly decreased to $252,000 from $852,000 in the same period in 2023.
• Operating loss improved to $403,000 in Q1 2024 from $517,000 in Q1 2023.
• Financing expenses, net, turned into income of $151,000 in Q1 2024, compared to expenses of $335,000 in Q1 2023, primarily due to the fair value measurement of IBOT options.
• The company reported no revenues from product sales as of March 31, 2024.
• Cash and cash equivalents decreased to $4,000 at March 31, 2024, from $7,000 at December 31, 2023.
• Working capital deficiency increased to $2,785,000 at March 31, 2024, from $2,461,000 at December 31, 2023.
• The company is undergoing a strategic pivot from plant-based wellness and pharma solutions to developing and manufacturing defense-grade UAV and drone solutions through its subsidiary, Cannovation Center Israel Ltd. (renamed SkyTech Orion Ltd.).
• Cannovation Center Israel Ltd. received a government grant of NIS 12.5 million (approximately USD 3.4 million) for the SkyTech Innovation and Production Center in Yerucham, Israel, covering approximately 37.5% of eligible expenses.
• The company became a delinquent filer during Q2 2024, resulting in restricted trading and no active market for its securities.
• Outstanding convertible loan principal totaling $1,764,106 was converted into 176,010,600 common shares and an equal number of warrants at $0.01 per share on December 31, 2024.
• An investment agreement with Deer Light Ltd. for $137,000 in exchange for 13.7 million common shares and warrants was completed by March 2025.
• Golden Holdings Finance's ownership in Cannovation was diluted to approximately 1% due to its failure to provide required support and personal guarantees.
• The company changed its name to SkyTech Orion Global Corp. on June 26, 2025, to reflect its new strategic focus.
• An impairment loss of approximately $431,000 was recorded on the investment in Nanomedic Technologies Ltd., reducing its carrying amount to $18,000 as of June 30, 2025.

Sentiment

Score: 3

Explanation: The company reported a reduced net loss and secured a substantial government grant for a new strategic direction in UAVs, which are positive developments. However, these are overshadowed by critical issues including extremely low cash reserves, a growing working capital deficiency, a failed capital raise, an expired option for a key investment, an impairment loss, and the significant negative impact of being a delinquent filer with ineffective disclosure controls. The strategic pivot is a high-risk, long-term play for a company with no current revenue.

Positives

• Net loss significantly reduced to $252,000 in Q1 2024 from $852,000 in Q1 2023.
• Operating loss improved to $403,000 in Q1 2024 from $517,000 in Q1 2023.
• Financing expenses turned into income of $151,000 in Q1 2024, primarily due to fair value measurement of IBOT options.
• Cannovation Center Israel Ltd. (now SkyTech Orion Ltd.) was awarded a NIS 12.5 million (approximately USD 3.4 million) government grant for the SkyTech Innovation and Production Center, supporting 37.5% of eligible expenses.
• The government grant is part of a national strategic program supporting the defense sector, indicating government backing for the new UAV/drone focus.
• Successful conversion of $1,764,106 in convertible notes into equity, reducing debt.
• Completion of Deer Light Ltd.'s $137,000 investment.
• Extension of the credit facility agreement with S.R. Accord Ltd. until March 31, 2027, providing continued access to funds.
• The company believes it has sufficient funds for the next twelve months from the issuance of these financial statements, based on current cash and credit facility access.

Negatives

• No revenues generated from product sales as of March 31, 2024.
• Cash balance is critically low at $4,000 as of March 31, 2024.
• Working capital deficiency increased to $2,785,000 at March 31, 2024, from $2,461,000 at December 31, 2023.
• The company became a delinquent filer during Q2 2024, leading to restricted trading and no active market for its securities.
• An agreement with X Group Fund of Funds Limited Partnership for a $250,000 investment lapsed due to X Group not remitting the agreed amount, with only $21,000 received.
• The option to increase holdings in iBOT Israel Botanicals Ltd. to 51% expired due to economic uncertainty and strategic shifts, retaining only a 19% stake.
• An impairment loss of approximately $431,000 was recorded on the investment in Nanomedic Technologies Ltd., reducing its carrying amount to $18,000.
• The ongoing war in Israel has caused widespread uncertainty, instability, and disruptions to the Israeli economy, directly impacting the company's operations and ability to launch products in the U.S.
• Management concluded that disclosure controls and procedures are not effective as of March 31, 2024.
• The company cannot determine with reasonable certainty when and if it will have sustainable profits.
• Golden Holdings Finance's ownership in Cannovation was significantly diluted to approximately 1% due to its failure to provide required support and personal guarantees.

Risks

• Operations are based in Israel, making the company highly susceptible to the ongoing war, economic restrictions, and political/military events, which could disrupt supply chains, operational continuity, and access to resources.
• The company is incurring losses and has a significant working capital deficiency, relying on current cash balances and credit facilities, with no certainty of achieving sustainable profits.
• Delinquent filing status has led to restricted trading and no active market for the company's shares, impacting liquidity for investors and future capital raising.
• The strategic pivot to UAV/drone solutions is a significant shift, and successful execution of the SkyTech Innovation and Production Center, including construction and securing necessary approvals, is critical and uncertain.
• The credit facility and government grant require personal guarantees from the CEO and a director, exposing them to significant personal liability, despite indemnification agreements.
• Future capital raises or strategic needs may lead to further dilution of existing shareholders, as demonstrated by the conversion of convertible notes and the dilution of Golden Holdings Finance.
• Operating in multiple jurisdictions for plant-based products and now defense-related technologies requires extensive and varying regulatory approvals, which could be complex and time-consuming.
• The impairment loss on Nanomedic Technologies Ltd. highlights the risk of investments losing value.
• Management concluded that disclosure controls and procedures are not effective, indicating potential weaknesses in financial reporting and compliance.
• The company exhibits a high dependence on its CEO, Ora Elharar Soffer, who is noted as the only shareholder continuously supporting the company with services, personal guarantees, and financial resources.

Future Outlook

The company is pivoting its strategic focus to developing and manufacturing defense-grade UAV and drone solutions through its subsidiary, SkyTech Orion Ltd., supported by a NIS 12.5 million government grant for the SkyTech Innovation and Production Center. It plans to establish assembly lines, R&D laboratories, testing facilities, and an advanced production system for these solutions. The company also intends to build a global network for its plant-based wellness and pharma products, focusing on the U.S. market, but acknowledges that the ongoing war in Israel has significantly affected its ability to launch these products in the U.S. at this time. Management believes it has sufficient funds for the next twelve months due to current cash and access to the extended credit facility, but cannot determine when it will achieve sustainable profits.

Management Comments

• Management is actively assessing the potential impacts of the war on the Company’s operations, investments, and liquidity.
• The Company has also pursued planned business initiatives, including efforts to expand international sales channels with a particular focus on the U.S. market, although execution has been impacted by the challenging environment.
• Based on the Company’s current cash balances, and the access to the Credit Facility noted above, the Company believes it will have sufficient funds for its plans for the next twelve months from the issuance of these financial statements.
• As the Company is embarking on its business plan, it is incurring losses. It cannot determine with reasonable certainty when and if it will have sustainable profits.
• As of this time, the current war in Gaza has significantly affected the Israeli economy, which has directly impacted our ability to launch our products in the US at this time. We shall revise and disclose our business plans in the future given the local situation on the ground.
• Management concluded that the Company’s disclosure controls and procedures are not effective.

Industry Context

The company is undergoing a significant strategic pivot from the plant-based wellness and pharma sector, which is projected to reach USD 7.6 trillion by 2030 (health and wellness market) and USD 624.7 billion by 2030 (nutritional supplements market), to the defense-grade UAV and drone solutions sector. This shift is influenced by the ongoing conflict in Israel, which has disrupted its original business plans. The new focus aligns with national strategic programs supporting the defense sector in Israel, as evidenced by the substantial government grant received. This move positions the company in a high-growth, technologically advanced industry, potentially leveraging existing land assets for a new purpose. The initial plant-based focus aimed at a growing market driven by consumer awareness of natural ingredients and health, but geopolitical factors have necessitated a re-evaluation of its core business.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results for either the plant-based wellness/pharma sector or the newly adopted UAV/drone sector.
• The company's financial performance (no revenue, significant working capital deficiency, low cash) is not benchmarked against industry averages.
• The government grant for the SkyTech Innovation and Production Center is a positive development, but its scale and impact relative to industry-standard defense projects are not detailed.
• The company's GMP certification for iBOT Israel Botanicals Ltd. is a standard quality benchmark in the nutritional supplement manufacturing industry.
• The company's disclosure of ineffective disclosure controls and procedures is a significant deviation from industry best practices and regulatory expectations for publicly traded companies.

Management Changes

Corporate Governance

Legal Proceedings

• The company is not aware of any legal proceedings involving the company and/or its subsidiaries as of the filing date.
• A previous issue with a former consultant of Cannovation Center Israel Ltd. regarding management fees was fully resolved through a binding Settlement Agreement on April 3, 2025.
• Cannovation Center Israel Ltd. filed an official debt claim in the insolvency proceedings of Golden Holdings Neto Ltd. for NIS 1,512,983 (approximately USD 420,000) in November 2024, which is currently under review by relevant authorities.

Related Party Transactions

• Cannovation Center Israel Ltd. was incorporated with Beezhome Technologies Ltd. (owned by CEO Ora Elharar Soffer) and Golden Holdings Neto Ltd. (in which former director Ilan Ben-Ishai holds shares).
• The Israeli Subsidiary, Beezhome, Netto Holdings (under partial control of Ilan Ben Ishay), Ms. Elharar Soffer (CEO), and Mr. Ben Ishay provided guarantees for the S.R. Accord Ltd. credit facility, with Cannovation agreeing to indemnify Ms. Elharar Soffer and Mr. Ben Ishay.
• Ms. Ora Elharar Soffer (CEO) and Mr. Lior Asher (director) signed personal guarantees for the renewed S.R. Accord Ltd. loan, with the company and its subsidiaries undertaking to fully indemnify them.
• Deer Light Ltd. (associated with director Lior Asher) entered into consulting agreements with the Company and its subsidiaries for monthly retainer fees totaling $11,000 (deferred payment).
• The company may award equity-based compensation, including options to purchase 41,762,976 common shares, to Lior Asher under future equity incentive plans.
• Deer Light Ltd. (associated with director Lior Asher) committed to invest $137,000 for 13.7 million common shares and warrants.
• Outstanding principal of $1,764,106 from convertible notes held by Citrine LP 7, Citrine LP 8, and Citrine LP 9 (related noteholders) was converted into common shares and warrants.
• Golden Holdings Finance (a related party) had its stake in Cannovation diluted from 20% to approximately 1% due to its failure to provide required support and personal guarantees.
• An unlimited personal guarantee from Ms. Ora Elharar Soffer (CEO) and a limited personal guarantee from Mr. Meir Aharon (consultant/contractor) were provided for the NIS 625,000 bank guarantee related to the government grant.
• Anti-Dilution Protection was granted to Beezhome Technologies Ltd. (owned by CEO Ora Elharar Soffer) for its holdings in SkyTech Orion Ltd.
• Research and development expenses with related parties were $0 for Q1 2024 and $28,000 for Q1 2023.
• Marketing, general and administrative expenses with related parties were $233,000 for Q1 2024 and $394,000 for Q1 2023.
• Accrued compensation to related parties was $2,016,000 as of March 31, 2024, and $1,898,000 as of December 31, 2023.
• Accounts payable to related parties was $204,000 as of March 31, 2024, and $180,000 as of December 31, 2023.
• Convertible notes from related parties totaled $2,238,000 as of March 31, 2024, and $2,202,000 as of December 31, 2023.
• Financing expenses related to convertible loan terms with related parties were $10,000 for Q1 2024 and $330,000 for Q1 2023.

Stakeholder Impact

• Shareholders face significant dilution from convertible note conversions and new investments, with further dilution risk from future capital raises. Trading in shares is restricted due to delinquent filing, impacting liquidity and market value. Golden Holdings Finance's stake in Cannovation was significantly diluted.
• Employees and directors, particularly the CEO and a director, have provided personal guarantees for loans and grants, exposing them to significant personal liability, albeit with company indemnification. New director Lior Asher has consulting agreements and potential equity grants.
• Customers are minimally impacted as the company has no current product sales revenue. The strategic pivot may delay or alter the availability of plant-based wellness products.
• Suppliers may face risks regarding timely payments due to the company's low cash balance and growing working capital deficiency.
• Creditors saw convertible notes converted to equity, reducing debt. The credit facility was extended, providing continued access to funds, but the company's overall financial health remains precarious.
• The Israeli government is a key stakeholder, having provided a significant grant for the new defense-related activities, indicating strategic interest and support.

Next Steps

• Develop and manufacture defense-grade UAV and drone solutions through the SkyTech Innovation and Production Center in Yerucham, Israel.
• Construct approximately 5,000 square meters of facilities for assembly lines, R&D laboratories, testing facilities, and advanced production systems for UAV/drone solutions.
• Work with local authorities and partners to obtain regulatory approvals for products in new territories.
• Revise and disclose business plans for plant-based products given the ongoing war in Israel and its impact on U.S. market launch.
• Address the ineffectiveness of disclosure controls and procedures.
• Potentially raise at least $2.5 million from external sources to trigger deferred payments under consulting agreements.
• Continue to monitor the evolving regional situation in Israel and assess its impact on operations, investments, and liquidity.

Key Dates

Recommendation

The company presents an extremely high-risk profile. It is a delinquent filer with no active market for its shares, indicating severe governance and compliance issues. Cash reserves are critically low ($4,000), and the working capital deficiency is substantial and growing. While the strategic pivot to UAV/drone solutions with a government grant is a potential long-term positive, it is an early-stage venture for a company with no current revenue and a history of failed capital raises (X Group). The impairment loss on a significant investment and the admission of ineffective disclosure controls further highlight operational and financial instability. The reliance on personal guarantees from management for critical funding also signals underlying financial weakness. Given the lack of liquidity, significant financial distress, and high operational uncertainty, the stock is a strong sell.

Keywords

UAV, drones, defense technology, SkyTech Orion, plant-based wellness, nutritional supplements, Israel, SEC filing, 10-Q, financial results, corporate governance, capital raise, strategic pivot, government grant, operational innovation center, CTGL