10-K: Citrine Global Shifts to UAVs Amidst Losses & War Impact

Citrine Global Corp. reported an increased net loss and working capital deficiency for 2023, while strategically pivoting towards defense-grade UAV and drone solutions in Israel, impacted by ongoing conflict.

Summary

• Net loss increased to $3,105,000 for the year ended December 31, 2023, from $2,645,000 in 2022.
• Working capital deficiency grew to $2,461,000 as of December 31, 2023, from $1,620,000 in 2022.
• Cash balance decreased significantly to $7,000 as of December 31, 2023, from $77,000 in 2022.
• The company is strategically pivoting its Cannovation Center Israel Ltd. (renamed SkyTech Orion Ltd.) to focus on defense-grade UAV and drone solutions, securing a NIS 12.5 million (approximately $3.4 million) government grant for the SkyTech Innovation and Production Center.
• Acquired a 19% equity stake in iBOT Israel Botanicals Ltd. for 70,370,370 common shares, with an option to increase to 51% that expired unexercised.
• The option to acquire an additional 45% of MyPlant Bio Ltd. expired unexercised, resulting in a $291,000 non-cash expense.
• Outstanding convertible loans totaling $1,880,000 were converted into 176,410,600 common shares and an equal number of warrants at a conversion price of $0.01 per share.
• The company changed its name to SkyTech Orion Global Corp. in Delaware on June 26, 2025, reflecting its new strategic focus.
• Operations in Israel have been significantly disrupted by the large-scale war that broke out on October 7, 2023, affecting product launch plans in the U.S. market.

Sentiment

Score: 3

Explanation: The company faces significant financial challenges, including increased net losses, a growing working capital deficiency, and a low cash balance. Operational disruptions due to the war in Israel and the lapse of key investment agreements add to the negative outlook. While the strategic pivot to UAV/drone solutions and a government grant offer future potential, the current financial state and market illiquidity present substantial risks.

Positives

• Secured a NIS 12.5 million (approximately $3.4 million) government grant for the establishment of the SkyTech Innovation and Production Center in Yerucham, Israel, focused on defense-grade UAV and drone solutions.
• The government grant is structured as reimbursements of approximately 37.5% of eligible expenses, including construction, equipment, and services.
• Acquired a 19% equity stake in iBOT Israel Botanicals Ltd., a GMP-certified facility, for strategic alliance in nutritional supplement development and manufacturing.
• The company has a proprietary Operational Innovation Centers Platform designed to support scalable growth and expansion into highly regulated sectors like wellness, plant-based pharma, biotech, defense, and Foodtech.
• Successfully resolved an issue involving a former consultant of Cannovation Center Israel Ltd. through a binding Settlement Agreement.
• The company believes it has sufficient funds for its plans for the next twelve months from the issuance of these financial statements, based on current cash balances and access to a credit facility.

Negatives

• Net loss increased to $3,105,000 in 2023 from $2,645,000 in 2022.
• Working capital deficiency increased to $2,461,000 in 2023 from $1,620,000 in 2022.
• Cash balance significantly decreased to $7,000 in 2023 from $77,000 in 2022.
• The option to acquire an additional 45% of MyPlant Bio Ltd. expired unexercised, resulting in a $291,000 non-cash expense.
• The X Group Fund of Funds Limited Partnership investment of $250,000 lapsed as the agreed amount was not remitted within approved timeframes.
• The company became a delinquent filer during Q2 2024, leading to restricted trading and no active market for its shares.
• An impairment loss of approximately $431,000 was recorded on the investment in Nanomedic Technologies Ltd. following a financing round.
• The ongoing war in Israel has caused widespread uncertainty, disrupted the Israeli economy, and affected the company's operations, impacting the ability to launch products in the U.S. market.
• Significant dilution occurred with the conversion of $1,880,000 in convertible loans into 176,410,600 common shares and warrants, and further dilution from the Deer Light Ltd. investment.

Risks

• Limited operating history and uncertainty of achieving profitability, potentially leading to loss of investment.
• Expectation to incur losses for the foreseeable future and reliance on future funding, which may not be available on acceptable terms or at all, leading to potential delays, scope reductions, or cessation of operations.
• Currency exchange rate fluctuations affecting results of operations, particularly with expenses denominated in NIS.
• Failure to manage growth effectively could strain administrative and operational resources and funding, impairing business.
• Dependence on key individuals (Ora Elharar Soffer) and the ability to attract and retain qualified personnel, with intense competition for such talent.
• Failure in information technology systems, including cybersecurity attacks, could disrupt operations, lead to data loss, reputational damage, regulatory fines, or litigation.
• Growth through mergers or acquisitions may not be successful, leading to integration difficulties, diversion of resources, exceeding value, entering new markets without experience, loss of key personnel, assumption of unanticipated problems, or dilution of stockholders.
• Exposure to product liability claims, regulatory action, and litigation if products cause loss or injury, with no assurance of adequate insurance coverage.
• Product recalls due to defects, contamination, harmful side effects, or inadequate labeling could harm reputation, incur unexpected expenses, and lead to decreased demand.
• Potential conflicts of interest involving officers and directors engaged in other business activities, which could interfere with duties to the company.
• Significant competition from larger, better-financed companies in the global health and wellness market.
• Inability to obtain adequate insurance coverage or if liabilities exceed policy limits, materially adversely affecting business.
• Research and development and product obsolescence may impair ability to compete in target markets due to rapidly changing technology and industry standards.
• Difficulty in enforcing U.S. court judgments against the company and its executive officers/directors in Israel, or asserting U.S. securities laws claims in Israel.
• Reliance on third parties to conduct clinical trials, which if not met, could delay or render programs unsuccessful.
• Subject to extensive governmental regulations for plant-based nutritional supplements, botanicals, cosmetics, and pharmaceuticals, with potential delays or failure to obtain approvals.
• Inability to obtain and maintain intellectual property protection for product offerings, or if protection is not sufficiently broad, allowing competitors to develop similar products.
• Risk of being sued by third parties for alleged infringement of proprietary rights, leading to significant expenses, damages, injunctions, or need for licenses.
• Involvement in lawsuits to protect or enforce patents, which could be expensive, time-consuming, and unsuccessful.
• Adverse effects on results due to economic restrictions and political/military events in Israel, including operational disruption, construction delays, increased costs, and physical security risks.
• Concentration of ownership by a certain group of stockholders, including the Chairperson and CEO, allowing them to exert significant influence over corporate actions.
• Future dilution from equity offerings, including shares reserved under the 2018 Equity Incentive Plan.
• Stock price and trading volume decline if securities or industry analysts do not publish research or publish inaccurate/unfavorable research.
• Significant fluctuation in common stock price due to limited trading market, small float, or external factors unrelated to company performance.
• Delaware law provisions that could discourage, delay, or prevent a change in control of the company.
• No intention to pay dividends for the foreseeable future, meaning investors may only receive a return if the stock price increases.

Future Outlook

The company plans to continue developing plant-based wellness and pharma solutions, expanding product lines, conducting clinical trials, and building infrastructure for production and innovation centers. A significant strategic shift involves establishing the SkyTech Innovation and Production Center in Israel, focusing on defense-grade UAV and drone solutions, supported by a government grant. The company aims to build a global network with local teams and partners, initially focusing on North America and Europe for business development and sales. Product launches in the U.S. market, initially expected in the first half of 2024, have been impacted by the war in Gaza and will be revised.

Management Comments

• Management is actively assessing the potential impacts of the war on the Company's operations, investments, and liquidity, including analyzing risks to ongoing activities, ensuring asset stability, and preparing for different scenarios.
• We believe the power of plant-based solutions from nature can help improve people's health and quality of life.
• We have built an end-to-end strategy to bring to market on a global scale innovative plant-based wellness and pharma solutions covering the whole spectrum from innovation, research and development, product development, infrastructure for production and manufacturing, distribution, marketing and sales.
• Our presence in Israel combined with our close contacts with leading universities, researchers, companies, shareholders and governmental support, allows us to access the latest technologies, talent, and innovation to bring innovative solutions to the global market.
• The Company has focused on carefully monitoring the situation, reviewing its financial position, and evaluating the status of its assets and holdings in light of the challenging environment.

Industry Context

The company operates in the booming plant-based wellness and pharma market, with the nutritional supplements market expected to reach $624.7 billion by 2030, superfoods $287.7 billion by 2027, botanical drugs $53 billion by 2026, and natural cosmetics $24.8 billion by 2027. This market is driven by health-conscious consumers, increased healthcare costs, and demand for natural ingredients. The company's strategic pivot into defense-grade UAV and drone solutions positions it in a distinct, high-tech sector, leveraging Israel's innovation ecosystem and government support for industrial development and defense. This diversification moves the company beyond its initial plant-based focus into a new, potentially high-growth, but also highly competitive and regulated industry.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• As of the date of filing, the Company is not aware of any legal proceedings involving the company and/or its subsidiaries.
• An issue involving a former consultant of Cannovation Center Israel Ltd., relating to management fees and compensation for the notice period, has been fully resolved through a binding Settlement Agreement and fully paid on April 3, 2025.
• Cannovation Center Israel Ltd. filed a debt claim in the insolvency proceedings of Golden Holdings Neto Ltd. for NIS 1,512,983 (approximately USD 420,000) for amounts due under prior agreements and commitments.

Related Party Transactions

• Ora Elharar Soffer (CEO, Chairperson) and Ilanit Halperin (CFO, Director) have consulting agreements with deferred compensation, with monthly fees increasing upon Nasdaq listing.
• Ora Elharar Soffer and former director Ilan Ben-Ishay provided personal guarantees for Cannovation's credit facility with S.R. Accord Ltd., and the company agreed to indemnify them.
• The company holds a 19% equity stake in iBOT Israel Botanicals Ltd., where Ora Elharar Soffer and former director Ilan Ben-Ishay are also directors.
• The company holds a 10% equity interest in MyPlant Bio Ltd., co-founded by Cannasoul Analytics (a related party).
• Convertible notes totaling $1,880,000 were issued to related parties (Citrine High Tech 7 LP, Citrine 8 LP, Citrine 9 LP) and subsequently converted into common shares and warrants.
• The company issued shares as commitment fees for the credit facility to the Lender (S.R. Accord Ltd.) and a consultant.
• Ora Elharar Soffer, Ilanit Halperin, David Kretzmer, and Doron Birger received stock options under the 2018 Plan, with vesting acceleration clauses tied to Nasdaq listing or change in control.
• Lior Asher, a director of subsidiaries, signed as a personal guarantor for the renewed credit facility with S.R. Accord Ltd., alongside Ora Elharar Soffer, and is indemnified by the company.
• Deer Light Ltd. (related to Lior Asher) entered into consulting and investment agreements with the company and its subsidiaries, with deferred payments and potential equity-based compensation.
• Ora Elharar Soffer provided an unlimited personal guarantee for a digital bank guarantee issued by Bank Mizrahi for the government grant to SkyTech Center.

Stakeholder Impact

• **Shareholders:** Significant dilution from convertible note conversions and new equity issuances. Potential for future value from the strategic pivot to UAV/drone solutions and government grants, but also high risk due to ongoing losses, war impact, and market illiquidity. Concentration of voting power by a group of stockholders, including the CEO, limits influence of other shareholders.
• **Employees/Consultants:** Compensation for key management (CEO, CFO) is deferred until specific funding milestones are met. Stock options are a significant part of compensation, with vesting acceleration tied to Nasdaq listing. Resignations of directors (Doron Birger, Ilan Ben Ishay) indicate some management changes.
• **Customers:** The strategic shift to defense-grade UAV/drone solutions will target a new customer base, while the plant-based wellness products are still in beta-testing with delayed U.S. launch plans.
• **Suppliers/Creditors:** Convertible noteholders have converted debt to equity, reducing immediate debt burden but increasing share count. The company has access to a credit facility, but personal guarantees from management are required, indicating reliance on related party support.
• **Regulatory Authorities:** The company is subject to extensive regulations in both plant-based wellness/pharma and the new defense sector. Delinquent filer status in Q2 2024 indicates compliance issues.

Next Steps

• Revise and disclose business plans for product launches in the U.S. market, considering the local situation in Israel.
• Continue development of plant-based wellness and pharma solutions, expanding product lines, and registering for worldwide regulatory approvals.
• Build clinical trials program and portfolio.
• Establish the SkyTech Innovation and Production Center in Yerucham, Israel, including construction of manufacturing facilities, R&D laboratories, and a global logistics center.
• Pursue partnerships and collaborations with international companies in wellness, pharma, and defense industries.
• Continue efforts to expand international sales channels, with a particular focus on the U.S. market.
• Prepare and present a competitive compensation program for senior management, including bonuses and severance payments.
• Address the delinquent filer status and work towards re-establishing an active trading market for its securities.

Key Dates

Recommendation

Citrine Global Corp. (now SkyTech Orion Global Corp.) presents a highly speculative investment. The company reported a substantial increase in net loss and a worsening working capital deficiency, alongside a critically low cash balance. Its shares are illiquid due to delinquent filer status. While the strategic pivot to defense-grade UAV/drone solutions, backed by a significant government grant, offers long-term potential, the immediate financial health is precarious. The company has a history of relying on related-party financing and compensation deferrals, indicating ongoing liquidity challenges. Significant dilution has occurred and is likely to continue. The operational risks associated with the ongoing war in Israel are substantial and directly impact business plans. Given the severe financial distress, high operational risks, market illiquidity, and history of dilution, a seasoned investor would likely recommend a strong sell, as the downside risks far outweigh the speculative upside at this stage.

Keywords

UAV, drone solutions, defense technology, plant-based wellness, nutritional supplements, biotech, Israel, SEC filing, 10-K, financial results, corporate strategy, SkyTech Orion, Cannovation Center, iBOT, MyPlant Bio, convertible notes, government grant, operational innovation center