Item 2. Management’s Discussion and Analysis or Plan of Operation.
THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH OUR AUDITED FINANCIAL STATEMENTS AND THE RELATED NOTES THAT APPEAR ELSEWHERE IN THIS QUARTERLY 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 QUARTERLY 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 thousands 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 thousands 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:
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Sections 14A(a) and (b) of the Exchange Act, which require companies to hold stockholder advisory votes on executive compensation and golden parachute compensation;
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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;
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Compliance with new or revised accounting standards until those standards are applicable to private companies;
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The requirement under Section 404(b) of the Sarbanes-Oxley Act of 2002 to provide auditor attestation of our internal controls and procedures; and
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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.
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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-QT 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-QT 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.
Organization
SEEDO CORP. (the “Company”, “Our” or “We”) was formed on January 16, 2015, under the laws of the State of Delaware. Prior to September 14, 2018, we were solely a provider of risk management and asset protection (“RAP”) services for businesses, individuals and families.
On September 14, 2018, the Company, then under it’s previous name, GRCR Partners Inc., executed an Acquisition and Share Exchange Agreement with Eroll Grow Tech Ltd., (“Eroll”) an Israeli Corporation that was incorporated on May 18, 2015 under the laws of the state of Israel. Immediately following the transaction, Eroll shareholders held approximately 87.4% of the outstanding Ordinary stock of the Company on a fully diluted basis, in exchange of 100% of the share capital of Eroll, while the pre-merger Company shareholders retained the remaining approximate 12.6%.
Following the Transaction, GRCR Partners Inc. issued an aggregate of 12,073,500 shares of its common stock, par value $0.0001 per share (the “Common Stock”), on a pro-rata basis to each of the holders of Eroll, so the total shares of the Company ended up with 15,000,000 shares. As a result of the transaction, Eroll became a wholly-owned subsidiary of GRCR Partners Inc. While GRCR Partners Inc. was the legal acquirer in the transaction, Eroll was deemed the accounting acquirer.
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 on November 5, 2018, FINRA granted effectiveness for said change and the new ticker Symbol “SEDO”. Post-Acquisition, SEEDO CORP has changed its main business focus to Eroll’s business activities while continuing with some RAP activities.
The quarterly unaudited condensed consolidated financial statements of the Company reflect the operations of Eroll as the acquirer for accounting purposes, together with a deemed issuance of shares, equivalent to the shares held by the stockholders of the legal acquirer, GRCR Partners Inc. prior to the Transaction, and a recapitalization of the equity of the accounting acquirer. The quarterly unaudited condensed consolidated financial statements include the accounts of the Company since the effective date of the reverse merger transaction and the accounts of Eroll since inception.
Company Overview
We are a global technology company focusing on producing cutting edge technology for the agro-tech markets for home, commercial and medical use. We produce automated plant growing devices managed and controlled by an artificial intelligent algorithm, allowing customers to grow their own herbs and vegetables effortlessly from seed to plant, while providing optimal conditions to assure premium quality produce year-round. Seedo delivers the future of automated plant growing technologies today. Our technology affords for pesticide free, soil free in a self-regulating climate - allowing anyone to grow simply, from seed to harvest.
Our telephone number is +972 546 642 228 and our website is
www.Seedolab.com
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial statement presentation and in accordance with Form 10-QT. Accordingly, they do not include all of the information and footnotes required in annual financial statements. In the opinion of management, the unaudited condensed financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position and results of operations and cash flows. The results of operations presented are not necessarily indicative of the results to be expected for any other interim period or for the entire year.
These unaudited condensed financial statements should be read in conjunction with our September 30, 2018 annual financial statements included in our Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on January 15, 2019.
Going Concern
Due to the uncertainty of our ability to meet our current operating and capital expenses, our independent auditors included an explanatory paragraph in their report on the audited financial statements for the year ended September 30, 2018 regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
Our unaudited condensed financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they become due. The outcome of these matters cannot be predicted with any certainty at this time and raise substantial doubt that we will be able to continue as a going concern. Our unaudited condensed financial statements do not include any adjustments to the amount and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern. There is no assurance that our operations will be profitable. Our continued existence and plans for future growth depend on our ability to obtain the additional capital necessary to operate either through the generation of revenue or the issuance of additional debt or equity.
Research and Development Costs
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 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 capitalize expenses during the three months ended December 31, 2018.
Note 3 – Stockholders’ Equity (Deficit)
Authorized Shares
The Company is authorized to issue up to 500,000,000 shares of common stock, par value $0.0001 per share. Each outstanding share of common stock entitles the holder to one vote per share on all matters submitted to a stockholder vote. All shares of common stock are non-assessable and non-cumulative, with no pre-emptive rights.
Note 4 – Commitments and Contingencies
On October 2017, Eroll entered into rental agreements for its office premises which will end on April 30, 2022.
On September 2017 Eroll entered into a vehicle operating lease agreement for a period of 32 months.
Note 5 – Subsequent Events
On January 15, 2019 the Company converted Cannabics Second Loan to 770,397 ordinary shares with a par value of $0.0001.
On January 30, 2019, the Company appointed Dr. Jendayi Frazer and Micha Maman to its Board of Directors, as disclosed in the Company’s 8K filing with the SEC of February 4, 2019.
On February 5, 2019, the Company elected to change its Fiscal Year from September 30, to December 31, as disclosed in the Company’s 8K filing with the SEC of February 5, 2019.
On February 7, 2019 the Company received a conversion notice from a lender. The Company will convert the loan to 500,000 ordinary shares.
On February 12, 2019, the Company entered into an MOU with SYS Technologies for development of next generation clean containerized clean growing solutions, as noted in the Company’s Press Release dated February 12, 2019.
On February 26, 2019, the Company closed several Funding Agreements with YAII PN for $550 thousands, as disclosed in the Company’s 8K filing with the SEC of March 5, 2019.
On February 28, 2019, the Company appointed Pninat Yanay to its Board of Directors, as disclosed in the Company’s 8K filing with the SEC of March 4, 2019.
On March 11, 2019, the Company appointed Daniel Birnbaum to its Board of Directors, as disclosed in the Company’s 8K filing with the SEC of March 4, 2019.
On March 11, 2019, the Company entered into a share purchase agreement with a new investor, according to the agreement the Company will issue 66,667 ordinary shares with a par value of $0.0001, for a total amount consideration of $100 thousands.
On March 12, 2019, the Company closed Funding Agreements with Elvik Lighting Ltd for a total of $126 thousands.
On March 12, 2019, the Company closed Funding Agreements with Shachar S. Enterprises & Investments Ltd. for a total of $252 thousands.
On March 14, 2019, the Company executed an Agreement with Kibbutz Dan in northern Israel to establish the first industrial scale fully automated containerized farm for licensed pharmaceutical-grade medical cannabis, as disclosed in the 8K filing with the SEC of March 19, 2019.
The Company has evaluated subsequent events through the date the unaudited condensed financial statements were issued and filed with the Securities and Exchange Commission and has determined that there are no other such events that warrant disclosure or recognition in the financial statements.
Financing
We will require additional financing to implement our business plan, which may include joint venture projects and debt or equity financings. The nature of this enterprise and constraint of positive cash flow places debt financing beyond the credit-worthiness required by most banks or typical investors of corporate debt until such time as an economically viable profits and losses can be demonstrated. Therefore, any debt financing of our activities may be costly and result in substantial dilution to our stockholders.
Future financing through equity investments is likely to be dilutive to existing stockholders. Also, the terms of securities we may issue in future capital transactions may be more favorable for our new investors. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other derivative securities, which may have additional dilutive effects. Further, we may incur substantial costs in pursuing future capital and financing, including investment banking fees, legal fees, accounting fees, and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition.
Our ability to obtain needed financing may be impaired by such factors as the capital markets, both generally and specifically in the Agro-tech industry, which could impact the availability or cost of future financings. If the amount of capital we are able to raise from financing activities, together with our revenue from operations, is not sufficient to satisfy our capital needs, even to the extent that we reduce our operations accordingly, we may be required to cease operations.
There is no assurance that we will be able to obtain financing on terms satisfactory to us, or at all. We do not have any arrangements in place for any future financing. If we are unable to secure additional funding, we may cease or suspend operations. We have no plans, arrangements or contingencies in place in the event that we cease operations.
Our company is now delivering tomorrow’s advanced technologies for automatic plant growing today. Zero dependency on climactic conditions or need of pesticides. Seedo has developed and produced automated plant growing device managed and controlled by an artificial intelligent algorithm, monitored by your own smart phone Application, 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. Our product is suitable for both personal and commercial use.
Marketing and the SEEDO “Community”
The Company is investing in organic marketing and has approximately:
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85,000 followers on Facebook
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40,000 followers on Instagram
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More than 50 million views on Facebook
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1 million views on YouTube
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As of December 31, 2018, the Company received more than 3,000 units ordered in a pre-order campaign. We believe that following the delivery of the pre-order units combined with a marketing campaign and our community strength, the Company will be able to sell and deliver thousands of its home cultivator devises world-wide.
Our Opportunity
Starting September 14, 2018, the Company operates two concurrent of businesses, the main business is operated by our fully owned subsidiary Eroll, which was purchased as part of the September 14, 2018 agreement. The Company delivers the future of automated plant growing technologies, for home, commercial, and medical use. Some of the previous RAP business is also continuing for the foreseeable future.
The Home cultivator opportunity
We target the world-wide population which wants to grow their own herbs and vegetables pesticide free, with self-regulating climate control capabilities - allowing each to grow its own, from seed to harvest. Our cutting-edge technology addresses cannabis customers market for adults and medical needs as well as any other need.
We believe that the following advantages afford the Company a unique market penetration opportunity:
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Automated home growing device
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Simplifying the seed to harvest process with seamless technology
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Growth cycle operated and monitored by mobile app
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Self-regulating climate control system
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No prior knowledge needed
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Simple installment – water, electricity and Wi-Fi
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Commercial Containers
During 2019, the Company is expected to finish its research and development efforts in order to present the markets with its new herbs and vegetables commercial container. Our technology will enable industrial farmers full control and automation of all plant feeding and environmental parameters, better unified standardized yields suitable for medical pharma industry in a hermetically sealed system - full isolation, with no need for pesticides at all. This affords dramatic space savings as well as water consumption and human resources.
We believe that our industrial commercial container technology advantages will provide several immediate solutions for farmers’ current challenges and experiences. We are targeting this product for any herb and/or vegetables growth including but not limited to medical cannabis. On March 14
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, 2019, we began new phase and officially announced our Agreement with Kibbutz Dan for the world’s first industrial scale fully automated containerized farm for government licensed pharmaceutical-grade medical cannabis, verifying our technology and expertise now to the commercial world.
The second type of operation is related to the corporate governance, risk management, compliance and regulatory reporting activities of the Company, as was before and after September 14, 2018. Along with the lack of clearly identified corporate risk management roles, an overall complex approach to personal and family asset protection, we believe there is a need to bridge the communication gap between technology and risk as well as lack of appropriate metrics to define and track enterprise risks. We believe that every member of a Company C-suite is responsible for their domain and for ensuring the remainder of the enterprise or company benefits from their decisions and counsel for collective risk management. Bringing the CRO to the forefront allows risk management to be consolidated and uniform throughout the enterprise. We believe Enterprise Risk Management needs to be a cross-functional phenomenon.
Given the global nature of business today, risk management needs to truly protect the enterprise by understanding the context and the landscape in which the business operates. If an organization can leverage that information and collect it and provide context, the organization will be more agile and adaptive as a result of that the risk level goes down.
Over the upcoming twelve months we plan to;
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Deliver pre orders of the home cultivator
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Increase sales and marketing efforts.
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Start and increase home cultivator manufacturing quantities.
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Progress the commercial container product R&D efforts
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Continue with the corporate governance, risk management, compliance and regulatory reporting activities of the Company while considering our targets and objectives in this regard.
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Strengthen our Board of Directors by adding world class key members which will better enable the Company to be recognized as a world-wide leader in its field.
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Three months ended December 31, 2018 compared to the three months ended December 31, 2018
For the audited year ending December 31, 2018 and 2017
Operating Expenses
R&D Expenses for the 3 months ended December 31, 2018 and 2017, was $800 thousand versus $346 thousand respectively from the main activity of the Company. This was primarily due to increased R&D efforts for progressing the Home Cultivator from a prototype version into mass production, which resulted mainly due to increased HC costs of $306 thousand, increased R&D material costs of $75 thousand, an increase of $33 thousand in depreciation expenses related to R&D, and $40 thousand increase in other miscellaneous expenses related to R&D.
Total marketing expenses for the 3 months ended December 31, 2018 and 2017, were $269 thousand versus $124 thousand, respectively. This was primarily due to increased marketing campaign efforts, which resulted mainly due to increased HC costs of $42 thousand and increased Marketing material costs and payment providers fees of $103 thousand.
Total General and Administrative expenses for the 3 months ended December 31, 2018 and 2017, was $386 thousand versus $303 thousand, respectively. This was primarily due to an increase of $71 thousand in expenses for external advisors and professional services, mainly due to the Eroll Grow Tech’s acquisition process and, increased share based payments to employees in the amount of $12 thousand.
Liquidity and Capital Resources
Overview
Since inception on January 16, 2015, the Company had a cumulative deficit of $8,522 thousand and we have a working capital deficit of $4,344 thousand as of December 31, 2018. Our future growth is dependent upon achieving 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 by raising strait equity and convertible loans. Since incorporation and as of December 31, 2018 Eroll Grow Tech Ltd. has raised approximately $6.5 million, during the 3 months ended December 31, 2018 the Company raised $2.517 million.
As of December 31, 2018, our cash balance was $921 thousand, we believe we will require a minimum of $6 million in working capital over the next 12 months to grow the company as currently planned, which is inclusive of Cost of Sales, covering our operation costs and maintaining our regulatory reporting and filings. Should our revenues not increase as expected, or 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; we may need funds in excess of that currently planned.
Consistent with Section 144 of the Delaware General Corporation Law, it is our current policy that all transactions between the Company and our officers, directors and their affiliates will be entered into only if such transactions are approved by a majority of the existing directors, are approved by vote of the stockholders, or are fair to us as a corporation as approved or ratified by the board or authorized officer. We will conduct an appropriate review of all related party transactions on an ongoing basis, and, where appropriate, we review the potential of conflicts of interest.
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 3 to the
unaudited condensed
consolidated financial statements of SEEDO CORP. included elsewhere in this Form 10-QT.
Critical Accounting Policies
Our discussion and analysis of the financial condition and results of operations are based upon the Company’s unaudited condensed financial statements, which have been prepared in accordance with U.S. 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 unaudited condensed 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 and income taxes. These policies require that we make estimates in the preparation of our unaudited condensed financial statements as of a given date.
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.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of our Quarterly Report on Form 10-QT, an evaluation was carried out by management, with the participation of our Chief Executive Officer and Chief Financial Officer, 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 December 31, 2018. 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 December 31, 2018 conducted as part of our preparation of the quarterly unaudited condensed 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 effective.,
Management’s Report on Internal Control over Financial Reporting
Management is responsible for the preparation and fair presentation of the unaudited condensed financial statements included in this quarterly report. The unaudited condensed 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 unaudited condensed financial statements 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 December 31, 2018.
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 unaudited condensed financial statements will not be prevented or detected on a timely basis.
The material weaknesses identified are described below.
Procedures for Control 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 unaudited condensed 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 above, the Company’s management has concluded that, as of December 31, 2018, the Company’s internal control over financial reporting was not based on the criteria in Internal Control – Integrated Framework issued by COSO.
This quarterly report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management’s report in this quarterly 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 three months ended December 31, 2018, that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Item 5. Change in Fiscal Year
The Board of Directors of SEEDO CORP. has changed our fiscal year end from September 30 to December 31, as announced in our 8K to this effect filed with the SEC on February 5, 2019. We made this change to align the Company's fiscal year end with its subsidiaries following the reverse merger. Subsequent to this, our Form 10-K will cover the calendar year January 1 to December 31. We refer to the period beginning October 1, 2017 and ending September 30, 2018 as “fiscal 2018".