WORLD HEALTH ENERGY HOLDINGS, INC. Forward-Looking Statements
The following discussion should be read in conjunction with the financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q, as well as our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2021 as filed with theSecurities and Exchange Commission (the "SEC") onApril 14, 2022 . Certain statements made in this discussion are "forward-looking statements" within the meaning of the private securities litigation reform act of 1995,. These statements are based upon beliefs of, and information currently available to, the Company's management as well as estimates and assumptions made by the Company's management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used herein, the words "anticipate," "believe," "estimate," "expect," "forecast," "future," "intend," "plan," "predict," "project," "target," "potential," "will," "would," "could," "should," "continue" or the negative of these terms and similar expressions as they relate to the Company or the Company's management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks relating to the Company's business, industry, and the Company's operations and results of operations and the effects that the COVID-19 outbreak, or similar pandemics, could have on our business. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned. The full extent to which the COVID-19 pandemic may directly or indirectly impact our business, results of operations and financial condition will depend on future developments that are uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. We have made estimates of the impact of COVID-19 within our financial statements, and although there is currently no major impact, there may be changes to those estimates in future periods. Actual results may differ from these estimates. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws ofthe United States , the Company does not intend to update any of the forward-looking statements to conform these statements to actual results. Our financial statements are prepared in accordance with accounting principles generally accepted inthe United States ("GAAP"). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report. General OverviewWorld Health Energy Holdings, Inc. ("we" "us" "our" the "Company" or "WHEN") WHEN is a diversified energy, health, and cybersecurity technology company. OnApril 27, 2020 , WHEN completed a reverse triangular merger pursuant to the Agreement and Plan of Merger (the "Merger Agreement") among the Company,R2GA, Inc. , aDelaware corporation and a wholly owned subsidiary of the Company ("Sub"),UCG, Inc. , aFlorida corporation ("Seller"), SG 77 Inc., aDelaware corporation and wholly-owned subsidiary of Seller ("SG"), andRNA Ltd. , an Israeli company and a wholly owned subsidiary of SG ("RNA"). Under the terms of the Merger Agreement, R2GA merged with and into SG, with SG remaining as the surviving corporation and a wholly-owned subsidiary of the Company (the "Merger"). The Merger became effective as ofApril 29, 2020 . Each ofGaya Rozensweig and George Baumeohl, directors of the Company, are also the sole shareholders and directors of UCG. 16 RNA is primarily a research and development company that has been performing software design services in the field of cybersecurity. SG is primarily engaged in the marketing and distribution of cybersecurity related products. In anticipation of the transaction contemplated under the Merger Agreement, SG was formed and all of the cybersecurity rights and interests held by UCG, including the share ownership of RNA, were assigned to SG.
Following the closing, each of SG 77 and RNA became wholly-owned subsidiaries of the Company.
Recent Developments (i) As previously disclosed, WHEN completed the acquisition of a 26% equity interest in CrossMobile Sp. z o.o, a company formed under the laws ofPoland ("CrossMobile"). OnMarch 22, 2022 the Company, CrossMobile and the shareholders of CrossMobile entered into an Investment Agreement (the "Agreement") pursuant to which the Company is to purchase 26% of the outstanding common share capital of CrossMobile on a fully diluted basis, in consideration of the issuance by the Company to CrossMobile of 10,000,000,000 restricted shares of Company common stock (the "Initial Investment "). Prior to the closing, Mr.Giora Rozensweig , the Company CEO, held 40.67% and Mr. George Baumeohl, a director, held 3.33%, of the issued preferred share capital of CrossMobile). The preferred share capital of CrossMobile provides certain privileges, including the right to participate in CrossMobile shareholder meetings at a rate of two votes for each preferred share and preference as to distribution of dividends at a rate equal to twice the dividends distributed to the holders of the common shares in CrossMobile. CrossMobile filed an application with the Polish Companies Registrar onJune 22, 2022 to increase its share capital in order to effectuate the issuance to WHEN of the CrossMobile ordinary shares representing 26% of the CrossMobile equity interest to WHEN and to register the issuance to CrossMobile of the 10,000,000,000 WHEN shares in consideration thereof. The Companies Registrar approved the requested actions onJuly 22, 2022 and published onAugust 1, 2022 . The approval and registration by the Polish Companies Registrar is required under local law for CrossMobil to issue to WHEN the CrossMobile ordinary shares representing 26% of CrossMobile. In anticipation of the approval of the increase in the share capital of CrossMobile, WHEN issued to CrossMobile onJuly 13, 2022 the 10,000,000,000 WHEN shares. Following the closing of theInitial Investment , Ms.Gaya Rozensweig , a Company director, was appointed to the CrossMobile board of directors and the combined holdings ofGiora Rozensweig and WHEN, afford them effective control of the majority of the outstanding voting capital of CrossMobile ThroughJanuary 22, 2024 , the Company has the option to purchase additional shares of CrossMobile, such that following such additional purchase, the Company would hold approximately 51% of CrossMobile's outstanding share capital on a fully diluted basis. In the event the Company elects to exercise the option, the Company shall issue such number of restricted shares of common stock of the Company calculated based on pre-money valuation of CrossMobile as determined by an independent appraiser agreed between the Company and CrossMobile. OnOctober 25, 2022 , the Company exercised the option to acquire such additional shares of CrossMobile and the Company now holds approximately 51% of CrossMobile's outstanding share capital on a fully diluted basis. In consideration for the exercise of the option, the Company shall issue to CrossMobile 10,000,000 shares of the Company's common stock.
Business Overview of the CrossMobile Transaction
We believe that the acquisition of CrossMobile provides an opportunity in our
evolution and provides us with a strong foothold in the European market.
CrossMobile is part of a limited group of licensed mobile virtual network
operators (MVNO) in the
The global telecom market was valued at$1.6 trillion in 2020 and is expected to grow at 5.4% Compound Annual Growth Rate (CAGR) through 20281. The global cybersecurity market was valued at$140 billion in 2021 and is expected to reach$376 billion by 20292. By combining the telecom focus with our existing cyber security product offering, our plan is to bring to market a new standard of service in value added telecom and security solutions for B2B and B2C customers alike. 1 Global Telecom Services Market Size Report, 2021-2028. (2022). Retrieved21 August 2022 , from https://www.grandviewresearch.com/industry-analysis/global-telecom-services-market
2 Insights, F. (2022). With 13.4% CAGR, Global Cyber Security Market Size to
Surpass
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By combining the current solutions of these two divisions, WHEN expects to commercialize a new standard of service in value added telecom and security solutions for B2B and B2C customers alike.
Our strategic plan for the next 12 months includes the following
a. Integrating IT infrastructure with
packages of Voice, SMS and Data service. (name of Telekom operator will be
released in separate announcement)
b. Finalizing tests of platform for sales and customer care. This platform will
be based on in-house artificial intelligence systems to keep operating costs
substantially below market
c. Start test of integration with and sales of Data packages
CrossMobile anticipates that it will be able to go live in
a. Be in the air with standard packages of Voice, SMS and Data in
International Roaming.
b. Generate first invoice for sales of standard packages of Voice, SMS and Data
in
c. Initiate cooperation with existing or build new
similar to CrossMobile to fully optimize ROI on the investment made in people
and IT Systems. Focus areas will be USA , UK , Asia Pacific and selected
countries in Europe with high potential.
Key Financial Terms and Metrics
The following discussion summarizes the key factors our management believes are necessary for an understanding of our consolidated financial statements.
Revenues
We currently generate revenues primarily from software license fees.
Research and Development Expenses
The process of researching and developing our product candidates is lengthy, unpredictable, and subject to many risks. We expect to continue incurring substantial expenses through 2023 as we continue to develop our product offerings and adapt them to our new MVNO business. We are unable, with any certainty, to estimate either the costs or the timelines in which those expenses will be incurred.. 18
Our research and development costs include costs are comprised of:
? internal recurring costs, such as personnel-related costs (salaries, employee benefits, equity compensation and other costs), materials and supplies, facilities and maintenance costs attributable to research and development functions; and
? fees paid to external parties
General and Administrative Expenses
General and administrative expenses consist primarily of salaries, employee benefits, equity compensation, and other personnel-related costs associated with executive, administrative and other support staff. Other significant general and administrative expenses include the costs associated with professional fees for accounting, auditing, insurance costs, consulting and legal services, along with facility and maintenance costs attributable to general and administrative functions. Financial Expenses
Financial expenses consist primarily impact of exchange rate derived from re-measurement of monetary balance sheet items denominated in non-dollar currencies. Other financial expenses include bank's fees and interest on long term loans.
Comparison of the Three Months Ended
The following table presents our results of operations for the three months
ended
Three Months Ended
September 30
2022 2021
Revenues 23,726 33,717Operating Expenses Research and development expenses (111,570 ) (120,701 ) General and administrative expenses (106,828 ) (466,847 ) Share based compensation expenses (4,529,664 ) (1,459,120 ) Operating loss
(4,724,336 ) (2,012,951 )
Financing income (expenses), net 8,881 (19,519 )
Net loss (4,715,455 ) (2,032,470 )
Revenues. Revenues for the three months ended September 30, 2022 and 2021 were
$23,726 and $33,717 , respectively. Revenues were comprised primarily of software
license fees. The decrease in revenues is primarily related to efforts we
undertook in the 2022 period to refocus our resources on the CrossMobile
transaction.
Research and Development. Research and development expenses consist of salaries
and related expenses, consulting fees, service providers' costs, related
materials and overhead expenses. Research and development expenses decrease from
$120,701 in the three months ended September 30, 2021 to $111,570 during the
corresponding period in 2022. The decrease resulted from decrease in salaries
and related expenses offset by increase in consulting fees.
General and Administrative Expenses. General and administrative expenses consist
primarily of salaries and related expenses and other non-personnel related.
General and administrative expenses decreased from $466,847 for the three months
ended September 30, 2021 to $106,828 during the corresponding period in 2022.
The decrease resulted primarily from decrease in professional services expenses.
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Financing Expenses, Net. Financing expenses, net for the three months ended
Net Loss. Net loss for the three months endedSeptember 30, 2022 was$4,715,455 and is primarily attributable to non-cash share based compensation expense of$4,529,664 , research and development and general and administrative expenses.
Comparison of the Nine Months Ended
The following table presents our results of operations for the three months
ended June 30 2022 and 2021
Nine Months Ended
September 30
2022 2021
Revenues 67,480 115,167Operating Expenses Research and development expenses (354,593 ) (374,561 ) General and administrative expenses (377,168 ) (736,501 ) Share based compensation expenses (8,474,989 ) (1,459,120 ) Operating loss
(9,139,270 ) (2,455,015 )
Financing income (expenses), net 45,515 (50,435 )
Net loss (9,093,755 ) (2,505,450 )
Revenues. Revenues for the nine months ended September 30, 2022 and 2021 were
$67,480 and $115,167 , respectively. Revenues were comprised primarily of
software license fees. The decrease in revenues is primarily related to efforts
we undertook in the 2022 period to refocus our resources on the CrossMobile
transaction
Research and Development. Research and development expenses consist of salaries
and related expenses, consulting fees, service providers' costs, related
materials and overhead expenses. Research and development expenses decreased
from $374,561 for the nine months ended September 30, 2021 as compared to
$354,593 during the corresponding period in 2022. The decrease resulted
primarily from decrease in salaries and related expenses.
General and Administrative Expenses. General and administrative expenses consist
primarily of salaries and related expenses and other non-personnel related
expenses such as legal expenses. General and administrative expenses decreased
from $736,501 for the nine months ended September 30, 2021 as compared to
$377,168 in 2022 during the corresponding period in 2022. The decrease resulted
primarily from decrease in professional services expenses.
Financing Expenses, Net. Financing expenses, net for the nine months ended
Net Loss. Net loss for the nine months endedSeptember 30, 2022 was$9,093,755 and is primarily attributable to non-cash share based compensation expense of$8,474,989 , research and development and general and administrative expenses.
Financial Condition, Liquidity and Capital Resources
Liquidity is the ability of an enterprise to generate adequate amounts of cash to meet its needs for cash requirements. AtSeptember 30 and 2022 and 2021, we had current assets of$371,280 and$355,188 respectively, and total assets of$5,472,583 and$622,735 respectively. The increase in total assets is primarily due to an increase in our investments and cash balance. We had current liabilities of$539,617 as compared to$1,297,427 as ofSeptember 30, 2022 and 2021, respectively and total liabilities of$2,830,399 as compared to$3,649,405 as ofSeptember 30, 2022 and 2021, respectively. The decrease is mainly attributed to the decrease in the balance of other accounts liabilities and right of use liabilities arising from operating lease offset by increase in accounts payable. 20
At
At
InJanuary 2022 , the Company received$34,000 from an investorwho entered into a subscription agreement with the Company inOctober 2021 for an investment of$200,000 to be remitted to the Company in periodic three month instalments, representing the second agreed upon instalment amount. In accordance with the terms of his subscription agreement, we issued to the investor a total 340,000,000 shares of our common stock and he is entitled to warrants for an additional 680,000,000 shares of our common stock. InMay 2022 , we received$40,000 from the same investor, representing the third agreed upon instalment amount to be remitted to the Company. In accordance with the terms of his subscription agreement, we issued to the designees of such investor a total 400,000,000 shares of our common stock and he is entitled to warrants for an additional 800,000,000 shares of our common stock. DuringMarch 2022 , the Company and certain investors entered into subscription agreements for a private placement of units of the Company securities in an aggregated amount of$500,000 , where each unit (a "Unit" and collectively the "Units") is comprised of (i) one (1) share of the Company's Common Stock and (ii) one common stock purchase warrant to purchase an additional share of the Company's Common Stock through the second anniversary thereof at a per share exercise price of$0.0002 . The price per unit is$0.0001 . In consideration thereof the holders are entitled to 5,000,000,000 shares of Common Stock and warrants for an additional 5,000,000,000 shares of Common Stock, of which to date 2,500,000,000 shares of Common Stock and warrants for an additional 2,500,000,000 shares of Common Stock have been issued. DuringMay 2022 , the Company entered into subscription agreements with two investors for a private placement of units of the Company securities in an aggregated amount of$250,000 , where each unit (a "Unit" and collectively the "Units") is comprised of (i) one (1) share of the Company's Common Stock and (ii) two common stock purchase warrants to purchase an additional share of the Company's Common Stock through the second anniversary thereof at a per share exercise price of$0.0003 . The price per unit was$0.0003 . In consideration thereof the holders are entitled to 833,333,334 shares of Common Stock and warrants for an additional 1,666,666,668 shares of Common Stock, of which to date the shares of Common Stock and warrants have been issued.
We expect that our existing cash and cash equivalents as well as expected
periodic remittances from subscription proceeds will enable us to fund our
operations and capital expenditure requirements through
We seek to raise any necessary additional capital through a combination of private or public equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other marketing and distribution arrangements. To the extent that we raise additional capital through marketing and distribution arrangements or other collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights, future revenue streams, or product candidates or to grant licenses on terms that may not be favorable to us. If we raise additional capital through private or public equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders' rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Going Concern The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. We have a stockholders' equity of$2,642,184 and a negative working capital of$168,337 at September30, 2022 as well as negative operating cash flows. These conditions raise substantial doubt about our ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern. 21
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to stockholders.
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