WHEN World Health Energy Holdings Inc (PK)

The following discussion should be read in conjunction with the audited financial statements and notes thereto of our wholly-owned subsidiary UCG Inc. for the years ended December 31, 2019 and 2018 included in our Current Report on Form 8-K field on April 30, 2020, as amended by the Current Report on Form 8-K/A filed with the Securities and Exchange Commission (the “SEC”) on July 30, 2020, as further amended by the Current Report on Form 8-K/A filed in August 25, 2020 (collectively, the “Current Report 8-K”). This section of the Quarterly Report includes a number of forward-looking statements within the meaning of the private securities litigation reform act of 1995, as amended that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements which speak only as of the date made, and except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from these forward-looking statements. Factors that could cause differences include, but are not limited to, customer acceptance risks for current and new products and services, reliance on external sources of financing, development risks for new products and brands, dependence on third party service providers, fluctuations in market demand and customer preferences, changes in government regulations, as well as general conditions of the industry, and other “Risk Factors” discussed in our Current Report in the Current Report Form 8-K and similar discussions in subsequently filed Quarterly Reports on Form 10-Q, including this Form 10-Q, as applicable, and those contained from time to time in our other filings with the SEC.

Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements regarding our business, financial condition, results of operations and prospects. The Securities and Exchange Commission (the “SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q and other written and oral statements that we make from time to time contain such forward-looking statements that set out anticipated results based on management’s plans and assumptions regarding future events or performance. We have tried, wherever possible, to identify such statements by using words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “will” and similar expressions in connection with any discussion of future operating or financial performance. In particular, these include statements relating to future actions, future performance or results of current and anticipated sales efforts, expenses, the outcome of contingencies, such as legal proceedings, and financial results and the effects of the COVID-19 pandemic or any similar pandemic.

We caution that these factors could cause our actual results of operations and financial condition to differ materially from those expressed in any forward-looking statements we make and that investors should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of anticipated or unanticipated events or circumstances. New factors emerge from time to time, and it is not possible for us to predict all of such factors. Further, we cannot assess the impact of each such factor on our results of operations or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

The following discussion should be read in conjunction with our unaudited financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q as well as our other SEC filings.

Overview

World Health Energy Holdings, Inc.(“we” “us” “our” the “Company” or “WHEN”) was incorporated on May 21, 1986 in the state of Delaware. WHEN is a diversified energy, health, and security technology company with corporate offices that are located in Boca Raton, Florida and Ramat Gan, Israel.

On April 27, 2020, WHEN completed a reverse triangular merger pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) among the Company, R2GA, Inc., a Delaware corporation and a wholly owned subsidiary of the Company (“Sub”), UCG, Inc., a Florida corporation (“Seller”), SG 77 Inc., a Delaware corporation and wholly-owned subsidiary of Seller (“SG”), and RNA 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 of April 29, 2020, upon the filing of a copy of the Merger Agreement and certificate of merger with the Secretary of State of the State of Delaware, whereby SG became a direct and wholly owned subsidiary of the Company and RNA indirect wholly owned subsidiary of the Company. Each of Gaya Rozensweig and George Baumeohl, directors of the Company, are also the sole shareholders and directors of UCG.

RNA is primarily a research and development company that has been performing software design work for the Seller 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. Below is a diagram of the current corporate structure of the Company. We intend to continue the business of SG/RNA as our principal business enterprise.

Overview of the Post Merger Entity

World Health Energy Holdings (d/b/a WHEN Group) is a cyber, intelligence and behavioral security company, comprised of SG 77, Inc. (“SG”) , and RNA Ltd (“RNA”). See the corporate structure diagram below. SG is a software security company that designs, develops and markets data security software-based solutions. SG’s solutions are intended for use by commercial enterprises to prevent unauthorized transfer of proprietary and confidential enterprise data (Business System) and parental or other legal guardian use to protect their minor children when online (Parental System). The main focus of the Company post-merger is on developing next generation intelligence and cyber systems based on a proprietary pattern recognition technology. This system analyzes mobiles, servers and computer activity, using a proprietary algorithm to determine and analyze human behavioral patterns. Any deviation from the regular behavior pattern is identified and flagged, thus, preventing potential danger both in the business and the parental sector.

The Business Sector (Business System)

Though Mobile Device Management’s (MDM) are widely used in the workforce, they are focused on providing protection from threats originating outside the organization. Our commercially available Business System provides such protection but also is designed to prevent threats to data loss or unauthorized use or transfer originating from persons within the organization. Contrary to the common misconception that outside threats are more significant, in numerous cases the cyber threat arises from inside the company. SG’s Business System provides innovative solutions for the constantly evolving cyber challenges that arise, whether this is a private business, NGO or governmental entities. Enterprises may be vulnerable to cyberattacks from many sources, including but not limited to, network, endpoint, data, and cloud services.

The Business System has similar filters as would any other firewall and antivirus yet stands out in the manner of information analysis. The Business System collects and analyzes the employee’s organizational behavior, active on a mobile, tablet desktop and server device creating an employee profile. This enables an employer or manager to instantly identify and prevent the unauthorized behavior such as but not limited to: access, download or transfer of company documents or information. The employee profile is unique to each individual, and the Business System can detect changes and disconnect the device if the profile is compromised while simultaneously sending an alert. Additionally, the Business System knows to identify non-routine employee activities such as correspondence that suggests the employee is planning to resign or a change in a behavioral pattern.

The Business System is designed to protect sensitive company data by identifying and preventing any authorized downloads or transfer. Access to any unusual or unauthorized files will be identified as a change in behavioral pattern and send an immediate alert. Any irregularities will send real time alerts, thus enabling a real-time response and protecting the company from both internal and external threats. Additionally, the software generates real time reports which help analyze and assess employee activity and improve employee efficiency.

The Parental Sector (Parental System)

SG’s Parental System offers a comprehensive solution which is designed to enable parents wishing to observe their children’s online and offline behavior to learn if they are accessing inappropriate websites and content and/or to protect them from a range of threats including cyberbullying, pedophiles and other predators and identity theft.

The Parental System line is positioned as the “ultimate parental cyber solution”. This system incorporates a range of features enabling parents to view and manage their children’s phones. The key elements of our proprietary solutions include the following: analysis of all incoming and outgoing written data; analysis of all incoming and outgoing audio communication; real time location tracking; environmental surroundings analysis; and cyber activity analysis.

The Parental System has similar features to those of the Business System yet tailored to fit the needs of parents and guardians to protect their children. Such variations focus on online behavioral patterns whether vocally, via SMS or any other way. If there is a change in behavior patterns, the product is designed to immediately send the parent or adult guardian an alert. For example, one of the identifiable indicators before suicide is social withdrawal, something which today appears as a significant decrease in text message exchanges. The system categorizes this decrease as a red flag. Moreover, prior to suicide, there are certain words and phrases which usage are increase, should the system detect these it will put them in the red flag category.

While analyzing voice calls based on; tone of speech, lengths of the conversation and the frequency of calls, Parental System Analytics is capable of identifying changes in behavioral patterns and flagging these. I.e. studies showed that with mental health decrease, the frequency of calls decreases and the sentences along with the length of the conversations get shorter. Any such discrepancy in behavior patterns will send a real time alert to the parent or legal guardian, potentially avoiding a tragedy.

Other Corporate Holdings

FSC Solutions, Inc. On June 26, 2015, we entered into a Stock Purchase Agreement (the “Agreement”) with FSC and its shareholders which included Uri Tadelis, our former Chief Executive Officer and Director and our former Directors Chaim J. Lieberman and Gal Levy. The Agreement was effective as of July 1, 2015 which served as the closing date for the acquisition. Pursuant to the terms of the Agreement, we acquired all of the capital stock of FSC in exchange for the issuance of 70 billion shares of our unregistered common stock with the possibility of the issuance of an additional 130 Billion common shares upon FSC meeting certain milestones as outlined in the Agreement. Upon completion of the acquisition of FSC, we intended to employ FSC’s software and trading platform to enter the on-line trading industry. Subsequent to the completion of the acquisition, we determined that FSC did not have control over the trading platform and software we expected to acquire and operate. Consequently, we never commenced operations of this business and we are in discussions with the non-management sellers of FSC to resolve this issue that arose after closing and are evaluating our alternatives.

World Health Energy, Inc. World Health Energy, Inc. owns an algae-tech business who’s primary focus was the production of algae using their proprietary GB3000 growth system. The system quickly and efficiently grows algae for the production of biofuels and food protein. We also sought to produce and market high-quality, low-cost B100 biodiesel. Though, we believe that the Company has been successful in demonstrating the effectiveness of the GB3000 system on a small-scale the Company has not yet been able to raise the necessary capital to implement their technologies on a commercial scale. The Company continues to pursue all available options for raising the necessary capital in addition to exploring alternative revenue sources including joint ventures and mergers with existing Green Energy organizations. However, there can be no assurance that the foregoing can occur as planned, or at all.

Corporate Structure (Diagram)

The corporate structure of the WHEN Group is reflected below in this diagram

Comparison of the Three and Nine Months Ended September 30, 2020 to the Three and Nine Months Ended September 30, 2019

Results of Operations

Comparison of the three months ended September 30, 2020 and 2019

Revenues.

Revenues for the three months ended September 30, 2020 were $24,798 an increase of $12,021, or 94%, compared to total revenues of $12,777 for the three months ended September 30, 2019. Revenues were comprised primarily of software license fees

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 for the three months ended September 30, 2020 were $181,175, an increase of $108,117, or 148%, compared to research and development expenses of $73,058 for the three months ended September 30, 2019. The increase is mainly attributable to the increase in payroll and related expenses as well as professional fees paid to outside consultant, rent and office expenses attributable to our research and development activities.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related expenses, rent and office expenses. General and administrative expenses for the three months ended September 30, 2020 were $109,466, an increase of $23,139, or 17%, compared to general and administrative expenses of $132,605 for the three months ended September 30, 2019. The increase is primarily attributable to the increase in administrative manpower and the related salaries and related expenses, rent and office expenses.

Financing Expenses, Net

Financing expenses, net for the three months ended September 30, 2020 was $2,307, an decrease of $71,197, or 97%, compared to financing expenses, net, of $73,504 for the three months ended September 30, 2019. The decrease is mainly a result of the effect of currency exchange differentials between the US Dollar and the New Israeli Shekel in the three months ended September 30, 2019 resulting in exchange losses in RNA.

Comparison of the Nine Months ended September 30, 2020 and 2019

Revenues

Revenues for the nine months ended September 30, 2020 were $52,906, a decrease of $13,359, or 20%, compared to total revenues of $66,265 for the nine months ended September 30, 2019.

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 for the nine months ended September 30, 2020 were $328,529, an increase of $154,258, or 89%, compared to total research and development expenses of $174,271 for the nine months ended September 30, 2019. The increase is mainly attributable to the increase in payroll and related expenses as well as professional fees paid to outside consultant, rent and office expenses attributable to our research and development activities.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related expenses, rent and office expenses. General and administrative expenses for the nine months ended September 30, 2020 were $227,525, an increase of $30,910, or 16%, compared to total general and administrative expenses of $196,615 for the nine months ended September 30, 2019. The increase is mainly a result of the increase in administrative manpower and the related salaries and related expenses, rent and office expenses.

Financing Expenses, Net

Financing income, net for the nine months ended September 30, 2020 were $6,925, an increase of $90,865, compared to total financing expenses of $83,940 for the nine months ended September 30, 2019. The increase in finance income is mainly a result of the effect of currency exchange differences between the US Dollar and the New Israeli Shekel in the nine months ended September 30, 2019 resulting in exchange losses in RNA.

Financial Condition, Liquidity and Capital Resources

On September 30, 2020, we had current and total assets of $441,849. We had current and total liabilities of $458,609 and $2,048,059, respectively, at September 30, 2020.

On September 30, 2020, we had a working capital deficiency of $38,809. 

We had $94,150 in cash on September 30, 2020 compared to $223,874 in cash on September 30, 2019. Cash used by operations for the nine months ended September 30, 2020 was $399,949 as compared to $306,905 for nine months ended September 30, 2019. The increase in cash used by operations is related to the increase in salaries and related expenses as well as service providers.

Net cash used in investing activities was $251,309 for the nine months ended September 30, 2020, as compared to net cash used in investing activities of $149,854 for the nine months ended September 30, 2019. The increase is mainly due to the increase in loans granted to related parties.

Net cash provided by financing activities was $387,514 for the nine months ended September 30, 2020, as compared to net cash provided by financing activities of $659,252 for the nine months ended September 30, 2019. The decrease is mainly due to the decrease in loans received from related parties.

Management believes that funds on hand, as well as anticipated revenues, will allow us to conduct operations as presently conducted through the end of 2020. We need to raise capital on an immediate basis in order to maintain operations. Without additional sources of cash and/or the deferral, reduction, or elimination of significant planned expenditures and debt repayment, we may not have the cash resources to continue as a going concern thereafter. To meet our short and long-term liquidity needs, we expect to use existing cash balances, cash from our revenue generating activities, as well as a variety of other means, including raising capital through potential issuances of debt or equity securities in public or private financings, partnerships and/or collaborations. There can be no assurance that additional financing will be available when needed or, if available, that can be obtained on commercially reasonable terms. If we will not be able to obtain the additional financing on a timely basis as required, or generate significant material revenues from operations, we will not be able to meet our other obligations as they become due and will be forced to limit or curtail certain of our business plans.

Going Concern

The accompanying Condensed Consolidated Financial Statements have been prepared assuming that we will continue as a going concern. We have an accumulated deficit of $1,120,067, and a working capital deficiency of $38,809 at September 30, 2020, and net loss from operations of $503,148 for the nine months period ended September 30, 2020. These conditions raise substantial doubt about our ability to continue as a going concern. The Condensed Consolidated Financial Statements do not include any adjustments that might be necessary if we are unable to continue as a going concern.

Critical Accounting Policies

Use of Estimates The Condensed Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). In preparing the Condensed Consolidated Financial Statements, management is required to make estimates and assumptions that affect the reported amounts on the condensed consolidated balance sheets and condensed consolidated statements of operations for the year then ended. Actual results may differ significantly from those estimates. As applicable to these financial statements, the most significant estimates and assumptions relate to the going concern assumptions.

Going Concern Uncertainty

The development and commercialization of our product will require substantial expenditures. We have not yet generated any material revenues and have incurred substantial accumulated deficit and negative operating cash flows. We currently have no sources of recurring revenue and are therefore dependent upon external sources for financing our operations. There can be no assurance that we will succeed in obtaining the necessary financing to continue our operations. As a result, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements during 2020 and do not anticipate entering into any off-balance sheet arrangements during the next 12 months.