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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

(Mark One)

 

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

FOR THE QUARTERLY PERIOD ENDED: September 30, 2021

 

☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________ to __________

 

Commission File Number: 333-240161.

 

CREATIONS, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   84-2054332

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

c/o Sichenzia Ross Ference LLP

1185 Avenue of the Americas, 31st Floor

New York, NY 10036

(Address of principal executive offices, Zip Code)

 

212-930-9700

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Ticker Symbol(s)   Name of Each exchange on which registered
N/A   N/A   N/A

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller reporting company ☒
    Emerging growth company ☒

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

 

As of September 30, 2021, there were 3,544,242 shares of common stock, par value $0.0001 per share, issued and outstanding.

 

 

 

 

 

 

TABLE OF CONTENTS

 

  Page
PART I  
   
Item 1. Financial Statements. 3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 17
Item 3. Quantitative and Qualitative Disclosures About Market Risk. 21
Item 4. Controls and Procedures. 21
   
PART II  
   
Item. 1. Legal Proceedings 21
Item 1A. Risk Factors. 21
Item 2. Unregistered Sales of Equity Securities 21
Item 3. Defaults Upon Senior Securities 22
Item 4. Mine Safety Disclosures 22
Item 5. Other Information. 22
Item 6. Exhibits. 22
   
SIGNATURES 23

 

i

 

 

CREATIONS INC. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of SEPTEMBER 30, 2021

 

 

 

 

CREATIONS INC. AND ITS SUBSIDIARIES

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As of September 30, 2021

 

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

  Page
   
Condensed Consolidated Statements of Financial Position 3
   
Condensed Consolidated Statements of Operations and Comprehensive Profit (Loss) 4
   
Condensed Consolidated Statements of Changes in Stockholders’ Equity 5-6
   
Condensed Consolidated Statements of Cash Flows 7-8
   
Notes to the Condensed Consolidated Financial Statements 9-16

 

- 2 -
 

 

PART 1 - FINANCIAL INFORMATION

 

ITEM 1. Financial StateMENTS

 

CREATIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(U.S. dollars in thousands except share data)

 

    September 30,     December 31,  
    2021     2020  
    Unaudited        
ASSETS                
Current assets                
Cash and cash equivalents     452       625  
Marketable securities     88       -  
Bank deposit     45       33  
Accounts receivable     118       51  
Other current assets     34       68  
Total current assets     737       777  
                 
Non-current assets                
Property and equipment, net     45       45  
Intangible assets     316       371  
Goodwill     625       627  
Loans granted to stockholders     26       26  
Operating right of use assets     67       109  
Total non-current asset     1,079       1,178  
                 
Total assets     1,816       1,955  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

               
Accounts payable (related parties of $122 and $26)     210       141  
Operating lease liability – current portion     58       58  
Total current liabilities     268       199  
                 
Non-current liabilities                
Operating lease liability – net of current portion     9       51  
Deferred taxes     73       86  
Total non-current liabilities     82       137  
                 
Total liabilities     350       336  
                 
Commitment and Contingencies     -       -  
Stockholders’ Equity                
Common Stock of $0.0001 par value - Authorized: 100,000,000 shares at September 30, 2021 and December 31, 2020; Issued and outstanding: 3,544,242 shares at September 30, 2021 and December 31, 2020     -       -  
Additional paid-in capital     3,162       3,162  
Accumulated other comprehensive income     102       106  
Accumulated deficit     (1,798 )     (1,649 )
Total stockholders’ equity     1,466       1,619  
                 
Total liabilities and stockholders’ equity     1,816       1,955  

 

- 3 -
 

 

CREATIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

PROFIT (LOSS)

(U.S. dollars in thousands except share data)

 

                                 
    For the period of three months ended September 30,     For the period of nine months ended September 30,  
    2021     2020     2021     2020  
    Unaudited     Unaudited  
Revenues     564       95       1,455       252  
Cost of revenues   (305 )   (114 )   (849 )   (282 )
Gross profit (loss)     259       (19 )     606       (30 )
                                 
Operating expenses:                                
Marketing expenses     (38 )     (6 )     (159 )     (7 )
General and administrative expenses (related parties $78, $56, $304 and $165)     (161 )     (229 )     (611 )     (581 )
                                 
Operating income (loss)     60       (254 )     (164 )     (618 )
                                 
Financial income (expenses), net     (1 )     36       2       72  
Income (loss) before income tax benefit     59       (218 )     (162 )     (546 )
                                 
Income tax benefit     5       -       13       -  
                                 
Net income (loss) for the period     64       (218 )     (149 )     (546 )
Other comprehensive income (expenses):                                
Foreign currency translation adjustments     11       6       (4 )     13  
Net comprehensive income (loss) for the period     75       (212 )     (153 )     (533 )
                                 
Basic and diluted net income (loss) per share     0.02       (0.09 )     (0.04 )     (0.24 )
Weighted average number of Common Stock used in  computing basic and diluted income (loss) per share     3,544,242       2,317,315       3,544,242       2,298,934  

 

- 4 -
 

 

CREATIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(U.S. dollars in thousands except share data)

(Unaudited)

 

    Number     Amount     Capital     income     Deficit     equity  
    Common Stock     Additional paid-in     Accumulated other comprehensive     Accumulated     Total stockholders’  
    Number     Amount     Capital     Income     Deficit     equity  
    Unaudited  
                                     
Balance as of January 1, 2020     2,289,744       -       2,205       6       (877 )     1,334  
                                                 
Issuance of units consisting of shares of Common Stock and warrants upon acquisition of subsidiary     1,254,498       -       957       -       -       957  
Other comprehensive income     -       -       -       13       -       13  
Net loss     -       -       -       -       (546 )     (546 )
Balance as of September 30, 2020     3,544,242       -       3,162       19       (1,423 )     1,758  

 

    Common Stock     Additional paid-in     Accumulated other comprehensive     Accumulated     Total stockholders’  
    Number     Amount     Capital     Income     Deficit     equity  
    Unaudited  
                                     
Balance as of July 1, 2020     2,289,744            -       2,205       13       (1,205 )     1,013  
                                                 
Issuance of units consisting of shares of Common Stock and warrants upon acquisition of subsidiary     1,254,498       -       957       -       -       957  
Other comprehensive income     -       -       -       6       -       6  
Net loss     -       -       -       -       (218 )     (218 )
Balance as of September 30, 2020     3,544,242       -       3,162       19       (1,423 )     1,758  

 

- 5 -
 

 

CREATIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(U.S. dollars in thousands except share data)

(Unaudited)

 

    Common Stock     Additional paid-in     Accumulated other comprehensive     Accumulated     Total stockholders’  
    Number     Amount     Capital     Income     Deficit     equity  
    Unaudited  
                                     
Balance as of January 1, 2021   3,544,242       -       3,162       106       (1,649 )     1,619  
                                                 
Other comprehensive expenses     -       -       -       (4 )     -       (4 )
Net loss     -       -       -       -       (149 )     (149 )
Balance as of September 30, 2021     3,544,242       -       3,162       102       (1,798 )     1,466  

 

    Common Stock     Additional paid-in     Accumulated other comprehensive     Accumulated     Total stockholders'  
    Number     Amount     Capital     Income     Deficit     equity  
    Unaudited  
                                     
Balance as of July 1, 2021     3,544,242             -       3,162       91       (1,862 )     1,391  
                                                 
Other comprehensive income     -       -       -       11       -       11  
Net income     -       -       -       -       64       64  
Balance as of September 30, 2021     3,544,242       -       3,162       102       (1,798 )     1,466  

 

- 6 -
 

 

CREATIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

 

    2021     2020  
    For the Period of Nine Months
Ended September 30, 		 
    2021     2020  
    Unaudited  
Cash flows from operating activities:                
Net loss     (149 )     (546 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     55       2  
Amortization of operating right of use asset     42       -  
Other income – capital gain from marketable securities     (2 )     (22 )
Deferred tax benefit     (12 )     -  
Changes in operating assets and liabilities:                
Accounts receivable     (66 )     -  
Other current assets     32       (39 )
Accounts payable     70       66  
Operating right of use liability     (42 )     -  
Net cash used in operating activities     (72 )     (539 )
                 

Cash flows from investing activities:

               
Investment in bank deposit     (12 )     -  
Acquisition of subsidiary (Appendix A)     -       (87 )
Cash acquired from acquisition of subsidiary (Appendix A)     -       100  
Investment in marketable securities     (85 )     (24 )
Purchase of property and equipment     (4 )     (1 )
Net cash used in investing activities     (101 )     (12 )
                 
Foreign currency translation adjustments on cash and cash equivalents     -       11  
                 
Change in cash and cash equivalents     (173 )     (540 )
Cash and cash equivalents at beginning of the period     625       1,366  
Cash and cash equivalents at end of the period     452       826  

 

- 7 -
 

 

CREATIONS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

 

Appendix A - Acquisition of subsidiary

 

      1  
Cash and cash equivalents acquired     100  
Deferred taxes     17  
Working capital (excluding cash and cash equivalents), net     32  
Intangible assets     363  
Property and equipment     33  
Goodwill     583  
Deferred income taxes     (84 )
Shares of Common Stock and warrants issued upon acquisition     (957 )
Cash paid for the acquisition of subsidiary     87  

 

- 8 -
 

 

CREATIONS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars in thousands)

 

NOTE 1 - GENERAL

 

  A. Creations Inc. (hereinafter: the “Company”) was established as a private company under the laws of the State of Delaware on May 13, 2019. The Company’s core business is providing investment services for mutual funds and portfolio management services for individuals and institutions. It operates as a portfolio manager through its wholly owned subsidiaries.

 

The Company has three wholly owned subsidiaries. Ocean Yetsira Ltd. (previously called Yestsira Holdings Ltd. (until April 28, 2021) (hereinafter: “Ocean Yetsira”) which was established as a private Israeli corporation in December 2017, Yetsira Investment House Ltd. (hereinafter: “Yetsira”) which was established as a private Israeli corporation in November 2016 and Ocean Partners Y.O.D.M (hereinafter: “Ocean”) following its acquisition (See note 1B).

 

On January 29, 2018 Ocean Yetsira became the sole stockholder of Yetsira by means of a share exchange agreement (the “Yetsira Exchange”), under which the issued and outstanding shares of Yetsira were exchanged for shares of Ocean Yetsira on a one-to-one basis.

 

On July 3, 2019 the Company entered into a share exchange agreement (the “Holdings Exchange”) pursuant to which all of the outstanding shares of Ocean Yetsira were exchanged for shares of the Company at a rate of 1:809 (the “Exchange Ratio”), with Ocean Yetsira stockholders each receiving the same proportional ownership in the Company as they had held in Ocean Yetsira immediately prior to the agreement. On the execution of the agreement and exchange of shares, Ocean Yetsira became a wholly owned subsidiary of the Company.

 

  B. On August 19, 2020, the Company entered into share purchase agreement with certain shareholders of Ocean, an Israeli corporation that provides mutual funds investment management services for several mutual funds, under which upon consummation of certain conditions the Company will purchase 7.5% of the outstanding and issued shares of Ocean for total cash consideration of NIS 300 (approximately $87) (the “Cash Consideration”).

 

On September 7, 2020, the Company entered into a share exchange agreement (the “Share Exchange Agreement”) by and among Yetsira, Ocean , and certain shareholders of Ocean (“Ocean Shareholders”), under which upon consummation of certain conditions the Company will purchase the remaining 92.5% of the shares of Ocean for a total equity consideration which represents 35.4% of the issued share capital of the Company on a fully diluted basis as of the Closing Date (as defined below) (the “Equity Consideration”), which comprised of the following:

 

  1. 1,254,498 shares of common stock of the Company.

 

  2. 1,254,498 warrants to purchase the same number of shares of common stock of the Company (the “Warrants”). The Warrants are convertible into shares of Common Stock over a period of three-years at an exercise price of $1.00 per share, with the price per share subject to standard anti-dilution adjustments.

 

- 9 -
 

 

CREATIONS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars in thousands)

 

NOTE 1 - GENERAL (CONT.)

 

  B. (Continued)

 

The Company consummated the aforesaid acquisition at September 28, 2020 (the “Closing Date”). The financial position and results of operation relating to periods following the closing date include the financial position and result of operation of Ocean.

 

  C. Beginning in early 2020, there has been an outbreak of coronavirus (COVID-19), initially in China and which has spread to other jurisdictions, including locations in which the Company operates. The full extent of the outbreak, related business and travel restrictions and changes to behavior intended to reduce its spread are uncertain as of the signing date of these financial statements as this continues to evolve globally although many countries around the world started actively vaccinating population which gradually reduces infection and mortality by the pandemic. As a result, similarly to other companies in the capital market industry, the Company’s assets under management (AUM) declined in the beginning of the outbreak. In the second half of 2020 and the first nine months of 2021, the results were significantly improving due to governments and central banks actions to support the economies and due to superior investments results in our products which resulted in accelerated growth in AUM. The Company’s management continues to follow the publications and guidelines on the matter. Nevertheless, future outcomes of the pandemic are uncertain and could be different than the Company’s estimations.

 

  D. On August 31, 2020, the Company’s registration statement on Form S-1 was declared effective by the U.S. Securities and Exchange Commission (the “SEC”). As at the date of filing this report, the Company’s shares have not begun to be quoted on the OTCQB.

 

  E. The figures in the financial statements are stated in U.S. Dollars in thousands unless otherwise mentioned.

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

 

  A. Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements have been prepared from the books and records of the Company and include all normal and recurring adjustments which, in the opinion of management, are necessary for a fair presentation in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) for interim financial information and Rule 8-03 of Regulation S-X promulgated by the “SEC”. Interim results are not necessarily indicative of the results that may be expected for the full year. The interim condensed consolidated financial statements do not include a full disclosure as required in annual financial statements and should be read with the annual financial statements of the Company as of December 31, 2020 from which the accompanying condensed consolidated balance sheet was derived. The accounting policies implemented in the interim financial statements is consistent with the accounting policies implemented in the annual financial statements as of December 31, 2020, except of the following accounting pronouncement adopted by the Company.

 

- 10 -
 

 

CREATIONS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars in thousands)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.)

 

  A. Basis of Presentation (Continued).

 

Recently Issued Accounting Pronouncements, Adopted

 

On January 1, 2021, the Company adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes” (“ASU 2019-12”) which reduces the cost and complexity in accounting for income taxes. ASU 2019-12 removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of U.S. GAAP. Most amendments within ASU 2019-12 are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

 

Recently Issued Accounting Pronouncements, Not Yet Adopted.

 

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) (“ASU 2016- 13”), which significantly changes how entities will account for credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. ASU 2016-13 replaces the existing incurred loss model with an expected credit loss model that requires entities to estimate an expected lifetime credit loss on most financial assets and certain other instruments. Under ASU 2016-13 credit impairment is recognized as an allowance for credit losses, rather than as a direct write-down of the amortized cost basis of a financial asset. The impairment allowance is a valuation account deducted from the amortized cost basis of financial assets to present the net amount expected to be collected on the financial asset. Once the new pronouncement is adopted by the Company, the allowance for credit losses must be adjusted for management’s current estimate at each reporting date. The new guidance provides no threshold for recognition of impairment allowance. Therefore, entities must also measure expected credit losses on assets that have a low risk of loss. For instance, trade receivables that are either current or not yet due may not require an allowance reserve under currently generally accepted accounting principles, but under the new standard, the Company will have to estimate an allowance for expected credit losses on trade receivables under ASU 2016-13. ASU 2016-13 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2022 for smaller reporting companies. Early adoption is permitted. The Company will evaluate the impact of ASU 2016-13 on the Company’s consolidated financial statements in a future period closer to the date of adoption.

 

In August 2020, the FASB issued ASU 2020-06 “Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815 – 40).” This guidance simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The amendments to this guidance are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

 

- 11 -
 

 

CREATIONS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars in thousands)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.)

 

  A. Basis of Presentation (Continued).

 

The Company does not believe that any other recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed consolidated financial statements.

 

  B. Use of Estimates in Preparation of Financial Statements

 

The preparation of consolidated financial statements in conformity with U.S. GAAP accounting principles requires management to make estimates and assumptions. The Company’s management believes that the estimates, judgments, and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.

 

  C. Principles of consolidation

 

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

 

  D. Functional currency

 

The functional currency of the Company is the U.S. dollar, which is the currency of the primary economic environment in which it operates. In accordance with ASC 830, “Foreign Currency Matters” (ASC 830), monetary balances denominated in or linked to foreign currency are stated on the basis of  the exchange rates prevailing at the applicable balance sheet date. For foreign currency transactions included in the statement of operations, the exchange rates applicable on the relevant transaction dates are used. Gains or losses arising from changes in the exchange rates used in the translation of such transactions and from the remeasurement of monetary balance sheet items are carried as financing income or expenses.

 

- 12 -
 

 

CREATIONS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars in thousands)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.)

 

  D. Functional currency (Continued).

  

The functional currency of Yetsira, Ocean Yetsira and Ocean is the New Israeli Shekel (“NIS”) and their financial statements are included in the consolidation based on translation into US dollars. Accordingly, assets and liabilities were translated from NIS to US dollars using year-end exchange rates, and income and expense items were translated at average exchange rates during the period. Gains or losses resulting from translation adjustments are reflected in stockholders’ equity, under “Accumulated Other Comprehensive Income”.

 

 SCHEDULE OF TRANSLATION ADJUSTMENTS

    September 30,     September 30,  
    2021     2020  
 Official exchange rate of NIS 1 to US dollar     0.310       0.291  
 Exchange rate change in the period     (6 )%     (1 )%

 

 

 

  E. Revenue recognition

 

The Company accounts for revenue under ASC 606, Revenue from Contracts with Customers (“ASC 606”). Under the guidance, the Company determines revenue recognition through the following five steps:

 

  ● Identification of the contract, or contracts, with a customer;
  ● Identification of the performance obligations in the contract;
  ● Determination of the transaction price;
  ● Allocation of the transaction price to the performance obligations in the contract; and
  ● Recognition of revenue when, or as, the Company satisfies a performance obligation.

 

Asset Management and Investments Fees (Gross): The Company earns Asset management and investment fees from its contracts with its clients. These fees are primarily earned over time on a daily basis and are generally assessed based on fixed percentage of the Assets Under Management (AUM). Other related services provided include investment banking and consulting for which the Company’s fees, which are based on a fixed fee schedule, are recognized when the services are rendered.

 

All of the Company’s revenues is from contracts with customers. Customers are invoiced at the end of the month.

 

- 13 -
 

 

CREATIONS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars in thousands)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.)

 

  F. Income taxes

 

The Company recorded no income tax expense for the nine months ended September 30, 2021 and 2020 because the estimated annual effective tax rate was zero. As of September 30, 2021, the Company continues to provide a valuation allowance against its net deferred tax assets since the Company believes it is more likely than not that its deferred tax assets will not be realized. The $13 thousands income tax benefit recorded in the Condensed consolidated statements of operations and comprehensive profit (loss) is related to amortization of intangible assets allocated to the acquisition of Ocean during 2020, (decrease of the $13 thousands in the deferred tax liability related to customer relationship).

 

  G. Basic and diluted net loss per share

 

The Company computes net loss per share in accordance with ASC 260, “Earnings per share.” Basic loss per share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, net of the weighted average number of treasury shares (if any).

 

Diluted loss per common share is computed similarly to basic loss per share, except that the denominator is increased to include the number of additional potential common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Potential common shares are excluded from the computation for a period in which a net loss is reported or if their effect is anti-dilutive. The Company’s potential common shares consist of stock warrants issued to certain investors and their potential dilutive effect is considered using the treasury method.

 

The total numbers of shares related to outstanding stock warrants that have been excluded from the calculation of the diluted net loss per share due to their anti-dilutive effect was 3,544,242 and 2,317,315 for the three months ended September 30, 2021 and 2020 respectively, and 3,544,242 and 2,298,934 for the nine months ended September 30, 2021 and 2020 respectively.


 

  H. Intangible assets

 

Intangible assets consist of existing customer relationships from the acquisition of Ocean in August and September 2020 for the cost amount of $364. The Company accounts for intangible assets at their historical cost and records amortization utilizing the straight-line method based upon their estimated useful lives. The estimated useful life of customer relationships was determined internally by the management at 5.25-years period. Amortization expense in the three and nine months ended September 30, 2021 amounted to $17 thousand and $52 thousand, respectively. Impairments, if any, are based on excess of the carrying amount over the fair value of the asset. There was no impairment charge for the nine months ended September 30, 2021.

 

- 14 -
 

 

CREATIONS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars in thousands)

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES (CONT.)

 

  I. Goodwill

 

Goodwill represents the excess of the acquisition cost of businesses over the fair value of the identifiable net assets acquired. The goodwill amount of $625 on September 30, 2021 and $627 December 31, 2020 relates to the acquisition of Ocean. This difference of the amounts for this dates is from foreign currency adjustments only.

 

Goodwill is not amortized, but is tested at least annually for impairment, or if circumstances occur that more likely than not reduce the fair value of the reporting unit below its carrying amount.

 

The Company has determined that there has been no impairment of goodwill as of September 30, 2021.

 

NOTE 3 - RELATED PARTIES BALANCES AND TRANSACTIONS

 

 SUMMARY OF BALANCES WITH RELATED PARTIES

  A. Balances with related parties

 

    September 30,     December 31,  
    2021     2020  
Assets:                
Loans granted to stockholders   $ 26     $ 26  
                 
Liabilities:                
Management fees payable to related parties   $ 122     $ 26  

 

  SUMMARY OF TRANSACTIONS WITH RELATED PARTIES

  B. Transactions with related parties

 

   

Three months ended

September 30,

 
    2021     2020  
Income:                
Interest income in respect to loans granted to stockholders   $ - *   $ - *
                 
Expenses:                
Management fees   $ 78     $ 56  

 

* Less than $1 thousand.

 

   

Nine months ended

September 30,

 
    2021     2020  
Income:                
Interest income in respect to loans granted to stockholders   $ - *   $ 1 *
                 
Expenses:                
Management fee   $ 304 **   $ 165  

 

* Less than $1 thousand.
** Includes $43 thousand related to 2020.

 

- 15 -
 

 

CREATIONS INC. AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(U.S. dollars in thousands)

 

NOTE 4 - MATERIAL EVENTS DURING THE PERIOD AND ADDITIONAL MATTERS

 

  A. On June 18, 2021, the Company learned that Guy Nissensohn, the Company’s Chief Executive officer (“CEO”) and Acting Chief Financial Officer (“CFO”), passed away. Following Mr. Nissensohn’s death, the Board of Directors (the “Board”) appointed Niv Nissensohn to serve as interim CEO, effective immediately. Niv Nissensohn (Guy Nissensohn’s brother) assumed Guy Nissensohn’s role as a director on the Board. Shmuel Yelshevich was appointed as Interim CFO of the Company, effective immediately. The Board also appointed Yaniv Aharon as Chairman of the Board, effective immediately.
     
  B. On February 22, 2021, the Board approved the agreement between the Company and Yaniv Aharon for the provision of management services (the “Agreement”) with Ocean Yetsira, effective July 1, 2020. The service provider will provide investment house services in a consideration ranging between the amounts as detailed in the agreement depending on the volume of managed assets as follows:

 SCHEDULE OF GRADATION OF VOLUME MANAGED ASSETS

Gradation of the volume of managed assets in NIS millions*   Monthly salary (NIS)*
Up to NIS1,000M (up to $297M)   NIS20,000 ($5,938)
NIS1,001M to NIS2,000M ($297M to $594M)   NIS30,000 ($8,907)
NIS2,001M to NIS3,000M ($594M to $891M)   NIS45,000 ($13,361)
NIS3,001M to NIS4,000M ($891M to $1,188M)   NIS65,000 ($19,299)
NIS4,001M and above ($1,188 and above)   NIS85,000 ($25,237)

 

* The amounts in dollars are translated from NIS and subject to changes in the exchange rates.

 

In addition, the service provider will be entitled to an annual compensation, starting in 2022, for the year 2021 onwards, calculated as follows:

 

2.5% of the EBITDA between NIS2M to NIS6M (between $0.6M to $1.78M)

2% of the EBITDA above NIS6M (above $1.78M)

1% of the EBITDA above NIS10M (above $2.97M)

The bonus is limited to NIS500 thousand a year ($148 thousand)

 

In the three and nine months ended September 30, 2021, the Company recognized an additional management fee expense to the service provider in the amount $0 and $18 thousand related to 2020.

 

  C. As of September 30, 2021, a bank guarantee in the amount of $17 is issued regarding the Company’s office lease.

 

- 16 -
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

This Quarterly Report contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about our:

 

  ● business strategy;
     
  ● financial strategy;
     
  ● intellectual property;
     
  ● production;
     
  ● future operating results; and
     
  ● plans, objectives, expectations and intentions contained in this report that are not historical.

 

All statements, other than statements of historical fact included in this report, regarding our strategy, intellectual property, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this report, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All forward-looking statements speak only as of the date of this report. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this report are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved. These statements may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” as well as in this report generally. Actual events or results may differ materially from those discussed in forward-looking statements as a result of various factors. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained in this filing will in fact occur.

 

Organizational History

 

Creations, Inc. was incorporated in May 2019. On July 1, 2019, Creations, Inc, acquired a 100% interest in Ocean Yetsira Ltd. (previously called Yetsira Holdings Ltd. (until April 28, 2021)) (hereinafter: “Ocean Yetsira”), through a share swap agreement. Ocean Yetsira is an Israeli Corporation incorporated in December 2017 which in turn owns 100% of Yetsira Investment House (“Yetsira”), which was incorporated in November 2016.

 

- 17 -
 

 

On August 19, 2020, the Company purchased 7.5% of the outstanding and issued shares of Ocean Partners Y.O.D.M Ltd., an Israeli corporation (“Ocean”) for total cash consideration of approximately $87,000. On September 7, 2020, the Company entered into a share exchange agreement by and among Yetsira, Ocean, and certain shareholders of Ocean, pursuant to which the Company acquired the remaining 92.5% of the capital stock of Ocean in exchange for an aggregate of 1,254,498 shares of common stock of the Company, $0.001 par value, and 1,254,498 warrants to purchase shares of common stock of the Company (the “Warrants”) issued to the certain Ocean shareholders by the Company. The Warrants are convertible into shares of our common stock over a period of three-years at an exercise price of $1.00 per share. The Company completed the acquisition on September 28, 2020.

 

Following the acquisition of Ocean, all the investment management business of the group is managed through Ocean.

 

The acquisition implements the Company’s vision of becoming a leading investment company in Israel and delivering high quality asset management and value to its clients and shareholders. By combining the two businesses, Yetsira and Ocean, the Company will be able to expand its variety of mutual funds and more than double its AUM. Moreover, Ocean has a large base of private clients with a high degree of customer loyalty which can be used as a platform to grow the Company’s privet client’s portfolio management business. Furthermore, the acquisition is intended to diversify the experience, skills, and abilities of the Company’s investment managers team, including marketing expertise that can be used to advance the Company forward.

 

The company continue to focus on its mutual fund management business, while increasing our number of managed funds and private portfolio which resulted in accelerated growth of our AUM. Part of our growth depends on the strength of our brand, which the Company intends to continue to strengthen by increasing our exposure to the general public, especially through investment advisors in the commercial banks, and by other public relations activities and advertising.

 

The board of directors examines from time to time expanding the companies areas of activities by locating synergistic opportunities for our existing areas of activity and establishing additional parallel investment opportunities. In addition, we may pursue the acquisition of other unrelated businesses in the financial sector.

 

Through our wholly owned subsidiary, Ocean, we operate as a portfolio manager. Ocean is licensed by the Israel Securities Authority (“ISA”). Ocean currently offers and manages ten mutual funds branded as Ocean-Yetsira funds, and 87 private clients’ portfolios with approximately $266M in assets, currently under management (“AUM”).

 

We generate revenue primarily from management fees paid by our unitholders or clients, which fees are based upon a certain percentage of their assets under management. Our expenses are mainly comprised of payments for distribution commissions to banks, third-party platform user fees, salaries, employees and third parties commissions and expenses, and ISA and the Israeli Stock Exchange fees. We conduct our business exclusively through Ocean Yetsira and exercise effective control over the operations of Ocean and Yetsira pursuant to a series of contractual arrangements, under which we are entitled to receive substantially all of its economic benefits.

 

On May 2021 the name of Yetsira Holding ltd. was changed to Ocean Yetsira Ltd in accordance with our brand name.

 

Recently Issued Accounting Pronouncements

 

Management reviewed currently issued pronouncements during the three months ended September 30, 2021, and does not believe that any recently issued, but not yet effective, accounting standards if currently adopted would have a material effect on the accompanying condensed financial statements.

 

- 18 -
 

 

Results of Operations for the nine Months Ended September 2021 compared to nine month Ended September 30, 2020 (In Thousands)

 

Revenue

 

For the nine months ended September 30, 2021, and 2020, the Company generated revenues in the amount of $1,455 and $252 respectively. The revenue growth attributable to AUM growth due to organic growth and Ocean acquisition in the last quarter of 2020 that added $95.3M to the company AUM, which led to an increase in investment management fees.

 

Assets Under Management and Investment Performance

 

The following table reflects the changes in our AUM for the nine Months ended September 30, 2021, and 2020.

 

(In millions)

 

    For the nine
months ended
September 30, 2021 		    For the nine
months ended
September 30, 2020 		 
Beginning Balance   $ 174.49     $ 63.20  
Gross inflows / outflows, net     62.77       (6.37 )
Market appreciation (depreciation) (1)     28.44       (2.19 )
                 
End Balance   $ 265.70     $ 54.64  

 

  (1) Market appreciation (depreciation) includes investment gains (losses) on assets under management, the impact of foreign exchange rates and net reinvested dividends.

 

Our total AUM increased by $91.21 million during the nine months ended June 30, 2021, from $174.49 million as of January 1, 2021, to $265.70 million as of September 30, 2021, or a 52.27% increase on our total AUM. The increase was a result of net AUM inflows of $62.77 million and market appreciation of $28.43 million.

 

Cost of Revenues

 

For the nine months ended September 30, 2021, and 2020, cost of revenues was $849 and $282 respectively. The increase in these expenses was mainly attributable to an increase in the number of managed funds and increase in the AUM.

 

Marketing Expenses

 

For the nine months ended September 30, 2021, our marketing expenses were $159, compared to $7, respectively. The Increase in these expenses was mainly attributable to increase in sales employees and marketing activities.

 

General and Administrative Expenses

 

For the nine months ended September 30, 2021, our general and administrative expenses were $611, compared to $581 for the period ended September 30, 2020, an approximate 5.16% increase. The increase in these expenses was mainly attributed to service and professional fees, payments to the management and employees as shown in the table below.

 

- 19 -
 

 

The following table provides a year-over-year breakout of the material components of our general and administrative expenses:

 

    For nine
months ended
September 30, 2021
(in thousands) 		    For nine
months ended
September 30, 2020
(in thousands) 		 
Components of G&A Expenses:   $       $    
Wages     51       62  
Travel and vehicle expenses     11       18  
Communication and office expenses     62       21  
Services and professional fees (1)     365       348  
One off expense (2)     29       65  
Office rent     44       35  
Insurance Fees     39       21  
Other expenses     10       11  
                 
Total G&A expenses   $ 611     $ 581  

 

(1) The increase in services and professional fees is primarily due to the following event:

 

On September 28, 2020, the share swap agreement between Ocean and Creations was consummated and contributed to an increase in professional services, management fees, wages, and other expenses.

 

(2) Nine months ended September 30, 2020, include one-off expenses of $29 due to a VAT assessment. Nine months ended September 30, 2020, include one-off expenses of $65 thousand for services fee for the S1 process.

 

Net Loss

 

The Company realized a net loss of $149 for the nine months ended September 30, 2021, compared to a net loss of $546 for the nine months ended September 30, 2020. The decrease in net loss, attributed to the increase in revenue.

 

After taking into account foreign currency translation adjustments, which resulted in other comprehensive expense of $4 and income of $13 for the nine months ended September 30, 2021, and 2020, respectively, the Company realized a net loss after other comprehensive expenses of $153 and $533 for the nine months ended September 31, 2021, and 2020, respectively.

 

Liquidity and capital resources

 

As of September 30, 2021, the Company had cash in the amount of $452 compared to cash in the amount of $625 as of December 31, 2020.

 

Stockholders’ equity as of September 30, 2021, was $1,466, as compared to stockholders’ equity of $1,619 as of December 31, 2020.

 

The Company’s accumulated deficit was $1,798 and $1,649 on September 30, 2021, and December 31, 2020, respectively.

 

Liquidity and capital resources

 

The Company’s operating activities resulted in net cash used of $72 for the nine months ended September 30, 2021, compared to net cash used of $539 for the nine months ended September 30, 2020. The decrease in net cash used was mainly attributable to an increase of our AUM and revenue.

 

- 20 -
 

 

The Company’s investing activities used net cash of $101 for the nine months ended September 30, 2021, compared to $12 investing activities used for the nine months ended September 30, 2020.

 

Off- Balance Sheet Arrangements

 

The Company currently does not have any off-balance sheet arrangements.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, we conducted an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is: (i) recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms, and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer, or person performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15f of the Exchange Act) that occurred during the fiscal quarter ended September 30, 2021 that has materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on Internal Controls

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

 

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

 

There are no legal proceedings to which we are presently a party, and we are not aware of any legal proceedings threatened or contemplated against us.

 

Item 1A. Risk Factors.

 

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

During the quarter ended September 30, 2021, the Company did not issue any unregistered securities.

 

- 21 -
 

 

Item 3. Defaults Upon Senior Securities.

 

None

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information.

 

Not applicable.

 

Item 6. Exhibits.

 

Exhibit Number   Description of Exhibit
31   Certification by Chief Executive and Chief Financial Officer, required by Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act
     
32   Certification pursuant to 18 U.S.C. §§1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
     
101.INS   Inline XBRL Instance Document.*
     
101.SCH   Inline XBRL Taxonomy Extension Schema.*
     
101.CAL   Inline XBRL Taxonomy Extension Calculation Linkbase.*
     
101.DEF   Inline XBRL Taxonomy Extension Definition Linkbase.*
     
101.LAB   Inline XBRL Taxonomy Extension Label Linkbase.*
     
101.PRE   Inline XBRL Extension Presentation Linkbase.*
     
104   Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

- 22 -
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  CREATIONS, INC.
   
 November 15, 2021 /s/ Niv Nissenson
  Niv Nissenson
  Interim Chief Executive Officer
  (Principal Executive Officer)

 

  CREATIONS, INC.
   
  /s/ Shmuel Yelshevich
  Shmuel Yelshevich
  Interim Chief Financial Officer
  (Principal Accounting and Financial Officer)

 

- 23 -

 

 

 

EXHIBIT 31

 

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
ACTING CHIEF FINANCIAL OFFICER

 

I, Niv Nissenson, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Creations, Inc. for the quarter ended September 30, 2021;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)), for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the registrant’s audit committee of the board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 15, 2021

 

/s/ Niv Nissenson  
Niv Nissenson  

Interim Chief Executive Officer

(Principal Executive Officer)

 

 

 

 

 

RULE 13a-14(a)/15d-14(a) CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND
ACTING CHIEF FINANCIAL OFFICER

 

I, Shmuel Yelshevich, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Creations, Inc. for the quarter ended September 30, 2021;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15(d)-15(f)), for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the registrant’s audit committee of the board of directors (or persons performing the equivalent functions):

 

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

Date: November 15, 2021

 

/s/ Shmuel Yelshevich  
Shmuel Yelshevich  
Interim Chief Financial Officer  
(Principal Accounting Officer)  

 

 

 

Exhibit 32

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND ACTING CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Creations, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Niv Nissenson, Interim Chief Executive Officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

  (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

 

Date: November 15, 2021

 

/s/ Niv Nissenson  
Niv Nissenson  
Interim Chief Executive Officer  
(Principal Executive Officer)  

 

 

 

 

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND ACTING CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. 1350

AS ADOPTED PURSUANT TO SECTION 906 OF

THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Creations, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Shmuel Yelshevich, Interim Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

 

  (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     
  (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

 

Date: November 15, 2021

 

/s/ Shmuel Yelshevich  
Shmuel Yelshevich  
Interim Chief Financial Officer  
(Principal Accounting Officer)