CREATIONS INC MANAGEMENT REPORT AND ANALYSIS OF THE FINANCIAL SITUATION AND OPERATING RESULTS. (Form 10-Q)

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 regarding 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 facts included in this report, regarding our strategy, intellectual property, future operations, financial condition, estimated revenues and losses, projected costs, prospects, plans and management’s objectives 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 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 or implied by the forward-looking statements we make in this report are reasonable, we cannot guarantee that these plans, intentions or expectations will be realized. These statements can be found under the heading “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 the forward-looking statements due to a variety of factors. In light of these risks and uncertainties, there can be no assurance that the forward-looking statements contained herein will actually occur.

Organizational History

Creations, Inc. has been incorporated into May 2019. On July 1, 2019, Creations, Inc.acquired a 100% stake in Ocean-Yetsira Ltd (Previously Yetsira Holdings Ltd), through a share exchange agreement. The Yetzira ocean is a Israeli society
embedded in December 2017which in turn owns 100% of Yetsira Investment House (“Yetsira”), which was incorporated in November 2016.

On August 19, 2020the Company purchased 7.5% of the outstanding and issued shares of Ocean Partners YODM Ltd., an Israeli company (“Ocean”) for a total cash consideration of approximately $87,000. On September 7, 2020the Company entered into a share exchange agreement by and between Yetsira, Ocean and certain shareholders of Ocean, pursuant to which the Company acquired the remaining 92.5% of the share capital of Ocean in exchange for a total of 1,254,498 common shares of the company, $0.001 par value, and 1,254,498 warrants to purchase common shares of the Company (the “Warrants”) issued by the Company to certain shareholders of Ocean. The warrants are convertible into common shares 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 investment management activities of the group are managed by Ocean.

On April 17, 2022, the board approved a resolution on ongoing conduct issues such as signing rights, voting, etc. In addition, executive compensation has been updated. In addition, non-binding guidelines for future transactions regarding the sale of the core business to related parties and the sale of equity interests by such parties were discussed, these guidelines are in line with the completion of the legal structuring, issues compliance and more.

The Company is in the process of finalizing an agreement between itself and a group of buyers (led by Yaniv Aharon director and shareholder of Creations Inc.) to sell all of the share capital of its subsidiary Ocean Yetsira Ltd in exchange for 4,227M ILS and the repurchase of all the shares of the Company held by the Buyers. Following the sale of Ocean Yetsira, the company is examining several alternatives to maximize shareholder returns. Including, selling the Company to a new buyer in order to place a new business in the Company or any other alternative which will result in the distribution of the proceeds received to the shareholders of the Company.

2

We continue to focus on our core business of mutual fund management, while growing our number of managed and private portfolio funds and increasing our assets under management. Part of our growth depends on the strength of our brand, which the Company intends to reinforce by increasing our exposure to the general public, in particular through the investment advisers of commercial banks, which constitute the main distribution channel for funds in Israel. We also plan to increase public relations and advertising activities. We also continue to look at expanding our business areas, through cooperation, finding synergistic opportunities for our existing business areas 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, licensed by the Israel Securities Authority (“IS A”). Ocean currently offers and manages nine mutual funds under the Ocean-Yetsira brand and 107 private portfolios with approximately $284 million in assets, currently under management (“AUM”).

We generate revenue primarily from management fees paid by our unitholders or clients, which fees are based on a certain percentage of their fund assets. Our expenses mainly include payments for distribution, commissions to banks, fees for the use of third-party platforms, commissions and salary expenses, and commissions to the ISA and the Israel Stock Exchange. We conduct our business exclusively through Ocean Yetzira and exercise effective control over the operations of Ocean and Yetzira pursuant to a series of contractual arrangements, under which we are entitled to receive substantially all of its economic benefits.

Recently issued accounting pronouncements

Management has reviewed the pronouncements currently issued during the nine months ended
September 30, 2022and do not believe that recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the accompanying summary financial statements.

Results of operations for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 (In thousands)

Revenue

For the nine months ended September 30, 2022and 2021, the Company generated revenues in the amount of $1,750 and $1,455 respectively. The increase is attributable to an increase in our assets under management.

Assets under management and investment performance

The following table reflects the changes in our AUM for the nine months ended
September 30, 2022 and 2021.



(In millions)



                                         Nine Months Ended        Nine Months Ended
                                         September 30, 2022       September 30, 2021
Beginning Balance                       $             282.70     $             174.50
Gross inflows/ outflows, net                          122.15                    62.77
Market appreciation (depreciation)(1)                (120.16 )                  28.44
Additional AUM from acquisitions                           -

End Balance                             $             284.69     $             265.70

(1) Market appreciation (depreciation) includes gains (losses) of

assets under management, the impact of exchange rates and the

      reinvested dividends.




3

Our total assets under management increased by $1.99 million in the nine months ended September 30, 2022of $282.7 million of the December 31, 2021 at $284.69 million of the
September 30, 2022, an increase of 0.07% of our total AUM. The increase is the result of net inflows of assets under management from $122.15 millionmarket depreciation of $120.16 million.

Cost of Revenues

For the nine months ended September 30, 2022 and 2021, the revenue cost was $964
and $849, respectively. The increase in these expenses is mainly attributable to an increase in assets under management.

Marketing Expenses

For the nine months ended September 30, 2022our marketing costs have been $173
compared to $159 for the period of the previous year.

General and administrative expenses

For the nine months ended September 30, 2022our general and administrative expenses were $533compared to $611 for the period ended September 30, 2021, a decrease of approximately 12.76%. These expenses are primarily attributed to service and professional fees, payments to management and employees, as shown in the table below.

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

                                     Nine Months Ended        Nine Months Ended
                                     September 30, 2022       September 30, 2021
                                       (in thousands)           (in thousands)
Components of G&A Expenses:         $                        $
Wages                                                 20                       51
Travel and vehicle expenses                           13                       11
Communication and office expenses                     46                       62
Services and professional fees                       363                      365
One off expense                                       20                       29
Office rent                                           43                       44
Other expenses                                        28                       49
Total G&A expenses                  $                533     $                611

The variations in general and administrative expenses are mainly due to the following event:

? End of nine months September 30, 2021include one-time expenses of $29 due to

Calculation of VAT.

? End of nine months September 30, 2022includes one-time expenses of $20 due to

additional attorney’s fees regarding future transactions sale of primary business to

related parties as mentioned above.

? Expenses from the 2020 merger between Ocean and Yetsira were

reduced, and a moderate increase in spending is attributed to a

increased business growth operations and increased assets under management.

Net Loss

The Company realized a net income of $60 for the nine months ended September 30, 2022compared to a net loss of $149 for the nine months ended September 30, 2021. This is explained by the increase in income following the growth of our assets under management.

4

After taking into account currency translation adjustments, which resulted in other overall $183 and costs of $4 for the nine months ended September 30, 2022and 2021, respectively, the Company realized a net loss after other comprehensive expenses of $123 and $153 for the nine months ended September 30, 2022 and 2021, respectively.

Cash and capital resources

From September 30, 2022the Company had cash in the amount of $487 compared to cash of an amount of $503 of the December 31, 2021.

Equity in September 30, 2022 has been $1,442 compared to the equity of $1,565 of the December 31, 2021.

The Company’s accumulated deficit was $1,692 and $1,752 at September 30, 2022
and December 31, 2020respectively.

Cash and capital resources

The Company’s operating activities generated free cash flow of $85 for the nine months ended September 30, 2022compared to the net cash used of $72 for the nine months ended September 30, 2021. The decrease in net cash used is mainly attributable to an increase in revenues, due to the increase in assets under management.

The Company’s investing activities net cash used of $46 for the nine months ended September 30, 2022compared to $101 investing activities used for the nine months ended September 30, 2021.

Off-balance sheet arrangements

The Company currently has no off-balance sheet arrangements.

© Edgar Online, source Previews