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 fact included in this report, regarding our strategy, intellectual property, future operations, financial condition, 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 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 (ancient- Yetsira Holdings Ltd), through a share exchange agreement. The Yetzira ocean is a Israeli society
embedded in December 2017 which 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.


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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 examine the expansion of our business areas, through cooperation, locating 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 103 private portfolios with approximately $304 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 assets in the funds. 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 statements currently issued during the six months ended
June 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 six months ended June 30, 2022compared to the half-year period June 30, 2021. (In thousands)


Revenue


For the semester ended June 30, 2022and 2021, the Company generated revenues in the amount of $1,123 and $891 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 Six month ended June
30, 2022, and 2021.



(In millions)



                                                    For the Six        For the Six
                                                    month ended        month ended
                                                   June 30, 2022      June 30, 2021
Beginning Balance                                  $        282.7     $        174.5
Gross inflows/ outflows, net                                 66.7                 71
Market appreciation (depreciation)(1)                         (45 )             27.6
Additional AUM from acquisitions                                -

End Balance                                        $        304.4     $        273.1




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





Our total assets under management increased by $21.7 million during the half-year ended June 30, 2022of $282.7 million of the December 31, 2021at $304.4 million of the June 30, 2022, representing a 7.67% increase in our total assets under management. The increase is the result of net inflows of assets under management from $66.7 millionmarket depreciation of $45 million.


Cost of Revenues


For the semester ended June 30, 2022and 2021, the revenue cost was $613 and
$544, respectively. The increase in these expenses is mainly attributable to an increase in assets under management.


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Marketing Expenses


For the semester ended June 30, 2022our marketing costs have been $126 compared to $121 for the period of the previous year.

General and administrative expenses

For the semester ended June 30, 2022our general and administrative expenses were $385compared to $450 for the period ended June 30, 2021, a decrease of approximately 14.44%. 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:


                                                    For the Six month        For the Six month
                                                          ended                    ended
                                                    June 30, 2022 (in        June 30, 2021 (in
                                                        thousands)               thousands)
Components of G&A Expenses:                        $                        $
Wages                                                                16                       38
Travel and vehicle expenses                                           8                        7
Communication and office expenses                                    34                       47
Services and professional fees                                      278                      270
Office rent                                                          29                       29
Other expenses                                                       20                       59
Total G&A expenses                                 $                385     $                450



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

? 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 loss of $1 for the semester ended June 30, 2022compared to a net loss of $213 for the completed semester June 30, 2021. The decrease in net loss attributed to the increase in revenues following the growth of our assets under management.

After taking into account currency translation adjustments, which resulted in other overall $164 and costs of $15 for the semester ended June 30, 2022and 2021, respectively, the Company realized a net loss after other comprehensive expenses of $165 and $228 for the six months ended
June 30, 2022 and 2021, respectively.

Cash and capital resources

From June 30, 2022the Company had cash in the amount of $404 compared to cash of an amount of $503 of the December 31, 2021.

Equity in June 30, 2022has been $1,400compared to the equity of $1,565 of the December 31, 2021.

The Company’s accumulated deficit was $1,753 and $1,752 on June 30, 2022and
December 31, 2020respectively.


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The Company’s operating activities generated free cash flow of $9 for the semester ended June 30, 2022compared to the net cash used of $105 for the completed semester June 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 $64 for the completed semester
June 30, 2022compared to $100 investing activities provided for the six months ended June 30, 2021.

Off-balance sheet arrangements

The Company currently has no off-balance sheet arrangements.

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Marjorie N. McClure