UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2020March 31, 2021
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File No. 000-56100
SAVE FOODS, INC.
(Exact name of registrant as specified in its charter)
Delaware | 26-468460 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
3657700 | ||
(Address of Principal Executive Offices) | (Zip Code) |
(347) 468 9583
(Registrant’s telephone number, including area code)
n/a
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||
Common Stock, Par value $0.0001 per share | SVFD | The Nasdaq Capital Market LLC |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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 [X] 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 [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 |
[X] | Non-accelerated filer | [X] | 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 [X]
As of November 10, 2020,May 14, 2021, the registrant had 11,202,1461,673,642 shares of common stock, par value $0.0001 (the “Common Stock”), of the registrant issued and outstanding.
As used in this Quarterly Report and unless otherwise indicated, the terms “Save Foods,” “we,” “us,” “our,” or “our Company” refer to Save Foods, Inc. Unless otherwise specified, all dollar amounts are expressed in United States dollars.
Save Foods, Inc.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
2 |
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our business, including many assumptions regarding future events. Such forward-looking statements include statements regarding, among other things:
● | our current and future capital requirements and our ability to satisfy our capital needs through financing transactions or otherwise; | |
● | sales of our products; | |
● | the size and growth of our product market; | |
● | our activity in the civilian market; | |
● | our manufacturing capabilities; | |
● | our entering into certain partnerships with third parties; | |
● | obtaining required regulatory approvals for sales or exports of our products; | |
● | our marketing plans; | |
● | our expectations regarding our short- and long-term capital requirements; | |
● | our expectation regarding the | |
● | our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses; and | |
● | information with respect to any other plans and strategies for our business. |
Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors. These statements may be found under the section of our Annual Report on Form 10-K for the year ended December 31, 20192020 (filed on March 30, 2020)29, 2021) (“20192020 Annual Report”) entitled “Risk Factors” as well as in our other public filings.
In light of these risks and uncertainties, and especially given the start-up nature of our business, there can be no assurance that the forward-looking statements contained herein will in fact occur. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.
On February 23, 2021, we implemented a one-for-seven reverse stock split of our Common Stock pursuant to which holders of our Common Stock received one share of our Common Stock for every seven shares of Common Stock held. Unless the context expressly dictates otherwise, all references to share and per share amounts referred to herein reflect the reverse stock split.
3 |
SAVE FOODS, INC.PART I – FINANCIAL INFORMATION
CONDENSEDITEM 1. CONSOLIDATED FINANCIAL STATEMENTSSTATEMENTS.
AS OF SEPTEMBER 30, 2020
SAVE FOODS, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 2020MARCH 31, 2021
IN U.S. DOLLARS
TABLE OF CONTENTS
4 |
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars except share and per share data)
September 30, | December 31, | |||||||
2020 | 2019 | |||||||
(Unaudited) | ||||||||
A s s e t s | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | 310,571 | 290,815 | ||||||
Restricted cash | 38,361 | 38,194 | ||||||
Accounts receivable, net | - | 64,003 | ||||||
Inventories | 11,267 | 16,302 | ||||||
Other current assets | 34,098 | 15,300 | ||||||
T o t a l Current assets | 394,297 | 424,614 | ||||||
Right-of-Use Asset Arising from Operating Lease | 17,168 | 48,982 | ||||||
Property and Equipment, Net | 58,885 | 81,119 | ||||||
Funds in Respect of Employee Rights Upon Retirement | 113,009 | 109,955 | ||||||
T o t a l Assets | 583,359 | 664,670 | ||||||
Liabilities and Shareholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Short-term loan from banking institution | 7,385 | 7,230 | ||||||
Current maturities of convertible loans (Note 3) | 31,250 | - | ||||||
Accounts payable | 209,917 | 235,864 | ||||||
Other accounts payable | 455,676 | 380,732 | ||||||
T o t a l Current Liabilities | 704,228 | 623,826 | ||||||
Fair Value of Convertible Component in Convertible Loans (Note 3) | 18,692 | - | ||||||
Convertible Loans (Note 3) | 75,250 | 285,917 | ||||||
Long term from Banking Institution | 9,454 | 14,955 | ||||||
Liability for Employee Rights Upon Retirement | 146,665 | 142,091 | ||||||
T o t a l Liabilities | 954,289 | 1,066,789 | ||||||
Stockholders’ Deficit | ||||||||
Common stock par value $0.0001 per share (the “Common Stock”): 495,000,000 shares authorized as of September 30, 2020 and December 31, 2019; issued and outstanding 11,202,146 and 10,209,487 shares as of September 30, 2020 and December 31, 2019, respectively. | 1,120 | 1,021 | ||||||
Preferred stock par value $ 0.0001 per share (“Preferred Stock”): 5,000,000 shares authorized as of September 30, 2020 and December 31, 2019; issued and outstanding 0 shares as of September 30, 2020 and December 31, 2019. | - | - | ||||||
Additional paid-in capital | 11,743,602 | 10,328,696 | ||||||
Foreign currency translation adjustments | (26,275 | ) | (26,275 | ) | ||||
Accumulated deficit | (12,061,100 | ) | (10,684,508 | ) | ||||
(342,653 | ) | (381,066 | ) | |||||
Non-Controlling Interests | (28,277 | ) | (21,053 | ) | ||||
T o t a l Stockholders’ Deficit | (370,930 | ) | (402,119 | ) | ||||
T o t a l Liabilities and Stockholders’ Deficit | 583,359 | 664,670 |
March 31, | December 31, | |||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | 370,072 | 242,900 | ||||||
Restricted cash | 21,596 | 22,395 | ||||||
Accounts receivable, net | 158,502 | 147,941 | ||||||
Inventories | 15,979 | 16,356 | ||||||
Other current assets | 135,426 | 65,579 | ||||||
Total Current assets | 701,575 | 495,171 | ||||||
Right of use asset arising from operating lease | 10,631 | 14,700 | ||||||
Property and equipment, net | 50,373 | 55,194 | ||||||
Funds in respect of employee rights upon retirement | 118,209 | 122,584 | ||||||
Total assets | 880,788 | 687,649 | ||||||
Liabilities and Shareholders’ Deficit | ||||||||
Current Liabilities | ||||||||
Short-term loan from banking institution | 7,708 | 7,949 | ||||||
Current maturities of convertible loans | 89,586 | 56,250 | ||||||
Accounts payable | 240,591 | 203,323 | ||||||
Other accounts liabilities | 566,091 | 517,711 | ||||||
Total current liabilities | 903,976 | 785,233 | ||||||
Fair value of convertible component in convertible loans | 505,774 | 54,970 | ||||||
Convertible loans | 188,185 | 146,929 | ||||||
Long term from banking institution | 5,881 | 8,115 | ||||||
152,220 | 157,855115715 | |||||||
Liability for employee rights upon retirement | 152,220 | 157,855 | ||||||
Total liabilities | 1,756,036 | 1,153,102 | ||||||
Stockholders’ Deficit | ||||||||
Common stock of $0.0001 par value each (“Common Stock”): 495,000,000 shares authorized as of March 31, 2021 and December 31, 2020; issued and outstanding 1,606,765 shares as of March 31, 2021 and December 31, 2020. | 161 | 161 | ||||||
Preferred stock of $0.0001 par value (“Preferred stock”): 5,000,000 shares authorized as of March 31, 2021 and December 31, 2020; issued and outstanding 0 shares as of March 31, 2021 and December 31, 2020. | - | - | ||||||
Additional paid-in capital | 11,951,190 | 11,867,585 | ||||||
Foreign currency translation adjustments | (26,275 | ) | (26,275 | ) | ||||
Accumulated deficit | (12,770,049 | ) | (12,277,647 | ) | ||||
(844,973 | ) | (436,176 | ) | |||||
Non-controlling interests | (30,275 | ) | (29,277 | ) | ||||
Total stockholders’ deficit | (875,248 | ) | (465,453 | ) | ||||
Total liabilities and stockholders’ deficit | 880,788 | 687,649 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
5 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(U.S. dollars except share and per share data)
Three months ended | ||||||||||||||||||||||||
Nine months ended | Three months ended | March 31 | ||||||||||||||||||||||
September 30 | September 30 | 2021 | 2020 | |||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | (Unaudited) | ||||||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||||||
Revenues from sales of products | 63,566 | 129,733 | - | - | 123,074 | 63,566 | ||||||||||||||||||
Cost of sales | (25,686 | ) | (99,035 | ) | - | - | (2,933 | ) | (20,775 | ) | ||||||||||||||
Gross profit | 37,880 | 30,698 | - | - | 120,141 | 42,791 | ||||||||||||||||||
Research and development expenses | (340,808 | ) | (371,407 | ) | (87,465 | ) | (152,404 | ) | (69,791 | ) | (157,636 | ) | ||||||||||||
Selling and marketing expenses | (43,482 | ) | (378,610 | ) | (6,734 | ) | (120,449 | ) | (44,258 | ) | (28,937 | ) | ||||||||||||
General and administrative expenses | (851,262 | ) | (659,629 | ) | (337,886 | ) | (231,878 | ) | (252,971 | ) | (218,079 | ) | ||||||||||||
Operating loss | (1,197,672 | ) | (1,378,948 | ) | (432,085 | ) | (504,731 | ) | (246,879 | ) | (361,861 | ) | ||||||||||||
Financing expenses, net | (206,829 | ) | (31,123 | ) | (6,478 | ) | (9,805 | ) | (247,416 | ) | (7,202 | ) | ||||||||||||
Other income | 881 | - | 881 | - | ||||||||||||||||||||
Share in losses of affiliated company | - | (10,850 | ) | - | (4,468 | ) | ||||||||||||||||||
Gain on disposal of affiliated company | 15,690 | - | - | - | ||||||||||||||||||||
Net loss | (1,387,930 | ) | (1,420,921 | ) | (437,682 | ) | (519,004 | ) | (494,295 | ) | (369,063 | ) | ||||||||||||
Less: Net loss attributable to non-controlling interests | 11,338 | 13,489 | 3,782 | 4,757 | ||||||||||||||||||||
Less: net loss attributable to non-controlling interests | 1,893 | 3,416 | ||||||||||||||||||||||
Net loss attributable to the Company | (1,376,592 | ) | (1,407,432 | ) | (433,900 | ) | (514,247 | ) | (492,402 | ) | (365,647 | ) | ||||||||||||
Loss per share (basic and diluted) | (0.13 | ) | (0.14 | ) | (0.04 | ) | (0.05 | ) | (0.31 | ) | (0.25 | ) | ||||||||||||
Basic and diluted weighted average number of shares of Common Stock outstanding | 10,442,832 | 9,886,403 | 10,904,449 | 10,171,443 | 1,606,765 | 1,458,598 |
The accompanying notes are an integral part of the condensed consolidated financial statements.
6 |
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ DEFECITDEFICIT
(U.S. dollars, except share and per share data)
Number of shares | Amount | Additional paid-in capital | Accumulated other comprehensive income (loss) | Proceeds on account of shares | Accumulated deficit | Total Company’s stockholders’ equity | Non- | Total stockholders’ deficit | ||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2019 | 9,228,339 | 923 | 8,851,670 | (26,275 | ) | 105,000 | (8,713,091 | ) | 218,227 | (6,712 | ) | 211,515 | ||||||||||||||||||||||||
CHANGES DURING THE PERIOD OF NINE MONTHS ENDED SEPTEMBER 30, 2019: | ||||||||||||||||||||||||||||||||||||
Issuance of shares for cash | 981,148 | 98 | 945,595 | - | (105,000 | ) | - | 840,693 | - | 840,693 | ||||||||||||||||||||||||||
Stock based compensation | - | - | 240,871 | - | - | - | 240,871 | 2,579 | 243,450 | |||||||||||||||||||||||||||
Comprehensive loss for the nine months ended September 30, 2019 | - | - | - | - | - | (1,407,432 | ) | (1,407,432 | ) | (13,489 | ) | (1,420,921 | ) | |||||||||||||||||||||||
BALANCE AT SEPTEMBER 30, 2019 (Unaudited) | 10,209,487 | 1,021 | 10,038,136 | (26,275 | ) | - | (10,120,523 | ) | (107,641 | ) | (17,622 | ) | (125,263 | ) |
Number of shares | Amount | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit | Total Company’s stockholders’ equity | Non-controlling interests | Total stockholders’ deficit | |||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2019 | 1,458,598 | 146 | 10,329,571 | (26,275 | ) | (10,684,508 | ) | (381,066 | ) | (21,053 | ) | (402,119 | ) | |||||||||||||||||||
CHANGES DURING THE PERIOD OF THREE MONTHS ENDED MARCH 31, 2020: | ||||||||||||||||||||||||||||||||
Value of warrant issued in convertible loans | 34,696 | 34,696 | 34,696 | |||||||||||||||||||||||||||||
Stock based compensation | 35,028 | 35,028 | 375 | 35,403 | ||||||||||||||||||||||||||||
Comprehensive loss for three month ended March 31, 2020 | (365,647 | ) | (365,647 | ) | (3,416 | ) | (369,063 | ) | ||||||||||||||||||||||||
BALANCE AT MARCH 31, 2020 (Unaudited) | 1,458,598 | 146 | 10,399,295 | (26,275 | ) | (11,050,155 | ) | (676,989 | ) | (24,094 | ) | (701,083 | ) |
Number of Shares | Amount | Additional paid-in capital | Accumulated other comprehensive income (loss) | Proceeds on account of shares | Accumulated deficit | Total Company’s stockholders’ equity | Non- controlling interests | Total stockholders’ deficit | ||||||||||||||||||||||||||||
BALANCE AT JANUARY 1, 2019 | 10,209,487 | 1,021 | 10,328,696 | (26,275 | ) | - | (10,684,508 | ) | (381,066 | ) | (21,053 | ) | (402,119 | ) | ||||||||||||||||||||||
CHANGES DURING THE PERIOD OF NINE MONTHS ENDED SEPTEMBER 30, 2020: | ||||||||||||||||||||||||||||||||||||
Issuance of shares for cash | 321,102 | 32 | 349,968 | - | - | - | 350,000 | - | 350,000 | |||||||||||||||||||||||||||
Conversion of convertible loans | 471,557 | 47 | 620,580 | - | - | - | 620,627 | - | 620,627 | |||||||||||||||||||||||||||
Exercise of warrants | 200,000 | 20 | 59,980 | - | - | - | 60,000 | - | 60,000 | |||||||||||||||||||||||||||
Stock based compensation | - | - | 384,378 | - | - | - | 384,378 | 4,114 | 388,492 | |||||||||||||||||||||||||||
Comprehensive loss for the nine months ended September 30, 2020 | - | - | - | - | - | (1,376,592 | ) | (1,376,592 | ) | (11,338 | ) | (1,387,930 | ) | |||||||||||||||||||||||
BALANCE AT SEPTEMBER 30, 2020 (Unaudited) | 11,202,146 | 1,120 | 11,743,602 | (26,275 | ) | - | (12,061,100 | ) | (342,653 | ) | (28,277 | ) | (370,930 | ) |
The accompanying notes are an integral part of the condensed consolidated financial statements.
Number of shares | Amount | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit | Total Company’s stockholders’ equity | Non-controlling interests | Total stockholders’ deficit | |||||||||||||||||||||||||
BALANCE AT DECEMBER 31, 2020 | 1,606,765 | 161 | 11,867,585 | (26,275 | ) | (12,277,647 | ) | (436,176 | ) | (29,277 | ) | (465,453 | ) | |||||||||||||||||||
CHANGES DURING THE PERIOD OF THREE MONTHS ENDED MARCH 31, 2021: | ||||||||||||||||||||||||||||||||
Stock based compensation | - | - | 83,605 | - | - | 83,605 | 895 | 84,500 | ||||||||||||||||||||||||
Comprehensive loss for three month ended March 31, 2021 | - | - | - | - | (492,402 | ) | (492,402 | ) | (1,893 | ) | (494,295 | ) | ||||||||||||||||||||
BALANCE AT MARCH 31, 2021 (Unaudited) | 1,606,765 | 161 | 11,951,190 | (26,275 | ) | (12,770,049 | ) | (844,973 | ) | (30,275 | ) | (875,248 | ) |
7 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars except)except share and per share data)
Nine months ended | ||||||||
September 30, | ||||||||
2020 | 2019 | |||||||
(Unaudited) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Net loss for the period | (1,387,930 | ) | (1,420,921 | ) | ||||
Adjustments required to reconcile net loss for the period to net cash used in operating activities: | ||||||||
Depreciation and amortization | 42,458 | 12,410 | ||||||
Share in losses of affiliated company | - | 10,851 | ||||||
Gain on disposal of affiliated company | (15,690 | ) | - | |||||
Increase in liability for employee rights upon retirement | 4,574 | 15,875 | ||||||
Stock based compensation | 388,492 | 243,450 | ||||||
Expenses on convertible loans | 141,981 | 1,370 | ||||||
Conversion of convertible loans | 57,793 | - | ||||||
Increase in accounts receivable | 64,003 | 135,297 | ||||||
Decrease in inventory | 5,035 | 38,085 | ||||||
Decrease (increase) in other current assets | (16,094 | ) | 8,210 | |||||
Increase (decrease) in accounts payable | (25,947 | ) | 57,615 | |||||
Increase in other accounts payable | 121,928 | 17,978 | ||||||
Net cash used in operating activities | (619,397 | ) | (879,780 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Payments on (proceeds from) investment in unconsolidated entity | 4,863 | (7,567 | ) | |||||
Short term deposits in banking institutions | - | (37,909 | ) | |||||
Purchase of property and equipment | - | (4,919 | ) | |||||
Increase in funds in respect of employee rights upon retirement | (3,054 | ) | (10,670 | ) | ||||
Net cash used in investing activities | 1,809 | (61,065 | ) | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Secured promissory notes | 135,000 | - | ||||||
Convertible loans | 125,000 | - | ||||||
Repayments of right of use asset arising from operating lease | (27,272 | ) | - | |||||
Repayments of long-term banking institute | (5,384 | ) | (40,227 | ) | ||||
Exercise of warrants | 60,000 | - | ||||||
Proceeds from stock issued for cash | 350,000 | 840,693 | ||||||
Net cash provided by financing activities | 637,344 | 800,466 | ||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 19,756 | (140,379 | ) | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 290,815 | 439,806 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 310,571 | 229,427 | ||||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid during the year for: | ||||||||
Interest | 316 | 1,082 | ||||||
Non-cash transactions: | ||||||||
Disposal of affiliated company | 2,704 | - | ||||||
Termination of lease agreement | 11,590 | |||||||
Issuance of warrants in convertible loans | 53,388 | - | ||||||
Conversion of convertible loans | 528,138 | - |
Three months ended | ||||||||
March 31, | ||||||||
2021 | 2020 | |||||||
(Unaudited) | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
Loss for the period | (494,295 | ) | (369,063 | ) | ||||
Adjustments required to reconcile net loss for the period to net cash used in operating activities: | ||||||||
Depreciation and amortization | 8,890 | 19,084 | ||||||
Increase (decrease) in liability for employee rights upon retirement | (5,635 | ) | 266 | |||||
Stock based compensation | 84,500 | 35,403 | ||||||
Expenses on convertible loans | 251,396 | 17,325 | ||||||
Decrease (increase) in accounts receivable | (10,561 | ) | 64,003 | |||||
Decrease in inventory | 377 | 5,035 | ||||||
Increase in other current assets | (5,167 | ) | (10,859 | ) | ||||
Increase (decrease) in accounts payable | 37,268 | (16,719 | ) | |||||
Increase in other accounts payable | 51,859 | 21,889 | ||||||
Net cash used in operating activities | (81,368 | ) | (233,636 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
Increase in funds in respect of employee rights upon retirement | 4,375 | 84 | ||||||
Net cash provided by investing activities | 4,375 | 84 | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
Proceeds from secured promissory notes | 274,000 | 135,000 | ||||||
Repayments of right to use asset arising from operating lease | (3,180 | ) | (10,473 | ) | ||||
Repayments of long-term banking institutes | (1,975 | ) | (1,787 | ) | ||||
Increase in prepaid issuance expenses | (64,680 | ) | - | |||||
Net cash provided by financing activities | 204,165 | 122,740 | ||||||
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 127,172 | (110,812 | ) | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 242,900 | 290,815 | ||||||
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 370,072 | 180,003 | ||||||
Supplemental disclosure of cash flow information: | ||||||||
Non cash transactions: | ||||||||
Issuance of warrants in convertible loans | - | 34,696 |
The accompanying notes are an integral part of the condensed consolidated financial statement
8 |
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 1 - GENERAL
Save Foods, Inc. (the “Company”) was incorporated on April 1, 2009, under the laws of the State of Delaware. On April 27, 2009, the Company acquired from its stockholders all98.94% of the issued and outstanding shares of Save Foods Ltd. (formerly Pimi Agro Cleantech Ltd.) (“Save Foods Israel”), including preferred and ordinary shares (the Company andCommon Stock. Save Foods Israel, collectively, the “Group”).
Save Foods IsraelLtd. was incorporated in 2004 and commenced its operations in 2005. Save Foods IsraelLtd. develops, produces, and focuses on delivering innovative solutions for the food industry aimed at improving food safety and prolonging shelf life of fresh produce.
In February 2010,Through May 13, 2021, the Company’s shares of Common Stock were initially quoted on the OTC Bulletin Board under the symbol “PIMZ.OB.” As of the date of these financial statements, the Company’s Common Stockcommon stock was quoted on the OTC, Pink Tier, under the symbol “SAFO.”
Going Concern
Since its incorporation (April 1, 2009),
On May 18, 2021, the Company has not had any operations other than those carried out by Save Foods Israel. The development and commercializationclosed an underwritten public offering of Save Foods Israel’s products will require substantial expenditures. Save Foods Israel and1,090,909 shares of Common Stock of the Company have not yet generated sufficient revenues from their operationsat a price to fund the Group activities and are therefore dependent upon external sources for financing their operations. There can be no assurance that Save Foods Israel andpublic of $11.00 per share. The gross proceeds to the Company will succeed in obtainingfrom this offering are expected to be approximately $12,000,000, before deducting underwriting discounts, commissions and other offering expenses, and excluding the necessary financingexercise of the over-allotment option, if any by the underwriter. The Company has granted the underwriter a 45-day option to continue their operations. Aspurchase up to 163,636 additional shares of September 30, 2020,Common Stock of the Company had $310,571to cover over-allotments, if any, at the public offering price, less the underwriting discounts and commissions. All of the shares of common stock are being offered by the Company. In addition, the Company agreed to issue to the underwriter as compensation warrants to purchase up to 54,545 shares of Common Stock (5% of the aggregate number of shares of Common Stock sold in cash,this offering exclusive of the over-allotment option, or the underwriter’s warrants). The underwriter’s warrants will be exercisable at a negative working capitalper share exercise price equal to 125% of $309,931the public offering price per share in this offering (excluding the over-allotment option). The underwriter’s warrants are exercisable at any time and an accumulated deficitfrom time to time, in whole or in part, during the four and one half year period commencing 180 days from the effective date of $12,061,100.the registration statement of which this prospectus is a part.
The Company will needhas received approval to secure additional capital in the future in order to meetlist its anticipated liquidity needs primarily through the sale of additional Common Stock or other equity securities and/or debt financing. Funds from these sources may not be availableon the Nasdaq Capital Market under the symbol “SVFD” and began trading on May 14, 2021.
Reverse Stock Split
On February 23, 2021, the Company amended its Certificate of Incorporation to effect a 7 to 1 reverse stock split of the Company’s outstanding Common Stock.
As a result of the reverse stock split, every 7 shares of the Company’s outstanding Common Stock prior to the Company on acceptable terms, if at all,effect of that amendment were combined and reclassified into one share of the Company cannot give assurance that it will be successfulCompany’s Common Stock. No fractional shares were issued in securing such additional capital.connection with or following the reverse split. The number of authorized capital of the Company’s Common Stock and par value of the shares remained unchanged.
The Company focuses its solutions towards vegetablesAll share, stock option and fruits which are considered the largestper share information in terms of worldwide consumption. Among other things, the Company commenced cooperation with certain major fruit packing houses in Israel and abroad.
These factors raise substantial doubt about Save Foods Israel and the Company’s ability to continue as a going concern. Thethese condensed consolidated financial statements do not include any adjustments that might result fromhave been restated to reflect the outcome of this uncertainty.stock split on a retroactive basis.
On March 11, 2020, the World Health Organization declared the outbreak of a novel strain of coronavirus (SARS-CoV-2) to be a global pandemic (COVID-19), which continues to spread throughout the United States and around the world. The COVID-19 pandemic is having significant effects on global markets, supply chains, businesses, and communities. COVID-19 may impact various aspects of the Company’s operations and financial results during the year 2020, including, but not limited to, reduction is sales, difficulties in obtaining additional financing, or potential shortages of personnel. The Company believes it is taking appropriate actions to mitigate the negative impacts. However, the full impact of COVID-19 is unknown and cannot be reasonably estimated as these events occurred subsequent to year end and are still developing.
9 |
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Unaudited Interim Financial Statements
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its subsidiary, prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the instructions to Form 10-Q. In the opinion of management, the financial statements presented herein have not been audited by an independent registered public accounting firm but include all material adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the financial condition, results of operations and cash flows for the nine monthsfor three-months ended September 30, 2020.March 31, 2021. However, these results are not necessarily indicative of results for any other interim period or for the year ended December 31, 2020.2021. The preparation of financial statements in conformity with U.S. GAAP requires the Company to make certain estimates and assumptions for the reporting periods covered by the financial statements. These estimates and assumptions affect the reported amounts of assets, liabilities, revenues and expenses. Actual amounts could differ from these estimates.
Certain information and footnote disclosures normally included in financial statements in accordance with generally accepted accounting principles have been omitted pursuant to the rules of the United StatesU.S. Securities and Exchange Commission (“SEC”(the “SEC”). These financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.2020.
Principles of Consolidation
The consolidated financial statements are prepared in accordance with US GAAP. The consolidated financial statements of the Company include the Company and its wholly-owned and majority-owned subsidiaries.subsidiary. All inter-company balances and transactions have been eliminated.
Use of Estimates
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. As applicable to these financial statements, the most significant estimates and assumptions relate to the going concern assumptions, share based compensation and convertible loans.
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continue)
Recent Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. In November 2018, the FASB issued ASU No. 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses,” which amends the scope and transition requirements of ASU 2016-13. Topic 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. Topic 326 will originally become effective for the Company beginning January 1, 2020, with early adoption permitted, on a modified retrospective approach. As a smaller reporting company, the effective date for the Company has been delayed until fiscal years beginning after December 15, 2022, in accordance with ASU 2019-10, although early adoption is still permitted. This standard is not expected to have a material impact to the Company’s consolidated financial statements after evaluation.
In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842),” and subsequent amendments, which replaced existing lease guidance in GAAP and requires lessees to recognize right-of-use (“ROU”) assets and lease liabilities on the balance sheet for leases longer than twelve months and disclose key information about leasing arrangements. The Company adopted the standard on January 1, 2019 using the modified retrospective method and used the effective date as our date of initial application. Financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. The new standard provides a number of optional practical expedients for transition. The Company elected the package of practical expedients under the transition guidance which permits the Company not to reassess under the new standards our prior conclusions for lease identification and lease classification on expired or existing contracts and whether initial direct costs previously capitalized would qualify for capitalization under Accounting Standards Codification (“ASC”) 842. The Company did not elect the hindsight practical expedient to determine the reasonably certain lease term for existing leases.
The new standard also provides practical expedients and recognition exemptions for an entity’s ongoing accounting policy elections. The Company elected the short-term lease recognition exemption for all leases that qualify. This means, for those leases that qualify, we will not recognize ROU assets or lease liabilities. The Company also elected the practical expedient not to separate lease and non-lease components for all of our leases.
The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.
In June 2018, the FASB issued ASU 2018-07, “Compensation – Stock Compensation (Topic 718): Improvements to Nonemployee Share-based Payment Accounting.” The standard expands the scope of Topic 718 to include share-based payments issued to nonemployees for goods or services, simplifying the accounting for share-based payments to nonemployees by aligning it with the accounting for share-based payments to employees, with certain exceptions. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years with early adoption permitted, including adoption in an interim period. The Company adopted this ASU on January 1, 2019. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements and related disclosures.
10 |
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continue)
Recent Accounting Pronouncements
In December 2019,August 2020, the FASBFinancial Accounting Standards Board issued ASU 2019-12, “Income Taxes (Topic 740)Accounting Standards Update (“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): Simplifying the Accounting for Income Taxes”Convertible Instruments and Contracts in an Entity’s Own Equity” (“ASU 2020-06”). The guidance in ASU 2020-06 simplifies the accounting for convertible debt and convertible preferred stock by removing the requirements to separately present certain conversion features in equity. In addition, the amendments in the ASU 2020-06 also simplify the guidance in ASC Subtopic 815-40, Derivatives and Hedging: Contracts in Entity’s Own Equity, by removing certain criteria that must be satisfied in order to classify a contract as equity, which is expected to decrease the number of freestanding instruments and embedded derivatives accounted for as assets or liabilities. Finally, the amendments revise the guidance on calculating earnings per share, requiring use of the if-converted method for all convertible instruments and rescinding an entity’s ability to rebut the presumption of share settlement for instruments that may be settled in cash or other assets. The amendments in this ASU simplify2020-06 are effective for the accounting for income taxes, eliminates certain exceptions to the general principles in Topic 740 and clarifies certain aspects of the current guidance to improve consistent application among reporting entities. ASU 2019-12 is effectiveCompany for fiscal years beginning after December 15, 2021 and interim periods within annual periods beginning after December 15, 2022, though early2021. Early adoption is permitted, including adoption in any interim period for which financial statements havepermitted. The guidance must be adopted as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of this new guidance, but does not yet been issued. This standard is not expectedexpect it to have a material impact to the Company’s consolidatedon its financial statements after evaluation.statements.
NOTE 3 – CONVERTIBLE LOANS
On September 21, 2020, the Company entered into a series of additional convertible loan agreements (each, a “September 2020 CLA”) with certain lenders (the “September 2020 Lenders”) to sell convertible promissory notes with an aggregate principal amount of $125,000 (each a “September 2020 Note”). The outstanding loan amount under the September 2020 CLA will mature on the earlier of (i) the third anniversary of each September 2020 CLA or (ii) a deemed liquidation event (as defined therein), and the September 2020 Lenders may convert all or any portion of the September 2020 Notes into shares of Common Stock at any time prior to a mandatory conversion event (as defined therein) at a conversion price of $7.63 per share. The September 2020 Notes will bear interest at a rate of 5% per annum. The loan amount represented by the September 2020 Notes will be repaid to the September 2020 Lenders according to the following schedule: (i) the principal amount represented by the September 2020 Notes will be repaid in four bi-annual installments, commencing on the first anniversary following the closing of each September 2020 CLA, and (ii) the interest accrued on the loan amount will be paid in two bi-annual installments, commencing on the first anniversary of the first payment of that principal amount. | ||
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
During October 2020, the Company entered into a series of additional convertible loan agreements with additional lenders to sell notes with an aggregate principal amount of $100,000, pursuant to the same terms a set in the September 2020 CLAs.
NOTE 3 – CONVERTIBLE LOANS (continue)
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
As part of the convertible loan agreements, the Company entered into a registration rights agreement with each of the lenders, whereby each lender received piggyback registration rights for the shares issuable upon conversion of the notes to shares of Common Stock.
The loans are convertible into commonCommon Stock upon (i) a completion of underwritten public offering (“Mandatory Conversion”) convert, whereby the outstanding loan amount is converted at a share price as shall be determined in the offering, or (ii) at the lender’s discretion (“Optional Conversion”) convert, whereby the outstanding loan amount is converted at a share price per share of $1.09.$7.63.
11 |
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 3 – CONVERTIBLE LOANS (continue)
In accordance with ASC 815-15-25, the conversion feature was considered embedded derivative instruments, and is to be recorded at their fair value as its fair value can be separated from the convertible loan and its conversion is independent of the underlying note value. The Company recorded finance expenses in respect of the convertible component in the convertible loan in the excess amount of the convertible component fair value over the face loan amount. The conversion liability is then marked to market each reporting period with the resulting gains or losses shown in the statements of operations.
The fair value of the convertible component was estimated by third party appraiser as weighted average of the two possible scenarios of the total loan amount conversion: 70%as of December 31, 2020, 75% probability for the Mandatory Conversion and 30%25% probability for the Optional Conversion and as of March 31, 2021, 85% probability for the Mandatory Conversion and 15% probability for the Optional Conversion.
The Mandatory Conversion (scenario 1) was estimated by the appraiser using the Black-Scholes option pricing model, to compute the fair value of the derivative and to market the fair value of the derivative at each balance sheet date. The Company has estimated the fair value of such derivative at a value of $15,208 as of September 21, 2020. The following are the data and assumptions used as of issuance dates and as of the balance sheet date:
December 31, 2020 | March 31, 2021 | |||||||
Dividend yield | 0 | 0 | ||||||
Risk-free interest rate | 0.09 | % | 0.05 | % | ||||
Expected term (years) | 0.417 | 0.167 | ||||||
Volatility | 48.06 | % | 48.06 | % | ||||
Share price | 8.61 | 15 | ||||||
Exercise price | 7.63 | 7.63 | ||||||
Fair value | 47,499 | 224,345 |
The Optional Conversion (scenario 2) was estimated by the appraiser using binomial option pricing model and simulating and waiver of the lender as an exercise price, to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The Company has estimated the fair value of such derivative at a value of $26,824 as of September 21, 2020. The following are the data and assumptions used as of the issuance dates and as of balance sheet date:
December 31, 2020 | March 31, 2021 | |||||||
Dividend yield | 0 | 0 | ||||||
Risk-free interest rate | 0.10-0.14 | % | 0.05-0.17 | % | ||||
Volatility | 48.06 | % | 48.06 | % | ||||
Share price | 8.61 | 15 | ||||||
Fair value | 77,381 | 258,114 |
The fair value of the convertible component was estimated by the third-party appraiser after giving effect to the weighted average of the two possible scenarios at $18,692.as of December 31, 2020, which was $54,970 and as of March 31, 2021, which was $229,411.
The fair value allocated to the convertible loan was estimated by third party appraiser as the residual value of the proceeds net of the convertible component and was estimated at a value of $106,308 at$209,631 as of March 31, 2021 of which $59,566 is presented under current liabilities and $150,065 is presented under long term liabilities.
The fair value of the issuance date.convertible component was estimated by third party appraiser as weighted average of the two possible scenarios of the total loan amount conversion: as of January 19, 2021, 75% probability for the Mandatory Conversion and 25% probability for the Optional Conversion and as of March 31, 2021, 85% probability for the Mandatory Conversion and 15% probability for the Optional Conversion.
12 |
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 3 – CONVERTIBLE LOANS (continue)
The Mandatory Conversion (scenario 1) was estimated by the appraiser using the Black-Scholes option pricing model, to compute the fair value of the derivative and to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of issuance dates and as of the balance sheet date:
January 19, 2021 | March 31, 2021 | |||||||
Dividend yield | 0 | 0 | ||||||
Risk-free interest rate | 0.11 | % | 0.05 | % | ||||
Expected term (years) | 0.36 | 0.167 | ||||||
Volatility | 48.06 | % | 48.06 | % | ||||
Share price | 13.23 | 15 | ||||||
Exercise price | 7.63 | 7.63 | ||||||
Fair value | 205,884 | 269,366 |
The Optional Conversion (scenario 2) was estimated by the appraiser using binomial option pricing model and simulating and waiver of the lender as an exercise price, to compute the fair value of the derivative and to mark to market the fair value of the derivative at each balance sheet date. The following are the data and assumptions used as of the issuance dates and as of balance sheet date:
January 19, 2021 | March 31, 2021 | |||||||
Dividend yield | 0 | 0 | ||||||
Risk-free interest rate | 0.10-0.2 | % | 0.06-0.22 | % | ||||
Volatility | 48.06 | % | 48.06 | % | ||||
Share price | 13.23 | 15 | ||||||
Fair value | 225,024 | 316,010 |
The fair value of the convertible component was estimated by the third-party appraiser after giving effect to the weighted average of the two possible scenarios as of issuance dates was $218,169 and as of March 31, 2021 was $276,363.
The fair value allocated to the convertible loan was estimated by third party appraiser as the residual value of the proceeds net of the convertible component and was estimated at a value of $68,140 as of March 31, 2021 of which $30,020 is presented under current liabilities and $38,120 is presented under long term liabilities.
On May 11, 2021 and May 12, 2021, the Company issued an aggregate of 66,877 shares of Common Stock following the conversion of the entire balance of the convertible promissory notes in the aggregate principal amount of $499,000 and of aggregated accrued interest amount of $11,211, at a conversion price of $7.63 per share.
13 |
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 4 – COMMON STOCK
On May 9, 2019, the Company entered into a Securities Purchase Agreement (the “May Agreement”) with an existing shareholder (the “Investor”), pursuant to which the Company sold to the Investor for an aggregated amount of $100,000, 91,743 units at a price per unit of $1.09 (the “2019 Units”), each 2019 Unit consists of (i) one share of Common Stock and (ii) one warrant to purchase one share of Common Stock with an exercise price of $1.20 for a period of 36 months following the issuance date. The shares of Common Stock were issued on July 2, 2020.
On July 2, 2020, the Company issued 471,557 shares of Common Stock in respect of the conversion of convertible loans as detailed in Note 3A above.
During July and August 2020, the Company entered into additional Securities Purchase Agreements with existing shareholders (the “Additional Investors”), pursuant to which the Company sold to the Additional Investors for an aggregate amount of $150,000, 137,616 units, based substantially upon the same terms as in the May Agreement.
On September 23, 2020, the Company entered into a Securities Purchase Agreement (the “Medigus SPA”) with Medigus Ltd. (“Medigus”) in connection with the sale and issuance of 91,743 units for total consideration of $100,000, based substantially upon the same terms as in the May Agreement.
The Medigus SPA contemplates an additional investment by Medigus not to exceed $25,000 (the “Additional Medigus Investment”), which shall be triggered following the parties’ initiation of a proof of concept procedure to test the effectiveness of the Company’s sanitizers and its residual effects against different pathogens. In consideration for the Additional Medigus Investment, the Company has agreed to issue an additional 22,935 units at a purchase price of $1.09, which units shall contain the same composition of securities as described in the foregoing description of the Medigus SPA.
On September 22, 2020 and September 24, 2020, the Chairman of the Board of Directors of the Company (the “Board”), exercised a warrant to purchase an aggregate of 200,000 shares of Common Stock, which warrants were granted to him on June 15, 2020 by the Board as a replacement for his recently expired options, which were previously granted to him in April 2018.
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 5 – STOCK OPTIONS
On June 23, 2020, the Company granted 148,000 options to purchase its Common Stock under the 2018 Equity Incentive Plan (the “Plan”). The options shall vest quarterly over two years commencing June 23, 2020, whereby 12.50% of the shares covered by the options will vest on the three month anniversary of June 23, 2020, and 12.50% of the shares covered by the options will vest at the end of each subsequent three month period thereafter over the course of the subsequent 21 months.
On July 1, 2020, the Company granted 500,000 options to purchase its Common Stock under the 2018 Equity Incentive Plan. The options shall vest quarterly over two years commencing June 1, 2020, whereby 12.50% of the shares covered by the options will vest on the three month anniversary of June 1, 2020, and 12.50% of the shares covered by the options will vest at the end of each subsequent three month period thereafter over the course of the subsequent 21 months. The fair value of the options was estimated at a value of $344,767 at the date of issuance using the Black-Scholes option pricing model.
In addition, on July 1, 2020, the Board approved an increase to the share option pool under the Plan by 696,258 shares of Common Stock, such that after the increase the total number of shares of Common Stock issuable under the Plan is 2,029,591 shares of Common Stock.
On September 22, 2020, the Board approved an amendment of the terms of the outstanding options granted to certain employees and directors of the Company. According to the new terms, subject to the consummation of equity financing in excess of $1,000,000 and the completion of listing of the Company’s Common Stock for trade on the Nasdaq, and in the event that the employment or engagement of such grantee is either terminated (not for cause) or otherwise changed thereby resulting in the conclusion of such engagement (including voluntary resignation), all outstanding options of such grantee shall vest immediately and shall be exercisable for a period of three years following the termination date.
The following table presents the Company’s stock option activity for employees and directors of the Company for the ninethree months ended September 30, 2020:March 31, 2021:
Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | |||||||||||||
Outstanding at December 31,2019 | 1,150,004 | 0.45 | ||||||||||||||
Outstanding at December 31,2020 | 206,862 | 3.37 | ||||||||||||||
Granted | 648,000 | 0.525 | - | - | ||||||||||||
Exercised | - | - | - | - | ||||||||||||
Forfeited or expired | (216,668 | ) | 0.45 | - | - | |||||||||||
Outstanding at September 30, 2020 | 1,581,336 | 0.488 | ||||||||||||||
Number of options exercisable at September 30, 2020 | 544,890 | 0.475 | ||||||||||||||
Outstanding at March 31,2021 | 206,862 | 3.37 | ||||||||||||||
Number of options exercisable at March 31, 2021 | 118,447 | 3.29 |
The aggregate intrinsic value of the awards outstanding as of September 30, 2020March 31, 2021 is $952,198.$2,406,313. These amounts represent the total intrinsic value, based on the Company’s stock price of $1.09$ 15 as of September 30, 2020,March 31, 2021, less the weighted exercise price. This represents the potential amount received by the option holders had all option holders exercised their options as of that date.
Costs incurred in respect of stock-based compensation for employees and directors, for the nine and three months ended September 30,March 31, 2021 and 2020 were $388,492$84,500 and $168,825, respectively.
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)$35,403, respectively
NOTE 6 – COMMITEMENTS
NOTE 7 – INVESTMENT IN SAVECANN SOLUTIONS INC
On April 2, 2019, the Company invested 10,000 Canadian Dollars for 20% of the outstanding shares of Savecann Solutions Inc. (“Savescann”) a newly formed company registered in Canada. Savecann intended to market the Company’s solutions to the Cannabis market.
On April 21, 2020, the Company sold its entire holdings in Savecann for total consideration of 10,000 Canadian Dollars.
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 85 – RELATED PARTIES
A. | Transactions and balances with related parties |
Nine months ended September 30 | Three months ended March 31 | |||||||||||||||
2020 | 2019 | 2021 | 2020 | |||||||||||||
General and administrative expenses: | ||||||||||||||||
Directors’ compensation (*) | 311,848 | 170,444 | ||||||||||||||
Directors compensation (*) | 63,402 | 52,002 | ||||||||||||||
Salaries and fees to officers (*) | 238,128 | 119,799 | 106,161 | 78,003 | ||||||||||||
561,148 | 290,243 | 169,563 | 130,005 | |||||||||||||
(*) share based compensation | 309,640 | 122,049 | 57,440 | 39,054 | ||||||||||||
Research and development expenses: | ||||||||||||||||
Salaries and fees to officers | 25,272 | 86,964 | - | 25,272 | ||||||||||||
(*) share based compensation | - | - |
14 |
SAVE FOODS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
NOTE 5 – RELATED PARTIES (continue)
B. | Balances with related parties and officers: |
As of September 30, | ||||||||
2020 | 2019 | |||||||
Other accounts payables | 295,413 | 156,082 |
As of March 31, | ||||||||
2021 | 2020 | |||||||
Other accounts payables | 485,611 | 227,309 |
NOTE 96 – SUBSEQUENT EVENTS
The Company has received approval to list its common stock on the Nasdaq Capital Market under the symbol “SVFD” and began trading on May 14, 2021 – see note 1 above. On May 11, 2021 and May 12, 2021, the Company issued an aggregate of 66,877 shares of Common Stock following the conversion of the entire balance of the convertible promissory notes - see note 3 above.
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15 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Readers are advised to review the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the consolidated financial statements and related notes thereto in our 20192020 Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements”. You should review the “Risk Factors” section of our Annual Report for the fiscal year ended December 31, 2019 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
We are an innovative company that developsdevelop eco-friendly “green” solutions for the food industry. Our solutions are developed to improve the food safety and shelf life of fresh produceproduce. We do this by controlling human and plant pathogens, thus ensuring safetythereby reducing spoilage, and reducing its spoilage, which, in turn, reducesreducing food loss and waste.loss.
Our products are based on a proprietary blend of food acids which arehave a synergistic effect when combined with certain types of oxidizing agent-based sanitizers and fungicides at low concentration of an oxidizer.concentrations. Our green products are capable of cleaning, sanitizing and controlling pathogens that renderon fresh produce unsafewith the goal of making them safer for human consumption or which lead to certain formsand extending their shelf life by reducing their decay. One of decay in fruit and vegetable. Ourthe main advantages of our products is that our active ingredients do not leave any toxicological residues on the fresh produce we treat. ByIn contrary, by forming a temporary protective shield around the fresh produce we treat, weour products make it difficult for pathogens to develop and therebypotentially provide long-lasting protection which also reduces cross-contamination.
Most conventional chemical pesticides (fungicides) whichOur shares of Common Stock are currently used to protect fresh produce and reduce food waste are toxic, they remain on fruit peel and present health concerns, while also polluting the environment. Therefore, the use of these products is strictly regulated and their residue on food andlisted on the environment must be carefully monitored. Our products on average reduce by 50% (and in some cases eliminate)Nasdaq Capital Market under the need for additional use of conventional fungicide in the post-harvest phase.symbol “SVFD.”
We have a unique opportunityDue to make a positive difference throughout the food value chain from field to fork. We target major markets that use conventional chemical pesticides (fungicides) and sanitizers, including the pre- and post-harvest market, the greenhouse market and the fresh-cut market, where our “green” products are usedeffects of COVID-19, as alternatives for, or mixed with, conventional products. We also target the cannabis market, for which we believe there are limited available and authorized conventional chemical products that can be used, either because of (a) health and environmental concerns, or (b) microbial resistance that has reduced the efficacy of conventional chemical pesticides.
Since the onset of the COVID-19 pandemic,date of this report, some of our employees are on temporary leave without pay (furlough), including our Chief Technology Officer, and we have postpendpostponed some of our planned field tests anddue to the current restriction on international travels. In addition, some of our employees are currently on a temporary leave without pay (furlough). We expect the significance of the COVID-19 pandemic, including the extent of its effectHowever, to date, we did not experience any material impact on our financial condition and operational results of operations due to be dictated by, among other things, its duration,COVID-19, and we do not expect to experience any material impact on our overall liquidity positions and outlook as a result of the success of efforts to containoutbreak. Nevertheless, it and the impact of actions taken in response. While we areis not ablepossible at this time to estimate the futurefull impact ofthat the COVID-19 pandemic, the continued spread of COVID-19, and any additional measures taken by governments, health officials or by us in response to such spread, could have on our business results of operations and financial and operational results, it could be material.condition.
Critical Accounting Policies
Please see Note 2 of this Quarterly Report on Form 10-Q for the summary of significant accounting policies. Management’s Discussion and Analysis of Financial Condition and Results of Operation of our 2019 Annual Report with respect to our Critical Accounting Policies and Estimates. There have been no other material changes to our critical accounting policies and estimates since our 2019 Annual Report.
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.
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Results of Operations
Components of Results of Operation
ComparisonRevenues and Cost of Revenues
Our total revenue consists of products and our cost of revenues consists of cost of products.
The following table discloses the breakdown of revenues and costs of revenues:
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Revenues from sale of products | $ | 123,074 | $ | 63,566 | ||||
Cost of sales | (2,933 | ) | (20,775 | ) | ||||
Gross profit | $ | 120,141 | $ | 42,791 |
Operating Expenses
Our current operating expenses consist of three components — research and development expenses, selling and marketing expenses and general and administrative expenses.
Research and Development Expenses, net
Our research and development expenses consist primarily of salaries and related personnel expenses, share base compensation, professional fees and other related research and development expenses such as field tests.
The following table discloses the breakdown of research and development expenses:
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Salaries and related expenses | $ | 2,086 | $ | 38,642 | ||||
Share based compensation | 17,916 | 14,587 | ||||||
Professional fees | 31,014 | 48,710 | ||||||
Laboratory and field tests | 6,261 | 34,605 | ||||||
Depreciation | 6,766 | 7,373 | ||||||
Other expenses | 5,748 | 13,719 | ||||||
Total | $ | 69,791 | $ | 157,636 |
We expect that our research and development expenses will increase as we continue to develop our products and services, field trials and recruit additional research and development employees.
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of salaries and related expenses, share based compensation and other expenses.
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The following table discloses the breakdown of selling and marketing expenses:
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Salaries and related expenses | $ | 778 | $ | 30,152 | ||||
Share based compensation | 462 | (23,349 | ) | |||||
Commissions | 4,800 | - | ||||||
Transport and storage | 5,313 | - | ||||||
Other expenses | 32,905 | 22,134 | ||||||
Total | $ | 44,258 | $ | 28,937 |
We expect that our selling and marketing expenses will increase as we continue to increase our selling and marketing efforts including commercial validation pilots and recruit additional employees or contractor to support our selling and marketing efforts in our targeted geographical areas.
General and Administrative Expenses
General and administrative expenses consist primarily of professional services, share based compensation and other non-personnel related expenses.
The following table discloses the breakdown of general and administrative expenses:
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Professional services | $ | 153,888 | $ | 119,504 | ||||
Share based compensation | 65,429 | 42,331 | ||||||
Legal expenses | 10,066 | 18,427 | ||||||
Other expenses | 23,588 | 37,817 | ||||||
Total | $ | 252,971 | $ | 218,079 |
Three months ended March 31, 2021 compared to three months ended September 30,March 31, 2020 and 2019
Revenues and cost of revenues.
We had no revenues and cost of revenuesRevenues for the three months ended September 30, 2020,March 31, 2021 were $123,074, an increase of $59,508, or 94%, compared to total revenues of $63,566 for the three months ended September 30, 2019.March 31, 2020. The increase is mainly a result of the Company’s sales of its new products, which the Company commenced in the fourth quarter of 2020.
We do not have backlogs or firm commitments from our clientscustomers for our products. Our sales might deteriorate if we fail to achieve commercial success or obtain regulatory approval of any of our products.
Cost of Sales
Cost of sales consists primarily of salaries, materials, transportation and overhead costs of manufacturing our products. Cost of revenues for the three months ended March 31, 2021 was $2,933, a decrease of $17,842, or 86%, compared to total cost of revenues of $20,775 for the three months ended March 31, 2020. The decrease is mainly a result of the decrease in salaries and related expenses, due to the fact that some of our employees are currently on temporary leave without pay (furlough), due to the effects of COVID-19 on our business, and a decrease in the overall cost of materials, due to our efforts to deploy our new solutions.
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Gross Profit
Gross loss for the three months ended March 31, 2021 was $120,141, an increase of $77,350, or 181%, compared to gross profit of $42,791 for the three months ended March 31, 2020. The increase is mainly a result of the increase in revenues and the decrease in cost of revenues, as detailed above.
Research and Development
Research and development expenses consist of salaries and related expenses, share base compensation, consulting fees, service providers’ costs, related materials and overhead expenses. Research and development expenses for the three months ended September 30, 2020March 31, 2021 were $87,465,$69,791, a decrease of $64,939,$87,845, or 43%56%, compared to total research and development expenses of $152,404$157,636 for the three months ended September 30, 2019.March 31, 2020. The decrease is mainly attributable to: (1) the decrease in professional fees, share based compensation and in payroll; and (2) the decrease in expenses associated with international travel and field trials which have been postponed due to COVID-19.
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of salaries and related costs for salesselling and marketing personnel, travel related expenses and services providers. Selling and marketing expenses for the three months ended September 30, 2020March 31, 2021 were $6,734, a decrease$44,258, an increase of $113,715,$15,321, or 94%53%, compared to total selling and marketing expenses of $120,449$28,937 for the three months ended September 30, 2019.March 31, 2020. The decreaseincrease is mainly attributable to the decreaseincrease in travel expenses offset by payroll expenses and service providers used in relation to selling and marketing activities mainly associated with the termination of the employment of our former Vice President of Sales in February 2020.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related expenses including share based compensation and other non-personnel related expenses such as legal expenses and directors and insurance costs. General and administrative expenses for the three months ended September 30, 2020March 31, 2021 were $337,886,$252,971, an increase of $106,008,$34,892, or 45%16%, compared to total general and administrative expenses of $231,878$218,079 for the three months ended September 30, 2019.March 31, 2020. The increase is mainly a result of the increase in share based compensation to our service providers and directors offset partially by a decrease in professional fees.
Financing Expenses, Net
Financing income, net for the three months ended September 30, 2020 was $6,478 compared to total financing income, net of $9,805 for the three months ended September 30, 2019.
Comparison of the nine months ended September 30, 2020 and 2019
Revenues
Revenues for the nine months ended September 30, 2020 were $63,566, a decrease of $66,167, or 51%, compared to total revenues of $129,733 for the nine months ended September 30, 2019. The decrease is mainly a result of the Company’s freeze in sales in Israel and the reduction in sales in the United States and focus on obtaining regulatory approval for the marketing and sale of its new products.
We do not have backlogs or firm commitments from our clients for our products. Our sales might deteriorate if we fail to achieve commercial success or obtain regulatory approval of any of our products.
Cost of Revenues
Cost of revenues consists primarily of salaries, purchasing of materials, transportation and overhead costs of manufacturing our products. Cost of revenues for the nine months ended September 30, 2020 was $25,686, a decrease of $73,349, or 74%, compared to total cost of revenues of $99,035 for the nine months ended September 30, 2019. The decrease is mainly a result of the decrease in salaries and related expenses.
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 $340,808, a decrease of $30,599, or 8%, compared to total research and development expenses of $371,407 for the nine months ended September 30, 2019. The decrease is mainly attributable to: (1) the decrease in professional fees, share based compensation and in payroll; and (2) the decrease in expenses associated with international travel and field trials which have been postponed due to COVID-19.
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of salaries and related costs for sales and marketing personnel, travel related expenses and services, providers. Selling and marketing expenses for the nine months ended September 30, 2020 were $43,482, a decrease of $335,128, or 88%, compared to total selling and marketing expenses of $378,610 for the nine months ended September 30, 2019. The decrease is mainly attributable to the decrease in payroll expenses and service providers used in relation to selling and marketing activities mainly associated with the termination of the employment of our Vice President of Sales in February 2020.
General and Administrative Expenses
General and administrative expenses consist primarily of salaries and related expenses including share based compensation and other non-personnel related expenses such as legal expenses and directors and insurance costs. General and administrative expenses for the nine months ended September 30, 2020 were $851,262, an increase of $191,633, or 29%, compared to total general and administrative expenses of $659,629 for the nine months ended September 30, 2019. The increase is mainly a result of the increase in share-based compensation to our service providers and directors offset partially by a decrease in professional fees.legal expenses.
Financing Expenses, Net
Financing expenses, net for the ninethree months ended September 30, 2020 was $206,829, a decreaseMarch 31, 2021 were $247,416, an increase of $175,706,$240,214, or 564%,3.0% compared to total financing expenses of $31,123$7,202 for the ninethree months ended September 30, 2019.March 31, 2020. The increase is mainly a result of compensation expenses related to the exchange of our Convertible Loans as described in Note 3A to the financial statements as well as accrued interest and amortization expenses related to our convertible loans.
Total Comprehensive Loss
As a result of the Convertible Loans.foregoing, our total comprehensive loss for the three months ended March 31, 2021 was $494,295, compared to $369,063 for the three months ended March 31, 2020, an increase of $125,232, or 34%.
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Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. Since our inception through March 31, 2021, we have funded our operations principally with approximately $11,951,190 (net of issuance expenses) from the issuance of shares of our Common Stock, options and loans.
The table below presents our cash flows for the periods indicated:
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Net cash used in operating activities | $ | (81,368 | ) | $ | (233,636 | ) | ||
Net cash provided by investing activities | 4,375 | 84 | ||||||
Net cash provided by financing activities | 204,165 | 122,740 | ||||||
Increase (decrease) in cash and cash equivalents | $ | 127,172 | $ | (110,812 | ) |
As of September 30, 2020,March 31, 2021, we had $310,571 in cash of $370,072, as compared to $290,815$242,900 as of December 31, 2019.2020. As of September 30, 2020,March 31, 2021, we had a negative working capital of $309,931,$202,401, as compared to a negative working capital of $199,212$290,062 as of December 31, 2019.2020. The increase in our cash balance is mainly attributable to equity financing less our net loss, as described above, which is offset by share based compensation expenses and other non-cash expenses.proceeds from convertible loans.
Operating Activities
Net cash used in operating activities was $619,397$81,368 for the ninethree months ended September 30, 2020,March 31, 2021, as compared to $879,780$233,636 for the ninethree months ended September 30, 2019.March 31, 2020.
Investing Activities
Net cash used forprovided by investing activities was $1,809$4,375 for the ninethree months ended September 30, 2020,March 31, 2021, as compared to $61,065$84 for the ninethree months ended September 30, 2019.March 31, 2020. The increase is mainly attributable to the increase in funds in respect of employee rights upon retirement.
Financing Activities
Net cash provided by financing activities was $637,344$204,165 for the ninethree months ended September 30, 2020,March 31, 2021, as compared to $800,466$122,740 for the ninethree months ended September 30, 2019.March 31, 2020. The decreaseincrease is mainly the result of a decrease in equity financing and proceeds from convertible loans.loans offset by prepaid issuance expenses.
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Financial Arrangements
On June 24, 2020, the Company entered into a Securities Purchase Agreement (the “June 2020 SPA”) with the Lenders in connection with the sale and issuanceSince our inception, we have financed our operation primarily through proceeds from sales of 485,318 units, at a purchase price of $1.09 per unit. Each unit consists of: (i) one share of the Company’s Common Stock; and (ii) one warrant to purchase one share of Common Stock with an exercise price of $1.20. In connection with the June 2020 SPA, the Company issued to the Lenders an aggregate of 485,318our shares of Common Stock, convertible loan agreements and warrants to purchase an aggregate of 485,318 shares of Common Stock. The shares of Common Stock were issued on July 2, 2020.grants from the IAA.
During July 2020, the Company entered into Securities Purchase Agreements with existing shareholders (the “Investors”), pursuant to which the Company sold to the Investors for an aggregate amount of $75,000, 68,808 units at a price per unit of $1.09, each unit consists of (i) one share of common stock of the Company and (ii) one warrant to purchase one share of Company’s common stock with an exercise price of $1.20 for a period of 36 months following the issuance date.
On September 23, 2020, the Company entered into a Securities Purchase Agreement (the “September 2020 SPA”) with Medigus Ltd. (“Medigus”) in connection with the sale and issuance of 91,743 units, at a purchase price of $1.09 per unit, and for an aggregate purchase price of $100,000. Each unit consists of: (i) one share of Common Stock and (ii) one warrant to purchase one share of Common Stock with an exercise price of $1.20. In connection with the September 2020 SPA, the Company issued to Medigus an aggregate of 91,743 shares of Common Stock and warrants to purchase an aggregate of 91,743 shares of Common Stock. Furthermore, the September 2020 SPA contemplates an additional investment by Medigus not to exceed $25,000 (the “Additional Investment”), which investment shall be triggered following the parties’ initiation of a proof of concept procedure to test the effectiveness of the Company’s sanitizers and its residual effects against different pathogens. In consideration for the Additional Investment, the Company has agreed to issue an additional 22,935 units at a purchase price of $1.09, which units shall contain the same composition of securities as described in the foregoing description of the September 2020 SPA.
On September 24, 2020, the CompanyJanuary 2021, we entered into a series of convertible loan agreements (each a “September 2020“January 2021 CLA”) with certain lenders (the “January 2021 Lenders”), to sell convertible promissory notes with an aggregate principal amount of $125,000.$274,000 (the “January 2021 Notes”). The January 2021 Notes bear interest at a rate of 5% per annum. The outstanding loan amount will maturematures on the earlier of (i) the third anniversary of each September 2020January 2021 CLA or (ii) a deemed liquidation event (as defined therein), and the lenders may convert all or any portion of the notes into shares of the Company’s Common Stock at any time prior to a mandatory conversion event (as defined therein) at a conversion price of $1.09 per share. The notes will bear interest at a rate of 5% per annum.. The loan amount represented by the notesJanuary 2021 Notes will be repaid to the lendersJanuary 2021 Lenders according to the following schedule: (i) the principal amount represented by the notes will be repaid in four (4) bi-annual installments, commencing on the first anniversary following the closing of each September 2020January 2021 CLA, and (ii) the interest accrued on the loan amount will be paid in two (2) bi-annual installments, commencing on the first anniversary of the first payment of that principal amount. The January 2021 Notes will be automatically converted into shares of Common stock immediately prior to a Mandatory Conversion Event, at a conversion price as shall be determined in connection with the Mandatory Conversion Event. In addition, the January 2021 Lenders may convert all or any portion of the notes into shares of Common Stock at any time prior to a Mandatory Conversion Event, at a conversion price of $7.63 per share.
As part of the January 2021 CLAs, we entered into a registration rights agreement with each of the January 2021 Lenders, whereby each of such lenders received piggyback registration rights with respect to the shares issuable upon conversion of the January 2021 Notes, for certain secondary offerings.
On May 11, 2021 and May 12, 2021, we issued an aggregate of 66,877 shares of Common Stock following the conversion of convertible promissory notes in the aggregate principal amount of $499,000 and of aggregated accrued interest amount of $11,211, at a conversion price of $7.63 per share.
On March 18, 2021, we closed an underwritten public offering (the “Offering”) pursuant to which we issued a total of 1,090,909 shares of our Common Stock at a purchase price of $11.00 per share. In connection with the Offering, we agreed to grant ThinkEquity, a division of Fordham Financial Management, Inc. (the “Underwriters”), a 45-day option (the “Option”) to purchase up to 163,636 additional shares of Common Stock at the public offering price of $11.00 per share, less the underwriting discounts and commissions solely to cover over-allotments, and to issue the Underwriters a five-year warrants to purchase up to 54,545 shares of Common Stock, at a per share exercise price equal to 125% of the Offering price per share of Common Stock. The gross proceeds from the Offering were approximately $12,000,000.
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The spread of COVID-19 throughout the world may result in a period of business and manufacturing disruption, and in reduced operations, any of which could materially affect our business, financial condition and results of operations especially regarding its ability to obtain the necessary finance to continue the Company’s operations. The extent to which COVID-19 impacts the Company’s business will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others. Since the onset of the COVID-19 pandemic, we have postpend some of our planned field tests and international travels. In addition, some of our employees are currently on a temporary leave without pay (furlough).
Off-Balance Sheet Arrangements
As of September 30, 2020,March 31, 2021, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4) of Regulation S-K.
Changes to Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are set forth in our 2020 Annual Report.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
As a smaller reporting company, we are not required to provide the information required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure.
Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of September 30, 2020,March 31, 2021, the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, and due to certain material weaknesses identified by management, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were not effective at a reasonable assurance level as of September 30, 2020.March 31, 2021.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II-II – OTHER INFORMATION
Our business faces many risks, a number of which are described under the caption “Risk Factors” in our 20192020 Annual Report. Other than as set forth below, there have been no material changes from the risk factors previously disclosed in our 20192020 Annual Report. The risks described in the 2019our 2020 Annual Report and below may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in the 2019our 2020 Annual Report or described below occurs, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in the 2019our 2020 Annual Report and below, and the information contained under the caption “Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.
The COVID-19 pandemic, or any other pandemic, epidemic or outbreak of an infectious disease, may materially and adversely affect our business and operations.
The outbreak of COVID-19, which originated in Wuhan, China, in late 2019, has since spread across the globe, including the United States, Israel and many European countries in which we operate. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. While COVID-19 is still spreading and the final implications of the pandemic are difficult to estimate at this stage, it is clear that it has affected the lives of a large portion of the global population. At this time, the pandemic has caused states of emergency to be declared in various countries, travel restrictions imposed globally, quarantines established in certain jurisdictions and various institutions and companies being closed. We are actively monitoring the pandemic and we are taking any necessary measures to respond to the situation in cooperation with the various stakeholders.
Based on guidelines provided by the Israeli Government, employers (including us) are also required to prepare and increase as much as possible the capacity and arrangement for employees to work remotely. In that regard, and in compliance with all applicable Israeli rules and guidelines, our offices have remained closed since the middle of March 2020, and all of our employees currently work remotely. In addition, COVID-19 infection of our workforce could result in a temporary disruption in our business activities, including manufacturing, and other functions.
The spread of an infectious disease, including COVID-19, may also result in the inability of our manufacturers to deliver components or finished products on a timely basis and may also result in the inability of our suppliers to deliver the parts required by our manufacturers to complete manufacturing of components or finished products. In addition, governments may divert spending from other budgeted resources as they seek to reduce and/or stop the spread of an infectious disease, such as COVID-19. Such events may result in a period of business and manufacturing disruption, and in reduced operations, any of which could materially affect our business, financial condition and results of operations. The extent to which COVID-19 impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain COVID-19 or treat its impact, among others.
(a) The following documents are filed as exhibits to this Quarterly Report or incorporated by reference herein.
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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 hereunto duly authorized.
Date: | SAVE FOODS INC. | |
By: | /s/ | |
Name: | ||
Title: | Chief Executive Officer | |
Save Foods, Inc. | ||
By: | /s/ Shlomo Zakai | |
Name: | Shlomo Zakai | |
Title: | Chief Financial Officer | |
Save Foods, Inc. |
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