UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

For the quarterly period ended June 30, 20212022

 

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

For the transition period from To

For the transition period fromto

 

Commission File No. 000-40403000-56100

 

SAVE FOODS, INC.
(Exact name of registrant as specified in its charter)

SAVE FOODS, INC.

(Exact name of registrant as specified in its charter)

Delaware 26-468460026-4684680
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

 

KibbutzAlonimHaPardes 134 (Meshek Sander)  
Neve Yarak, Israel 36577004994500
(Address of Principal Executive Offices) (Zip Code)

 

(347)468 9583

(Registrant’s telephone number, including area 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 ☒ No ☐

 

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

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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
☒Non-accelerated filer☒Smaller reporting company
  ☐☒Emerging growth company

 

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

 

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

 

The numberAs of June 30, 2022, the registrant had 2,876,136 shares of the registrant’s common stock, $0.0001 par value outstanding as of August 11, 2021: 2,790,836.$0.0001 (the “Common Stock”) 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. and Save Foods Ltd., ourthe 98.48% owned subsidiary.subsidiary of 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

 

 Page
Cautionary Note Regarding Forward-Looking Statements3
  
PART I - FINANCIAL INFORMATION 
   
Item 1.UnauditedCondensed Consolidated Interim Financial Statements4
Unaudited Consolidated Balance Sheets (unaudited)5
   
UnauditedCondensed Consolidated Statements of Comprehensive LossInterim Balance Sheets (unaudited)6
   
UnauditedCondensed Consolidated Interim Statements of Stockholders’ EquityComprehensive Loss (unaudited)7
   
UnauditedCondensed Consolidated Interim Statements of Cash FlowsStockholders’ Equity (unaudited)8
   
Condensed Consolidated Interim Statements of Cash Flows (unaudited)9
Notes to Condensed Consolidated Interim Financial Statements910
   
Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations1617
   
Item 3.Quantitative and Qualitative Disclosures about Market Risk2223
   
Item 4.Control and Procedures2223
   
PART II - OTHER INFORMATION 
   
Item 1A.Risk Factors2324
   
Item 6.Exhibits2324
   
SIGNATURES2425

 

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 currentexpectations regarding our short and futurelong-term capital requirements and our ability to satisfy our capital needs through financing transactions or otherwise;requirements;
  
●our history of operating losses and expectation to incur additional losses in the future;
 
●our ability to raise additional capital to meet our liquidity needs;
●because of our limited operating history, we may not be able to successfully operate our business or execute our business plan;
●our products and technology requiring additional trials;
●commercial success of our new generation products, as well as any future products, depends upon the degree of market acceptance by the packing house community as well as by other prospect markets and industries
●our ability to comply with the continued listing standards of the Nasdaq Capital Market;
●sales of our products;
  
●the size and growth of our product market;
  
●our marketing plans;
 
●our activity in the civilian market;
  
●our manufacturing capabilities;ability to obtain market acceptance of our environmentally friendly solutions for fruits and vegetables;
  
●our entering into certain partnerships with third parties;inability to respond effectively to technological changes in our industry, which could reduce the demand for our products;
  
●obtainingour ability to satisfy or maintain compliance in the U.S. (including the U.S. Food and Drug Administration, the United States Environmental Protection Agency and the California Department of Pesticide Regulation), and international regulatory requirements and obtain required regulatory approvals for sales or exports of our products;
  
●our marketing plans;ability to achieve regulatory approvals and registration in the United States and abroad (Mexico, Israel, Spain and Italy), which might take longer than expected;
  
●our expectations regarding our short-significant competition from other companies looking to develop or acquire new alternative environmentally friendly solutions for the treatment of fruits and long-term capital requirements;vegetables, and other edible matter;
  
●our reliance on a limited number of suppliers to produce certain key components of our products;
 
●our expectation regardingplans to continue to invest in research and development;

3

●our ability to establish and maintain strategic partnerships with third parties, including for the impactdistribution of COVID-19products;
●our ability to establish sales, marketing and distribution capabilities or enter into successful relationships with third parties to perform these services;
●our reliance on rapidly establishing global distributorship network in order to effectively market our products;
●results of our early tests may not be indicative of results in future tests and we cannot assure you that any planned or future tests will lead to results sufficient for the necessary regulatory approvals;
●inherent dangers in production and transportation of hydrogen peroxide and highly concentrated organic acids could cause disruptions and could expose us to potentially significant losses, costs or other liabilities;
●our ability to attract and retain sufficient, qualified personnel;
●our ability to obtain or maintain patents or other appropriate protection for the intellectual property;
●our ability to grow both domestically and internationally;
●our ability to adequately support future growth;
●potential product liability or intellectual property infringement claims;
●our business and operations may be affected by climate change conditions, which could materially harm our financial results;
●risks relating to portfolio concentration;
●risks relating to international expansion of our business and operations;
  
●the effect of COVID-19 on our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses;business; 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, 20202021 (filed on March 29, 2021)31, 2022) (“20202021 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, par value $0.0001 per share (the “Common Stock”)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.

34

PART I – FINANCIAL INFORMATION

 

ITEMItem 1. CONSOLIDATED FINANCIAL STATEMENTS.Condensed Consolidated Interim Financial Statements (unaudited).

 

SAVE FOODS, INC.

 

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

 

AS OF JUNE 30, 2021

2022

IN U.S. DOLLARS

TABLE OF CONTENTS

 Page
UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS: 
Unaudited Condensed Consolidated Balance Sheets as of June 30, 2021, and December 31, 20205
Unaudited Condensed Consolidated Statements of Comprehensive Loss for the Six and Three Months Ended June 30, 2021 and June 30, 2020Interim Balance Sheets6
Unaudited Condensed Consolidated Interim Statements of Shareholders’ Deficit for the Six and Three Months period Ended June 30, 2021 and June 30, 2020Comprehensive Loss7
Unaudited Condensed Consolidated Interim Statements of Cash Flows for the Six Months Ended June 30, 2021 and June 30, 2020Stockholders’ Equity8
Unaudited Condensed Consolidated Interim Statements of Cash Flows9
Notes to Unaudited Condensed Consolidated Interim Financial Statements109 - 1516

 

45

 

SAVE FOODS, INC.

UNAUDITED CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

(U.S. dollars except share and per share data)

 

 2021 2020         
 June 30, December 31,  June 30, December 31, 
 2021  2020  2022  2021 
Assets                
Current Assets                
Cash and cash equivalents  9,305,800   242,900   4,378,434   6,750,938 
Restricted cash  22,086   22,395   50,286   56,674 
Accounts receivable, net  54,403   147,941   31,080   172,630 
Inventories  15,236   16,356   36,305   22,603 
Other current assets  706,258   65,579   506,755   226,252 
Total Current assets  10,103,783   495,171   5,002,860   7,229,097 
                
Right of use asset arising from operating lease  6,963   14,700 
Right-of-use asset arising from operating lease  151,410   129,613 
                
Property and equipment, net  45,585   55,194   109,120   100,944 
                
Funds in respect of employee rights upon retirement  118,209   122,584   126,339   137,625 
Total assets  10,274,540   687,649   5,389,729   7,597,279 
                
Liabilities and Shareholders’ Equity ( Deficit)        
Liabilities and Shareholders’ Equity        
Current Liabilities                
Short-term loan from banking institution  7,928   7,949 
Current maturities of convertible loans  -   56,250 
Short-term loan from banking institutions  3,748   8,390 
Accounts payable  329,253   203,323   482,567   539,360 
Other liabilities  862,415   517,711   289,436   383,554 
Total current liabilities  1,199,596   785,233   775,751   931,304 
Fair value of convertible component in convertible loans  -   54,970 
Convertible loans  -   146,929 
Long term loan from banking institution  3,995   8,115 
Operating lease liabilities  75,149   87,287 
      
Liability for employee rights upon retirement  152,992   157,855   150,141   166,077 
                
Total liabilities  1,356,583   1,153,102   1,001,041   1,184,668 
                
Stockholders’ Equity                

Common stock, par value $ 0.0001 per share (“Common Stocks”):

495,000,000 shares authorized as of June 30, 2021 and December 31, 2020; issued and outstanding 2,776,551 shares as of June 30, 2021 and 1,606,765 shares as of December 31, 2020.

  278   161 
Preferred stock, par value $ 0.0001 per share (“Preferred stock”): 5,000,000 shares authorized as of June 30, 2021 and December 31, 2020; issued and outstanding 0 shares as of June 30, 2021 and December 31, 2020.  -   - 
Common Stock $ 0.0001 par value per share (“Common Stock”):
495,000,000 shares authorized as of June 30, 2022 and December 31, 2021; issued and outstanding 2,876,136 and 2,806,536 shares as of June 30, 2022 and December 31, 2021, respectively.		  289   281 
Preferred Stock $ 0.0001 par value per share (“Preferred Stock”):
5,000,000 shares authorized as of June 30, 2022 and December 31, 2021; issued and outstanding 0 shares as of June 30, 2022 and December 31, 2021.		  -   - 
Additional paid-in capital  23,244,172   11,867,585   24,186,496   23,607,503 
Foreign currency translation adjustments  (26,275)  (26,275)  (26,275)  (26,275)
Accumulated deficit  (14,251,490)  (12,277,647)  (19,684,647)  (17,098,227)
Stockholders' Equity  8,966,685   (436,176)
Total  4,475,863   6,483,282 
Non-controlling interests  (48,728)  (29,277)  (87,175)  (70,671)
Total stockholders’ equity (deficit)  8,917,957   (465,453)
Total liabilities and stockholders’ equity (deficit)  10,274,540   687,649 
Total stockholders’ equity  4,388,688   6,412,611 
Total liabilities and stockholders’ equity  5,389,729   7,597,279 

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

56

SAVE FOODS, INC.

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(U.S. dollars except share and per share data)

 

  2021  2020  2021  2020 
  Six months ended  Three months ended 
  June 30  June 30 
  2021  2020  2021  2020 
             
Revenues from sales of products  177,477   63,566   54,403   - 
Cost of sales  (14,287)  (25,686)  (11,354)  (4,911)
Gross profit (loss)  163,190   37,880   43,049   (4,911)
Research and development expenses  (296,533)  (253,343)  (226,742)  (95,707)
Selling and marketing expenses  (33,409)  (36,748)  (18,712)  (7,811)
General and administrative expenses  (1,672,707)  (513,376)  (1,419,736)  (295,297)
Operating loss  (1,839,459)  (765,587)  (1,622,141)  (403,726)
Financing income (expenses), net  (156,061)  (200,351)  120,916   (193,149)
Gain on disposal of affiliated company  -   15,690   -   15,690 
Net loss  (1,995,520)  (950,248)  (1,501,225)  (581,185)
                 
Less: Net loss attributable to non-controlling interests  21,677   7,556   19,784   4,140 
Net loss attributable to the Company  (1,973,843)  (942,692)  (1,481,441)  (577,045)
                 
Loss per share (basic and diluted)  (1.05)  (0.65)  (0.69)  (0.40)
                 
Basic and diluted weighted average number of shares of Common Stock outstanding (1)  1,884,365   1,458,598   2,158,915   1,458,598 

(1)Prior periods results have been adjusted to reflect 7 to 1 reverse stock split in February 2021 (see note 1).
                 
  Six months ended  Three months ended 
  June 30  June 30 
  2022  2021  2022  2021 
             
Revenues from sales of products  118,710   177,477   31,080   54,403 
Cost of sales  (54,847)  (14,287)  (12,998)  (11,354)
Gross profit  63,863   163,190   18,082   43,049 
Research and development expenses  (322,738)  (296,533)  (113,376)  (226,742)
Selling and marketing expenses  (323,049)  (33,409)  (144,913)  (18,712)
General and administrative expenses  (2,040,682)  (1,672,707)  (1,036,725)  (1,419,736)
Operating loss  (2,622,606)  (1,839,459)  (1,276,932)  (1,622,141)
Financing income (expenses), net  18,832   (156,061)  12,928   120,916 
Comprehensive loss  (2,603,774)  (1,995,520)  (1,264,004)  (1,501,225)
Less: net loss attributable to non-controlling interests  17,354   21,677   7,334   19,784 
Net loss attributable to the Company’s stockholders’ equity  (2,586,420)  (1,973,843)  (1,256,670)  (1,481,441)
                 
Loss per share (basic and diluted)  (0.91)  (1.05)  (0.44)  (0.69)
                 
Basic and diluted weighted average number of shares of Common Stock outstanding  2,841,027   1,884,365   2,862,562   2,158,915 

 

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

67

SAVE FOODS, INC.

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS’

EQUITY (DEFICIT)

(U.S. dollars, except share and per share data)

 

  Share  Amt  Amt  Amt  Amt  Amt  Amt  Amt  Total 
  

Number

of Shares

  Amount  

Additional

paid-in

capital

  

Accumulated

other

comprehensive

income (loss)

  

Proceeds on

account of

shares

  

Accumulated

deficit

  

Total

Company’s

stockholders’

deficit

  

Non-

controlling

interests

  

Total

stockholders’

deficit

 
                            
BALANCE AT JANUARY 1, 2020  1.458.598   146   10,329,571   (26,275)  -   (10,684,508)  (381,066)  (21,053)  (402,119)
Receipts on account of shares                                    
Stock based compensation  -   -   35,028   -   -   -   35,028   375   35,403 
Value of warrant issued in convertible loans  -   -   34,696   -   -   -   34,696   -   34,696 
Issuance of shares, net of issuance costs of $1,542,138                                    
Conversion of convertible loans                                    
Share based compensation for services providers                                    
Comprehensive loss for three months ended March 31, 2020  -   -   -   -   -   (365,647)  (365,647)  (3,416)  (369,063)
BALANCE AT JUNE 30, 2020  1,458,598   146   10,399,295   (26,275)  -   (11,050,155)  (676,989)  (24,094)  (701,083)
Receipts on account of shares  -   -   -   -   100,000   -   100,000   -   100,000 
Stock based compensation  -   -   182,313   -   -   -   182,313   1,951   184,264 
Conversion of convertible loans  -   -   585,931   -   -   -   585,931   -   585,931 
Comprehensive loss for three months ended June 30, 2020  -   -   -   -   -   (577,045)  (577,045)  (4,140)  (581,185)
BALANCE AT JUNE 30, 2020  1,458,598   146   11,167,539   (26,275)  100,000   (11,627,200)  (385,790)  (26,283)  (412,073)
                                 
  Number of shares (*)  

 

Amount

  Additional paid-in capital  Foreign currency translation adjustments  Accumulated deficit  Total Company’s stockholders’ equity  Non-controlling interests  

Total stockholders’

equity

 
                         
BALANCE AT DECEMBER 31, 2021  2,806,536   281   23,607,503   (26,275)  (17,098,227)  6,483,282   (70,671)  6,412,611 
                                 
Issuance of shares to employees and services providers  35,500   4   279,139   -   -   279,143   591   279,734 
Share based compensation to employees and directors  -   -   11,642   -   -   11,642   180   11,822 
Comprehensive loss for the period  -   -   -   -   (1,329,750)  (1,329,750)  (10,020)  (1,339,770)
BALANCE AT MARCH 31, 2022  2,842,036   285   23,898,284   (26,275)  (18,427,977)  5,444,317   (79,920)  5,364,397 
Issuance of shares to employees and services providers  34,100   4   283,114   -   -   283,118   -   283,118 
Share based compensation to employees and directors  -   -   5,098   -   -   5,098   79   5,177 
Comprehensive loss for the period  -   -   -   -   (1,256,670)  (1,256,670)  (7,334)  (1,264,004)
BALANCE AT JUNE 30, 2022  2,876,136   289   24,186,496   (26,275)  (19,684,647)  4,475,863   (87,175)  4,388,688 

 

  

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’

equity

 
                            
BALANCE AT JANUARY 1, 2021  1,606,765   161   11,867,585   (26,275)  -   (12,277,647)  (436,176)  (29,277)  (465,453)
Stock based compensation  -   -   83,605   -   -   -   83,605   895   84,500 
Comprehensive loss for three months ended March 31, 2021  -   -   -   -   -   (492,402)  (492,402)  (1,893)  (494,295)
BALANCE AT MARCH 31, 2021  1,606,765   161   11,951,190   (26,275)  -   (12,770,049)  (844,973)  (30,275)  (875,248)
Issuance of shares, net of issuance costs of $1,542,138  1,090,909   109   10,457,753   -   -   -   10,457,862   -   10,457,862 
Conversion of convertible loans  66,877   7   648,403   -   -   -   648,410   -   648,410 
Stock based compensation  -   -   60,227   -   -   -   60,227   1,331   61,558 
Share based compensation for services providers  12,000   1   126,599   -   -   -   126,600   -   126,600 
Comprehensive loss for three months ended June 30, 2021  -   -   -   -   -   (1,481,441)  (1,481,441)  (19,784)  (1,501,225)
Comprehensive loss  -   -   -   -   -   (1,481,441)  (1,481,441)  (19,784)  (1,501,225)
BALANCE AT JUNE 30, 2021 (1)  2,776,551   278   23,244,172   (26,275)  -   (14,251,490)  8,966,685   (48,728)  8,917,957 
  Number of shares  

 

Amount

  Additional paid-in capital  Foreign currency translation adjustments  Accumulated deficit  Total Company’s stockholders’ equity  

 

Non-controlling interests

  

Total stockholders’

equity

 
                         
BALANCE AT DECEMBER 31, 2020  1,606,765   161   11,867,585   (26,275)  (12,277,647)  (436,176)  (29,277)  (465,453)
                                 
Share based compensation for employees and directors  -   -   83,605   -   -   83,605   895   84,500 
Comprehensive loss for the period  -   -   -   -   (492,402)  (492,402)  (1,893)  (494,295)
BALANCE AT MARCH 31, 2021  1,606,765   161   11,951,190   (26,275)  (12,770,049)  (844,973)  (30,275)  (875,248)
                                 
Issuance of shares, net of issuance costs of $1,542,138  1,090,909   109   10,457,753   -   -   10,457,862   -   10,457,862 
Conversion of convertible loans  66,877   7   648,403   -   -   648,410   -   648,410 
Stock based compensation to employees and directors  -   -   60,227   -   -   60,227   1,331   61,558 
Share based compensation for services providers  12,000   1   126,599   -   -   126,600   -   126,600 
Comprehensive loss for the period  -   -   -   -   (1,481,441)  (1,481,441)  (19,784)  (1,501,225)
BALANCE AT JUNE 30, 2021  2,776,551   278   23,244,172   (26,275)  (14,251,490)  8,966,685   (48,728)  8,917,957 

(1)(*)Prior periods results have been adjusted to reflect 7 to 1 reverse stock split in February 2021 (seeSee note 1).3(9)

The accompanying notes are an integral part of the condensed consolidated interim financial statements.

 

78

 

SAVE FOODS, INC.

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(U.S. dollars except share and per share data)

 

  2021  2020 
  Six months ended 
  June 30, 
  2021  2020 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Loss for the period  (1,995,520)  (950,248)
Adjustments required to reconcile net loss for the period to net cash used in operating activities:        
Depreciation and amortization  17,346   25,934 
Gain on disposal of affiliated company  -   (15,690)
Increase (decrease) in liability for employee rights upon retirement  (4,863)  4,332 
Stock based compensation  272,658   219,667 
Expenses on convertible loans  115,972   141,926 
Conversion of convertible loans      57,793 
Decrease in accounts receivable  93,538   64,003 
Decrease in inventory  1,120   5,035 
Increase in other current assets  (680,679)  (30,516)
Increase (decrease) in accounts payable  117,786   (55,428)
Increase in other accounts payable  351,420   64,193 
Net cash used in operating activities  (1,711,222)  (468,999)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Payments on investment in unconsolidated entity  -   2,480 
Decrease (increase) in funds in respect of employee rights upon retirement  4,375   (3,054)
Net cash provided by investing activities  4,375   (574)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from secured promissory notes  274,000   135,000 
Proceeds on account of shares  -   100,000 
Repayments of right to use asset arising from operating lease  (6,407)  (17,435)
Repayments of long-term banking institutes  (3,852)  (3,556)
Proceeds from stock issued for cash, net of issuance costs of $1,502,138  10,497,862   - 
Net cash provided by financing activities  10,761,603   214,009 
Effect of exchange rate changes on cash and cash equivalents and restricted cash  8,144   - 
         
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS  9,062,900   (255,564)
         
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD  242,900   290,815 
         
CASH AND CASH EQUIVALENTS AT END OF PERIOD  9,305,800   35,251 
         
Supplemental disclosure of cash flow information:        
Non cash transactions:        
Disposal of affiliated company  -   5,087 
Issuance of warrants in convertible loans  -   34,696 
Conversion of convertible loans  648,410   528,138 
Deferred issuance expenses  40,000   - 
         
  Six months ended 
  June 30, 
  2022  2021 
       
CASH FLOWS FROM OPERATING ACTIVITIES:        
Loss for the period  (2,603,774)  (1,995,520)
Adjustments required to reconcile net loss for the period to net cash used in operating activities:        
Depreciation and amortization  18,792   9,609 
Decrease in liability for employee rights upon retirement  (15,935)  (4,863)
Issuance of shares to employees and services providers  491,042   126,601 
Share based compensation to employees and directors  16,999   146,057 
Expenses on convertible loans  -   115,972 
Interest expenses on loans  (677)  - 
Exchange rate differences on operating leases  (15,474)  202
Decrease in accounts receivable  141,550   93,538 
Decrease (increase) in inventory  (13,702)  1,120 
Increase in other current assets  (208,693)  (680,679)
Increase (decrease) in accounts payable  (52,556)  117,786 
Increase (decrease) in other liabilities  (112,579)  352,548 
Net cash used in operating activities  (2,355,007)  (1,717,629)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchase of property and equipment  (26,968)  - 
Decrease in funds in respect of employee rights upon retirement  11,287   4,375 
Net cash provided by (used in) investing activities  (15,681)  4,375 
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Proceeds from convertible loans  -   274,000 
Repayments of long-term loans from banking institutions  (3,965)  (3,852)
Proceeds from stock issued for cash, net of issuance costs of $1,502,138  -   10,497,862 
Net cash provided by (used in) financing activities  (3,965)  10,768,010 
Effect of exchange rate changes on cash and cash equivalents  (4,239)  8,144 
         
INCREASE (DECREASE) IN CASH , CASH EQUIVALENTS AND RESTRICTED CASH  (2,378,892)  9,062,900 
         
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR  6,807,612   242,900 
         
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD  4,428,720   9,305,800 
         
Supplemental disclosure of cash flow information:        
Non cash transactions:        
Issuance of shares for future services  71,810   - 
Initial recognition of operating lease right-of-use assets  56,671   - 
Initial recognition of operating lease liability  56,671   - 
Conversion of convertible loans  -   648,410 
Deferred issuance expenses  -   40,000 

 

The accompanying notes are an integral part of the condensed consolidated interim financial statementstatements

89

 

SAVE FOODS, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM 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 98.48% 98.48% of the issued and outstanding shares of Save Foods Ltd., an Israeli company, including preferred and Common Stock. Save Foods Ltd. was incorporated in 2004 and commenced its operations in 2005. Save Foods Ltd. develops, produces, and focuses on delivering innovative solutions for the food industry aimed at improving food safety and shelf life of fresh produce. The Company and Save Foods Ltd. (collectively, the “Group”).

 

Through May 13, 2021, the Company’s Common Stock was quoted on the OTC, Pink Tier, under the symbol “SAFO”. On May 13, 2021, the Company completed an underwritten public offering of 1,090,909shares of its Common Stock for net proceeds of the Company at a price to the public of $$11.0010,457,862per share. The gross proceeds to the Company from this offering were $12,000,000, before deducting underwriting discounts, commissions and other offering expenses, and excluding the exercise of the over-allotment option by the underwriter, which were not exercised. The Company granted the underwriter a 45-day option to purchase up to 163,636 additional shares of Common Stock of the Company to cover over-allotments at the public offering price, less the underwriting discounts and commissions, which was not exercised by the underwriter. In addition, the Company issued 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 this offering exclusive of the over-allotment option, or the underwriter’s warrants). The underwriter’s warrants are exercisable at a per share exercise price equal to 125% of the public offering price per share in the offering, or $13.75 per share.The underwriter’s warrants are exercisable at any time and from time to time, in whole or in part, during the four one half year period commencing 180 days from the effective date of the registration statement.

Commencing on May 14, 2021, theThe Company’s Common Stockcommon stock was initially listed on the Nasdaq Capital Market under the symbol “SVFD”.

 

In March 2020,Effects of the World Health Organization declaredspread of the coronavirus (COVID-19) outbreak

The COVID-19 pandemic continues to create business and economic uncertainty and volatility in the global markets. Many countries around the world are experiencing further outbreaks of the pandemic, following which governments are once again imposing various restrictions. At the same time, there is a global pandemic. To date,recovery trend in the volume of economic activity around the world that leads on one hand, to significant demand for certain products and services and on the other hand, disruptions to worldwide supply chain routes and some raw materials. The Group continues to take measures to ensure the health and safety of its employees, suppliers, other business partners and the communities in which it operates in order to ensure, among others, the operation level, the proper functioning of its facilities and to minimize the pandemic’s potential impact on its business. Manufacturing continues at the Group’s sites without interruptions. However, there is still a difficulty in assessing the future impacts of the pandemic on the Company’sGroup’s operations, has been mainly limited to a temporary facility closureinter alia, in the context of a government-mandated general lockdown, which temporary delayed certain development activities. Due to the effects of COVID-19, aslight of the dateuncertainty of this report, some of Company's employees are on temporary leave without pay (furlough), including Company's Chief Technology Officer, and we have postponed some of our planned field tests due to the current restriction on international travels. However, to date, the Company did not experience any material impact on our financial condition and results of operations due to COVID-19 However, the Company is unable to assess with certaintyits duration, the extent of future impact, in part due to the uncertainty regarding the duration of the COVID-19 pandemic, its forceintensity and its effects on theglobal supply chains and global markets, in which the Company operates and the effects of possible government measures to prevent the spread of the virus.

Reverse Stock Splitadditional countermeasures that may be taken by governments and central banks.

 

On February 23, 2021, the Company amended its Certificate of Incorporation to effect aNOTE 2 - 7 to 1 reverse stock splitSUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION of the Company’s outstanding Common Stock.

 

As a resultBasis of the reverse stock split, every 7 shares of the Company’s outstanding Common Stock prior to the effect of that amendment were combined and reclassified into one share of the Company’s Common Stock. No fractional shares were issued in 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.presentation

 

All share, stock option and per share informationThe condensed interim consolidated financial statements included in these condensed consolidatedthis quarterly report are unaudited. These financial statements have been restatedprepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for a fair statement of the Company’s financial position as of June 30, 2022, and its results of operations for the three and six months ended June 30, 2022, and 2021, changes in shareholders’ equity for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021. The results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results to reflectbe expected for the stock split on a retroactive basis.year ending December 31, 2022 or for any other future annual or interim period. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Form 10--K for the year ended December 31, 2021 as filed with the SEC. The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2021 included in the Company’s Form 10-K. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.

910

 

SAVE FOODS, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

 

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

NOTE 2 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continue)

 

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”). 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 three and six-months ended June 30, 2021 and 2020. However, these results are not necessarily indicative of results for any other interim period or for the year ended December 31, 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.

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, 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 majority-owned subsidiary. All inter-company balances and transactions have been eliminated.

Use of Estimates

 

The preparation of unaudited condensed consolidated interim 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 share based compensation.

NOTE 3 –COMMON STOCK

1.On January 31, 2022, following the Board of Directors of Save Foods Ltd.’s appointment of Mr. Joachim Fuchs as the Chairman of the Board of Directors of Save Foods Ltd, the Board of Directors of the Company (the “Board”) approved the nomination and his consulting agreement. Based on the consulting agreement Mr. Joachim Fuchs is entitled to a monthly fee of NIS5,000 (approximately $1,600) and subject to the approval of the Board, 9,000 shares of common stock and in addition, subject to the terms of the equity incentive plan to be adopted by the Company, options to purchase 1.5% of the Company’s’ outstanding capital stock of which (1) 0.5% of such options shall have an exercise price of $1 and shall be vested in 4 equal quarters during the 12 months period commencing the Effective Date (January 1, 2022), (2) 0.5% of such options shall have an exercise price of $1.25 and shall be vested in 4 equal quarters during the 12 months period following the 12 month anniversary of the Effective Date, (3) 0.5% of such options shall have an exercise price of $1.5 and shall be vested in 4 equal quarters during the 12 months period following the 24 month anniversary of the Effective Date. On March 24, 2022 the Company issued to Mr. Joachim Fuchs 9,000 shares of common stock. The Company determined the value of the shares at $38,790.
2.On February 1, 2022, the Company entered into a Letter Agreement with a consultant according to which the Consultant will provide the Company with public relations, branding and other services as detailed in the Letter Agreement. As consideration for the services, the Company will issue the Consultant, a warrant to purchase up to an aggregate of 77,400 shares of Common Stock of the Company, at an exercise price of $0.05 each (the “February 2022 Warrant”). The February 2022 Warrant will be issuable in five equal tranches, 15,480 warrant shares upon signing of the agreement or the approval of the agreement by the Board, whichever is later and four additional quarterly installments ending in February 2023. In addition, the Company has provided the Consultant anti-dilution rights if at any time after both the (a) the approval of the agreement and (b) the Company having exceeded 3,000,000 shares of common stock. In such event the Consultant shall receive for no consideration additional securities necessary to maintain a fully-diluted ownership percentage (as defined in the Letter Agreement). In addition, the consultant is entitled to convert the February 2022 Warrant into cash, except for the portion of the February 2022 Warrant issuable upon signing of the agreement, upon providing the Company with advance notice of at least 45 days prior to each exercise date, an amount not to exceed 33% of the Warrant Shares due to vest, based on the share price of the Company less the exercise price, with a maximum cash conversion amount of $20,000 for each tranche.

1011

SAVE FOODS, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

NOTE 3 –COMMON STOCK (continue)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION

Recent Accounting Pronouncements

In August 2020, the Financial Accounting Standards Board issued 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): Accounting for 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 ASU 2020-06 are effective for the Company for fiscal years beginning after December 15, 2021. Early adoption is permitted. 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 expect it to have a material impact on its financial statements.

 

NOTE 3 – CONVERTIBLE LOANSAs of June 30, 2022, the consultant did not elect to utilize the cash exercise option

 

On September 21, 2020,The fair value of the Company entered into a series of convertible loan agreements with certain lenders to sell convertible promissory notes with an aggregate principal amount of $125,000. The outstanding loan amount of these convertible promissory notes will matureFebruary 2022 Warrant was determined based on the earlier of (i) the third anniversary of each such convertible loan agreement or (ii) a deemed liquidation event, and the lenders may convert all or any portionCompany’s share price as of the convertible promissory notes into sharesdate of Common Stockthe agreement using the Black-Scholes pricing model, assuming a risk-free rate of 1.35%, a volatility factor of 52.14%, dividend yields of 0% and an expected life of 0.75 years and was calculated at any time prior to a mandatory conversion event at a conversion price of $$7.63 332,859per share (collectively the “September 2020 CLAs”).

 

During October 2020,the six months ended June 30, 2022, the Company entered into a seriesrecorded $105,358 as share based compensation expenses in respect of additional convertible loan agreements with additional lenders to sell notes with an aggregate principalthe February 2022 Warrant and share based compensation in the amount of $$100,00033,334, pursuantrelated to the same terms a set forth in the September 2020 CLAs.

During January 2021, the Company entered into a series of additional convertible loan agreements with additional lenders to sell notes with an aggregate principal amount of $274,000, pursuant to the same terms a set forth in the September 2020 CLAs.

As part of the foregoing convertible loan agreements, the Company entered into registration rights agreements with each of the lenders, whereby each lender received piggyback registration rights for the shares of Common Stock issuable upon conversion of the notes.cash exercise option.

 

On May 11, 2021 and May 12, 2021,July 28, 2022 the lenders of the convertible loans agreements utilized their optional 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 shareCompany and the Company issuedConsultant entered into an Amendment to the lenders an aggregate amount of Letter Agreement – see note 7 below.

66,877 

3.On March 10, 2022, the Company entered into an Investor Relations Agreement (the “March IR Agreement”) with a consultant for a period of 12 months. According to the Agreement, the Company will pay the Consultant for his services a monthly fee of $11,000 and in addition, 14,000 shares of Common Stock of the Company, upon execution of the agreement. The shares were issued on March 10, 2022. The Company determined the value of the shares at $103,600. During the period of six months ended June 30, 2022, the Company recorded share based compensation expenses of $31,790 and the remaining amount was recorded as prepaid expenses under other current assets.
On June 27, 2022 the Company and the consultant, signed an amendment to the March IR Agreement, according to which the monthly cash payment for the three months ended September 30, 2022 would be $5,500.
4.On January 27, 2022, and on May 2, 2022, the Company issued an aggregate of 25,000 shares under its October 1, 2021, consulting agreement. During the six months ended June 30, 2022, the Company recorded share based compensation expenses of $136,000 in respect of the above agreement.
On June 8, 2022 the Company decided to terminate the consulting agreement.
5.On April 1, 2022, the Company entered into an Investor Relations Agreement (the “April IR Agreement”) with a Consultant for a period of 90 days. According to the April IR Agreement, the Company will pay the Consultant for his services a monthly fee of $15,000 and in addition, 12,000 shares of Common Stock of the Company, upon execution of the agreement. The shares were issued on May 2, 2022. The Company estimated the value of the shares issued at $66,000 based on the share price on the agreement date.

In addition, the Company will issue warrants to purchase 60,000shares of Common Stock followingof the conversion.Company, of which (a) 20,000 warrants shall vest upon the laps of 12 months with an exercise price of $8, (b) 20,000 warrants shall vest upon the laps of 18 months with an exercise price of $9.50, and (c) 20,000 warrants shall vest upon the laps of 24 months with an exercise price of $11.

The fair value of the April Warrant was determined based on the Company’s share price as of the date of the agreement using the Black-Scholes pricing model, assuming a risk-free rate between 1.72% to 2.44%, a volatility factor between 52.14% to 63.36%, dividend yields of 0% and an expected life between 1 to 2 years and was calculated at $40,350.

 

1112

SAVE FOODS, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

 

NOTE 3 –COMMON STOCK (continue)

NOTE 4 – COMMON STOCK

 

On May 13, 2021,June 26, 2022, the Company completedentered into an underwritten public offeringamendment to the April IR Agreement, according to which the Company shall engage the Consultant for additional period of 90 days commencing July 1, 2022. According to the amendment to the April IR Agreement, the Company will pay the Consultant for his services a monthly fee of $1,090,9093,333 and in addition, issued 12,000 shares of Common Stock of the Company, at a price toupon execution of the public of $11.00 per share – see note 1 above.amendment.

 

On May 15, 2021, the Company signed consulting agreement with a third party according to which the Consultant will provide the Company with investor relations services for a period of 12 months following the commencement date. As consideration for the agreement,In addition, the Company will pay the consultant an annual fee ofissue warrants to purchase $40,000and issue the consultant 12,000 shares of Common Stock of the Company. On June 20, 2021, the Company issued 12,000 shares of Common Stock of the Company, toof which (a) 20,000 warrants shall vest upon the consultant. The Company estimatedlaps of 6 months with an exercise price of $4.50, (b) 20,000 warrants shall vest upon the valuelaps of the shares issue at 12 months with an exercise price of $$126,6006.

6.On May 2, 2022, the Company issued 600 shares under its June 15, 2021 consulting agreement as detailed in the financial statements for the year ended December 31, 2021.
7.On May 18, 2022, the Company issued 9,000 shares to a consultant, based on the May 11, 2022 board resolution. The shares were estimated at $39,420 based on the share price of the resolution date.
8.On January 9, 2022 the Company entered into a Strategic consulting and Corporate Digital Marketing agreement (the “Consulting Agreement”) with a Consultant for a period of 12 months. According to the Consulting Agreement, the Company agreed to pay the Consultant for his services a monthly fee of $4,250. On June 13, 2022, the Company and the Consultant entered into an amendment to the Consulting Agreement according to which, effective July 1, 2022, and for the remaining period of the Consulting Agreement, the Company shall issue the Consultant (a) 6,000 restricted shares of common stock, and (b) restricted common stocks representing $19,125 which amount shall be calculated based on the average closing bid price of the Company’s common stock during the 10 trading days period prior to October 10, 2022 provided however that the number of shares to be issued shall not be less than 6,000 shares of common stock. See note 7, as to shares issued after balance sheet date.
9.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. All share, stock option and per share information in these consolidated financial statements have been presented to reflect the stock split.

13

SAVE FOODS, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

 

NOTE 5 4 – STOCK OPTIONS

 

The following table presents the Company’s stock option activity for employees directors and consultantsdirectors of the Company for the three and six months ended June 30, 2021:2022:

SCHEDULE OF STOCK OPTION ACTIVITY

 

Number of

Options

 

Weighted

Average

Exercise Price

  Number of Options  Weighted Average Exercise Price 
Outstanding at December 31,2020  206,862   3.37 
Outstanding at December 31, 2021  192,576   3.38 
Granted  -   -   -   - 
Exercised  -   -   -   - 
Forfeited or expired  -   -   -   - 
Outstanding at June 30,2021  206,862   3.37 
Number of options exercisable at June 30, 2021  139,543   3.31 
Outstanding at June 30, 2022  192,576   3.38 
Number of options exercisable at June 30, 2022  191,981   3.38 

 

The aggregate intrinsic value of the awards outstanding as of June 30, 20212022 is $$941,62727,863. These amounts represent the total intrinsic value, based on the Company’s stock price of $7.923.38 as of June 30, 2021,2022, 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 six months ended June 30, 2022 and 2021 were $16,999and 2020 were $$146,058 146,057and $219,667 respectively, respectively.

 

1214

SAVE FOODS, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

 

NOTE 65 – COMMITMENT AND CONTINGENT LIABILITIES

A.On June 15, 2021, the Company signed consulting agreement with a third party according to which the consultant will provide the Company with public relations services. Based on the agreement the Company will pay the consultant a monthly fee of $3,500 and shall issue the consultant 200 shares of Common Stock of the Company on the final day of each month following the commencement date of the agreement.
B.On June 1, 2021, the Company terminated consulting agreements previously executed on October 10, 2018, with two of its consultants and signed new consulting agreements with the same parties. According to the agreements, the consultants shall provide the Company with business development and strategic consulting services including ongoing consulting for the Company, board and management. The agreement shall be effective until terminated by each of the parties by giving a 30 days prior notice. Based on the agreements, the Company agreed to pay each a monthly fee of $13,000 and $2,000 as monthly reimbursement of expenses. In addition, the Company agreed to grant the consultants with signing bonuses in the amounts of $150,000 and $250,000 net of the outstanding debt of the Company, which was $33,000 payable to each consultant. In addition, the Company agreed to pay the consultants 5% of any gain generated by the Company exceeding an initial gain of 25% due to any sale, disposition or exclusive license of activities, securities, business, or similar events initiated by each the Consultants. In addition, each consultant shall be entitled to a special bonus upon the execution of business opportunities or upon other events the consultant assisted with (“Consultant Engagements”), authorized by the CEO or the Chairman of the Board. The special bonus shall not exceed two times each consultant’s monthly fee. As of the date of the financial statements, no such Consultant Engagements were executed.

NOTE 7 – RELATED PARTIES

 

A. Transactions and balances with related parties

SCHEDULE OF TRANSACTIONS AND BALANCES WITH RELATED PARTIES

  

Six months ended

June 30

 
  2021  2020 
       
General and administrative expenses:        
Directors compensation (*)  22,217   228,136 
Salaries and fees to officers (*)  70,145   135,339 
General and administrative expenses, net  92,362   363,475 
(*) share based compensation included in the above  6,533   199,199 
         
Research and development expenses:        
Salaries and fees to officers  -   25,272 
 Share based compensation  -   - 

 

13

SAVE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

         
  Six months ended June 30, 
  2022  2021 
       
General and administrative expenses:        
Directors compensation  156,913   22,217 
Salaries and fees to officers  289,824   70,145 
General and administrative expenses net  (*) 446,737  (*) 92,362
         
(*) of which share based compensation  48,931   6,533 
         
Research and development expenses:        
Salaries and fees to officers  (*) 54,572  - 
         
(*) of which share based compensation  2,921   - 
         
Selling and marketing expenses:        
Salaries and fees to officers  (*) 54,572  - 
         
(*) of which share based compensation  2,921   - 

 

B. Balances with related parties and officers:

 

  As of June 30, 
  2021  2020 
         
Other accounts payables  173,526   258,782 
Other accounts payables89,806173,526

 

C. Other information:

 1.On November 5, 2020,April 17, 2022, the board of directors ofBoard resolved to appoint Ms. Lital Barda, the Company appointed Mr. David Palach, to serveCompany’s current financial controller, as Chief Executive Officer of the Company, effective as of the same date.Company’s CFO, Treasurer and Secretary, which appointment entered into effect on April 18, 2022. In connection with Mr. Palach’sMs. Barda’s appointment as the parties entered into a Consulting Agreement pursuantCompany’s CFO, Treasurer and Secretary, the Board resolved to which the Company and Mr. Palach agreed upon, inter alia,approve the following engagement terms:terms of compensation, effective immediately upon the effectiveness of Ms. Barda’s appointment: (a) a monthly feebase salary of NIS $8,00025,000, and (b) a grant of options to purchase such number of shares of the Company’s Common Stock, which amountcommon stock, par value $0.0001 per share, as shall be determined byagreed upon between Ms. Barda and the Board on a future date. On June 17, 2021, the Board of Directors of the Company approved an amendment to the compensation of Mr. Palach, according todate, and which he shall be entitled to a monthly fee of $14,000 and reimbursement of expenses of $500 per month. In addition, Mr. Palach shall receive a one-time grant of options to purchase shares of Common Stock ofin accordance with the Company representing 4.5% terms of the Company’s outstanding share capital as of the date of the approval. The terms of the grant have not yet been determined.
2.On June 17, 2021, the board of directors of the Company approved the compensation of Vered Raz Avayo as its Chief Financial Officer, according to which she shall be entitled to a monthly fee of $8,000 and reimbursement of expenses of $500 per month. In addition, Ms. Raz Avayo shall receive a one-time grant of options to purchase shares of Common Stock of the Company representing 1.5% of the Company’s outstanding share capital as of the date of the approval. The terms of the grant have not yet been determined.
3.On June 17, 2021, the board of directors of the Company approved the compensation of its Chairman of the Board, according to which the Chairman of the Board shall be entitled to a monthly fee of $5,000. In addition, the Chairman of the Board shall receive a one-time grant of options to purchase shares of Common Stock of the Company representing 1.5% of the Company’s outstanding share capital as of the date of the approval. The terms of the grant have not yet been determined.
4.On June 17, 2021, the board of directors of the Company approved the compensation for each non-executive member of the board, according to which the each such member shall be entitled to an annual fee of NIS 100,000 (approximately $30,500). In addition, each such member shall receive a one-time grant of options to purchase shares of Common Stock of the Company representing 0.25% of the Company’s outstanding share capital as of the date of the approval. The terms of the grant have not yet been determined.future equity incentive plan.

 

1415

SAVE FOODS, INC.

 

NOTES TO UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

NOTE 6 –GEOGRAPHIC AREAS AND MAJOR CUSTOMERS

A.Information on sales by geographic distribution:

The Company has one operating segment. Sales are attributed to geographic distribution based on the location of the customer.

SCHEDULE OF INFORMATION ON SALES BY GEOGRAPHIC DISTRIBUTION

                 
  Six months ended June 30,  Three months ended June 30, 
  2022  2021  2022  2021 
             
Israel  11,213   -   -   - 
United States  35,948   84,674   -   - 
Mexico  71,549   92,803   31,080   54,403 
Revenues from sales of products  118,710   177,477   31,080   54,403 

B.Sales to single customers exceeding 10% of sales (US$):

SCHEDULE OF SALES TO CUSTOMERS

                 
  Six months ended June 30,  Three months ended June 30, 
  2022  2021  2022  2021 
             
Customer A  71,549   92,803   31,080   54,403 
Customer B  35,948   84,674   -   - 
Revenues from sales of products  107,497   177,477   31,080   54,403 

NOTE 87 –SUBSEQUENT EVENTS

On July 1, 2021, the Company and a digital communication consultant signed an Addendum to a certain Service Agreement, previously executed on October 20, 2020 (the “Original Agreement”), according to which the Company agreed to pay the consultant $15,000 as compensation for services rendered pursuant to the Original Agreement and to issue the consultant 14,285 shares of Common Stock of the Company. The Company estimates the value of the shares of Common Stock issued to be $143,279. In addition, the Company agreed to continue the Original Agreement for a period of an additional six months pursuant to which the consultant will receive a monthly fee of $10,000.

On July 12, 2021, the Company and the Chairman of the Board of Save Foods Ltd. entered into a Separation Agreement and Release according to which the consulting agreement previously executed with the former chairman was terminated effective as of July 8, 2021. According to the Separation Agreement and Release, the Company would pay the amounts accrued to the former chairman under his consulting agreement and in addition the Company compensated the former chairman for the amounts owed to him during the 90 days notice following the termination of the Separation Agreement and Release and accelerate the vesting of all unvested options granted to the former chairman.

On August 5, 2021, the Company signed consulting agreement with a third party according to which the Consultant will provide the Company with strategic consulting and digital marketing services for a period of six months commencing on September 1, 2021. As consideration for the agreement, the Company agreed to pay the consultant a total fee of $301,000 and shall issue the consultant 12,000 shares of Common Stock of the Company.

1.On July 11, 2022, the Company issued 6,000 shares to a consultant under its January 9, 2021 consulting agreement.
2.On July 28, 2022 the Company entered into an Amendment to the Letter Agreement detailed in note 3(2) above according to which the Consultant shall be entitled to 30,960 February 2022 Warrants already vested under the Letter Agreement and no further February 2022 Warrant shall be issued or issuable. The Consultant shall be entitled to a per hour fee with a minimum aggregate compensation amounting to $30,600 for the period of 6 months commencing on August 1, 2022.

 

1516

 

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 condensed consolidated interim financial statements (unaudited) 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 20202021 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 20202021 Annual Report 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. Furthermore, certain disclosures and references made herein apply to Save Foods Ltd., the subsidiary of Save Foods, Inc. The primary business activities and operations discussed herein are performed by Save Foods Ltd., whereas Save Foods, Inc. operates as a holding company and is the Registrant for purposes of this Quarterly Report on Form 10-Q.

 

We develop eco-friendly “green” solutions for the food industry. Our solutions are developed to improve the food safety and shelf life of fresh produce. We do this by controlling human and plant pathogens, thereby reducing spoilage, and in turn, reducing food loss.

 

Our products are based on a proprietary blend of food acids which have a synergistic effect when combined with certain types of oxidizing agent-based sanitizers and fungicides at low concentrations. Our green productstreatments are capable of cleaning, sanitizing and controlling pathogens on fresh produce with the goal of making them safer for human consumption and extending their shelf life by reducing their decay. One of the main advantages of our products is that our active ingredients do not leave any toxicological residues on the fresh produce we treat. In contrary, by forming a temporary protective shield around the fresh produce we treat, our products make it difficult for pathogens to develop and potentially provide protection which also reduces cross-contamination.

 

Our shares of Common Stock areis listed on the Nasdaq Capital Market under the symbol “SVFD.”

 

Due to the effects of COVID-19, as of the date of this report, some of our employees are on temporary leave without pay (furlough), including our Chief Technology Officer, and we have postponed some of our planned field tests due to restrictions on international travels. However, to date, we did not experience any material impact on our financial condition and results of operations due to COVID-19, and we do not expect to experience any material impact on our overall liquidity positions and outlook as a result of the outbreak. Nevertheless, it is not possible at this time to estimate the full impact that 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 condition.

16

Results of Operations

 

Components of Results of Operation

 

Revenues 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:

 

  

Six Months Ended

June 30,

  

Three Months Ended

June 30,

 
U.S. dollars in thousands, except share and per share data 2021  2020  2021  2020 
             
Revenues $177,477  $63,566  $54,403  $- 
Cost of revenues  (14,287)  (25,686)  (11,354)  (4,911)
Gross (loss) profit $163,190  $37,880  $43,049  $(4,911)
  

Six Months Ended

June 30,

  

Three Months Ended

June 30,

 
U.S. dollars in thousands, except share and per share data 2022  2021  2022  2021 
             
Revenues from sales of products  118,710   177,477   31,080   54,403 
Cost of sales  (54,847)  (14,287)  (12,998)  (11,354)
Gross profit  63,863   163,190   18,082   43,049 

 

Operating Expenses

 

Our current operating expenses consist of three components — research and development expenses, selling and marketing expenses and general and administrative expenses.

 

17

Research and Development Expenses net

 

Our research and development expenses consist primarily of salaries and related personnel expenses, share base compensation,laboratory and field tests, professional fees and other related research and development expenses such as field tests.expenses.

 

 

Six Months Ended

June 30,

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 

Three Months Ended

June 30,

 
U.S. dollars in thousands 2021  2020  2021  2020  2022  2021  2022  2021 
Salaries and related expenses $17,927  $38,643  $15,841  $-   173,557   17,927   58,742   15,841 
Share based compensation  31,344   33,636   13,428   19,050   2,921   31,344   973   13,428 
Professional fees  210,932   68,961   179,918   20,251   41,633   210,932   17,331   179,918 
Laboratory and field tests  7,376   77,525   1,116   42,920   54,483   7,376   13,488   1,116 
Depreciation  35,267   13,899   17,477   7,133 
Other expenses  28,954   34,578   16,439   13,486   14,877   15,055   5,365   9,307 
Total $296,533  $253,343  $226,742  $95,707   322,738   296,533   113,376   226,742 

 

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 compensationprofessional fees and other expenses.

 

17

 

Six Months Ended

June 30,

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 

Three Months Ended

June 30,

 
U.S. dollars in thousands 2021  2020  2021  2020  2022  2021  2022  2021 
Salaries and related expenses $3,414  $30,152  $2,637  $-   150,965   3,414   68,705   2,637 
Share based compensation  791   (22,366)  329   983   2,921   791   2,142   329 
Professional fees  86,975   6,750   31,354   4,850 
Commissions  8,135   9,060   2,669   4,260 
Travel abroad  29,627   -   16,065   - 
Transport and storage  15,855   10,339   8,037   5,026 
Other expenses  29,204   28,962   15,746   6,828   28,571   3,055   15,941   1,610 
Total $33,409  $36,748  $18,712  $7,811   323,049   33,409   144,913   18,712 

 

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, insurance and other non-personnel related expenses.

 

 

Six Months Ended

June 30,

  

Three Months Ended

June 30,

  

Six Months Ended

June 30,

 

Three Months Ended

June 30,

 
U.S. dollars in thousands 2021  2020  2021  2020  2022  2021  2022  2021 
Salaries and related expenses $32,056  $-  $32,056  $- 
Professional services  1,277,693   208,439   1,123,805   88,935   1,165,349   1,345,163   612,653   1,181,209 
Share based compensation  112,738   205,087   47,309   162,756   397,655   112,738   207,636   47,309 
Legal expenses  20,753   36,582   10,687   18,155 
Salaries and related expenses  159,464   32,056   68,685   32,056 
Insurance  246,030   147,125   110,155   128,217 
Other expenses  229,467   63,268   205,879   25,451   72,184   35,625   37,596   30,945 
Total $1,672,707  $513,376  $1,419,736  $295,297   2,040,682   1,672,707   1,036,725   1,419,736 

18

 

Three months ended June 30, 20212022 compared to three months ended June 30, 20202022

 

Revenues.Revenues

 

Revenues for the three months ended June 30, 20212022 were $54,403,$31,080, a decrease of $23,323, or 43%, compared to $0$54,403 during the three months ended June 30, 2020.2021. The increasedecrease is mainly a result of our sale of new products,a decrease in sales due to weather conditions, which we commencedcaused a reduction in the fourth quarter of 2020.citrus production.

 

We do not have backlogs or firm commitments from our customers 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 June 30, 20212022 was $11,354,$12,998, an increase of $6,443,$1,644, or 131%14%, compared to total cost of revenues of $4,911$11,354 for the three months ended June 30, 2020.2021. The increase is mainly a result of our increase in salesmaterials, offset by a decrease in salaries for the three months ended June 30, 2021.2022.

18

 

Gross Profit

 

Gross profit for the three months ended June 30, 20212022 was $43,049, an increase$18,082, a decrease of $47,960,$24,967,   or 58%, compared to gross loss of $4,911$43,049 for the three months ended June 30, 2020.2021. The increasedecrease is mainly a result of the increasedecrease in revenues as detailed above.above under the heading “Revenues”.

 

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 June 30, 20212022 were $226,742, an increase$113,376, a decrease of $131,035,$113,366, or 137%50%, compared to total research and development expenses of $95,707$226,742 for the three months ended June 30, 2020.2021. The increasedecrease is mainly attributable to a decrease in consulting fees and service providers’ costs and compensation payable to a consultant following the listing of our Common Stock on the Nasdaq Capital Market, which occurred during the second quarter of 2021, partially offset by an increase in professional fees and salarysalaries and related expenses offset by a decrease in share based compensation and in expenses associated with international travel and field trials which have been postponed due to COVID-19.tests.

19

 

Selling and Marketing Expenses

 

Selling and marketing expenses consist primarily of salaries and related costs for selling and marketing personnel, travel related expenses and services providers. Selling and marketing expenses for the three months ended June 30, 20212022 were $18,712,$144,913, an increase of $10,901,$126,201, or 139%674%, compared to total selling and marketing expenses of $7,811$18,712 for the three months ended June 30, 2020.2021. The increase is mainly attributable to the increase in service providers’ deliverysalaries and related costs, associatedprofessional services and travel abroad in connection with the marketing and sales of our sales.products.

 

General and Administrative Expenses

 

General and administrative expenses consist primarily of salaries and related expenses including share based compensation and other professional services as well as other non-personnel related expenses such as legal expenses and directors and insurance costs. General and administrative expenses for the three months ended June 30, 20212022 were $1,419,736, an increase$1,036,725, a decrease of $1,124,439,$383,011, or 381%27%, compared to total general and administrative expenses of $295,297$1,419,736 for the three months ended June 30, 2020.2021. The increasedecrease is mainly a result of the increasedecrease in professional services and compensation payable to directors following the listing of our Common Stock on the Nasdaq Capital Market, which occurred during the second quarter of 2021, offset partially by a decreasean increase share-based compensation to our employees and service providers.

 

Financing Expenses, Net

 

Financing income, net for the three months ended June 30, 20212022 were $120,916,$12,928, a changedecrease of $314,066,$107,988,   or 89%, compared to total financing expenses of $193,149$120,916 for the three months ended June 30, 2020.2021. The decrease is mainly a result of the decrease in compensation expenses related to the accrued interest and amortization expenses associated with our convertible loans which were fully converted during the three months ended June 30, 2021.

 

Total Comprehensive Loss

 

As a result of the foregoing, our total comprehensive loss for the three months ended June 30, 20212022 was $1,481,580,$1,264,004, compared to $577,045$1,501,225 for the three months ended June 30, 2020, an increase2021, a decrease of $904,535,$237,221, or 157%16%.

Six months ended June 30, 20212022 compared to six months ended June 30, 20202021

 

Revenues.Revenues

 

Revenues for the six months ended June 30, 20212022 were $177,477, an increase$118,710, a decrease of $113,911,$58,767, or 179%33%, compared to total revenues of $63,566 for$177,477 during the six months ended June 30, 2020.2021. The increasedecrease is mainly a result of oura decrease in sales of new products,due to weather conditions which we commencedcaused a reduction in the fourth quarter of 2020.citrus production.

 

We do not have backlogs or firm commitments from our customers 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 revenuessales for the six months ended June 30, 2021 was $14,287, a decrease2022 were $54,847, an increase of $11,399,$40,560, or 44%283%, compared to total cost of revenues of $25,686$14,287 for the six months ended June 30, 2020.2021. The decreaseincrease is mainly a result of our increase in materials for the decrease in the overall cost of materials, due to our efforts to outsource production of our new solutions.three months ended June 30, 2022.

20

 

Gross Profit

 

Gross profit for the six months ended June 30, 20212022 was $163,190, an increase$63,863, a decrease of $125,310,$99,327,   or 331%61%, compared to a gross profit of $37,880$163,190 for the six months ended June 30, 2020.2021. The increasedecrease is mainly a result of the increase in revenues and the decrease in cost of revenues as detailed above.above under the heading “Revenues”.

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 six months ended June 30, 20212022 were $296,533,$322,738, an increase of $43,190,$26,205, or 17%9%, compared to total research and development expenses of $253,343$296,533 for the six months ended June 30, 2020. The increase is mainly attributable to the increase in professional fees partially offset by a decrease in share based compensation and in payroll and decrease in expenses associated with international travel and field trials which have been postponed due to COVID-19.2021.

 

Selling and Marketing Expenses

 

Selling and marketing expenses consist primarily of salaries and related costsexpenses for selling and marketing personnel, travel related expenses and services providers.providers and commissions. Selling and marketing expenses for the six months ended June 30, 20212022 were $33,409, a decrease$323,049, an increase of $3,339,$289,640, or 9%867%, compared to total selling and marketing expenses of $36,748$33,409 for the six months ended June 30, 2020.2021. The decreaseincrease is mainly attributable to the increase in payroll expensessalaries and service providers usedrelated costs, professional services and travel abroad in relation to selling and marketing activities mainly associatedconnection with the termination of the employmentmarketing and sales of our former vice president of sales in February 2020 partially offset by an increase in share based compensation expenses.products.

 

General and Administrative Expenses

 

General and administrative expenses consist primarily of salaries and related expenses including share based compensation and other professional fees andservices as well as other non-personnel related expenses such as legal expenses and directors and insurance costs. General and administrative expenses for the six months ended June 30, 20212022 were $1,672,707,$2,040,682, an increase of $1,159,331,$367,975, or 226%22%, compared to total general and administrative expenses of $513,376$1,672,707 for the six months ended June 30, 2020.2021. The increase is mainly a result of the increase in share based compensation expenses, salaries and related expenses and insurance costs, offset partially by a decrease in professional services andresulting from compensation payable to directorsexpenses following the listing of our Common Stock on the Nasdaq Capital Market, which occurred during the second quarter of 2021, offset partially by a decrease share-based compensation to our employees and service providers.2021.

 

Financing Expenses,Income (Expenses), Net

 

Financing expenses,income, net, for the six months ended June 30, 20212022 were $156,061,$18,832, a decrease of $44,290,$174,893, or 22%112%, compared to total financing expenses of $200,351$156,061 for the six months ended June 30, 2020.2021. The decrease is mainly a result of the decrease in compensation expenses related to the accrued interest and amortization expenses associated with our convertible loans which were fully converted during the three months ended June 30, 2021.

 

21

Total Comprehensive Loss

 

As a result of the foregoing, our total comprehensive loss for the six months ended June 30, 20212022 was $1,973,843,$2,603,774, compared to $942,692$1,995,520 for the six months ended June 30, 2020,2021, an increase of $1,031,151,$608,254, or 109%30%.

19

 

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 June 30, 2021,2022, we have funded our operations, principally with approximately $23,244,172$16 million (net of issuance expenses), from the issuance of shares of our Common Stock, options and loans.

 

On May 13, 2021, we completed an underwritten public offering of 1,090,909 shares of Common Stock at a price to the public of $11.00 per share. The gross proceeds we received from this offering were $12,000,000 (net proceeds of $10,457,862) (the “Underwritten Offering”).

 

The table below presents our cash flows for the periods indicated:

 

Six Months Ended

June 30,

  

Six Months Ended

June 30,

 
 2021  2020  2022  2021 
Net cash used in operating activities $(1,711,222) $(468,999)  (2,355,007)  (1,717,629)
                
Net cash provided by investing activities  4,375   (574)  (15,681)  4,375 
                
Net cash provided by financing activities  10,761,603   214,009   (3,965)  10,768,010 
                
Effect of exchange rate changes on cash and cash equivalents and restricted cash  8,144   -   (4,239)  8,144 
                
Increase (decrease) in cash and cash equivalents $9,062,900  $(255,564)  (2,378,892)  9,062,900 

 

As of June 30, 2021,2022, we had cash and cash equivalents of $9,305,800,$4,378,434, as compared to $242,900$9,305,800 as of December 31, 2020.June 30, 2021. As of June 30, 2021,2022, we had a working capital of $8,904,187,$4,227,109, as compared to a negativethe working capital of $290,062$8,904,187 as of December 31, 2020.June 30, 2021. The increasedecrease in our cash balance is mainly attributable to the Underwritten Offering described above and proceeds from convertible loans.

cash used in operations.

 

In view of our cash balance following the above transactions, we anticipate that our cash balances will be sufficient to permit us to conduct our operations for at least a period of twelve months from the date of the issuancedate of these unaudited condensed consolidated financial statements. We may also satisfy itsour liquidity through the sale of its securities, either in public or private transactions.

 

If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any of our equity securities or by issuing Common Stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the Common Stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy.

Operating Activities

 

Net cash used in operating activities was $1,711,222$2,355,007 for the six months ended June 30, 2021,2022, as compared to $468,999$1,717,629 for the six months ended June 30, 2020.2021. The increase is mainly attributable to our net loss of $637,378.

 

Investing Activities

 

Net cash used in investing activities was $15,681 for the six months ended June 30, 2022, as compared to net cash provided by investing activities wasof $4,375 for the six months ended June 30, 2021, as compared to net cash used in investing activities of $574 for the six months ended June 30, 2020.2021.  The increase is mainly attributable to theincrease in purchase of property and equipment partially offset by increase in funds in respect of employee rights upon retirement.retirement

 

Financing Activities

 

Net cash provided byused in financing activities was $10,761,603$3,965 for the six months ended June 30, 2021,2022, as compared to $214,009net cash provided by financing activities of $10,768,010 for the six months ended June 30, 2020.2021. The increasedecrease is mainly the result of proceeds from to the Underwritten Offering described above and conversions of convertible loans.loans which occurred during the second quarter of 2021.

 

2022

Financial Arrangements

Since our inception, we have financed our operation primarily through proceeds from sales of our shares of Common Stock, convertible loan agreements and grants from the Israeli Innovation Authority, formerly known as the Office of the Chief Scientist of the Ministry of Economy and Industry.

 

During January 2021, we entered into a series of convertible loan agreements with an aggregate principal amount of $274,000 that each bear interest at a rate of 5% per annum.

 

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 May 18, 2021, we closed the Underwritten 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 Underwritten Offering, we agreed to grant ThinkEquity, a division of Fordham Financial Management, Inc. (the “Underwriters”“Underwriter”), a 45-day 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, which was not exercised by the Underwriters, and to issue the UnderwritersUnderwriter a five-year warrantswarrant to purchase up to 54,545 shares of Common Stock, at a per share exercise price equal to 125% of the Underwritten Offering price per share of Common Stock, or $13.75.Stock. The gross proceeds from the Underwritten Offering were approximately $12,000,000.

21

Off-Balance Sheet Arrangements

As of June 30, 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 20202021 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 officerChief Executive Officer and principal financial officer,Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures pursuant to(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ActAct) as of June 30, 2021, the end of the period covered by this Quarterly Report on Form 10-Q.2022. Based on such evaluation, our Chief Executive Officer and due to certain material weaknesses identified by management, our principal executive officer and principal financial officerChief Financial Officer have concluded that, as of June 30, 2022, our disclosure controls and procedures were not effective at a reasonable assurance level as of June 30, 2021.effective.

 

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 – OTHER INFORMATION

 

ITEM 1A. RISK FACTORS.

 

Our business faces many risks, a number of which are described under the caption “Risk Factors” in our 20202021 Annual Report. Other than as set forth below, there have been no material changes from the risk factors previously disclosed in our 20202021 Annual Report. The risks described in our 20202021 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 our 20202021 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 our 20202021 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.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Except as set forth below, there were no sales of equity securities sold during the period covered by this Quarterly Report on Form 10-Q that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.

On May 2, 2022, the Company issued 12,500 shares of Common Stock to a consultant in consideration for services under the October 1, 2021 consulting agreement.

On May 2, 2022, the Company issued 12,000 shares of Common Stock to a consultant in consideration for services under the April 1, 2022 investor relations agreement.

On May 2, 2022, the Company issued 600 shares of Common Stock to a consultant in consideration for services under the June 15, 2021 consulting agreement.

On May 18, 2022, the Company issued 9,000 shares of Common Stock to a consultant in consideration for services pursuant to a resolution of the Company’s board of directors on May 11, 2022.

The foregoing shares were issued in reliance on the exemptions from registration provided by Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder for transactions not involving a public offering.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

ITEM 5. OTHER INFORMATION

None.

 

ITEM 6. EXHIBITS.

 

(a) The following documents are filed as exhibits to this Quarterly Report or incorporated by reference herein.

 

Exhibit  
Number Description
31.1* Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
   
31.2* Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
   
32.1** Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
32.2** Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   
101.INS* Inline XBRL Instance Document
101.INS* Inline XBRL Taxonomy Extension Schema Document
101.CAL* 
101.CAL*Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF* 
101.DEF*Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB* 
101.LAB*Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE* 
101.PRE*Inline XBRL Taxonomy Extension Presentation Linkbase Document
104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

 

*Filed herewith.

**Furnished herewith.

 

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SIGNATURES

 

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

 

Date: August 16, 202115, 2022SAVE FOODS INC.
   
 By:

/s/ David Palach

 Name:David Palach
 Title:Chief Executive Officer
  Save Foods, Inc.

 

 By:

/s/ Vered Raz AvayoLital Barda

 Name:Vered Raz AvayoLital Barda
 Title:Chief Financial Officer
Save Foods, Inc.

 

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