Save Foods, Inc. - Quarter Report: 2023 March (Form 10-Q)

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 March 31, 2023

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

For the transition period from To

Commission File No. 001-40403

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:

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.

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

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

As of March 31, 2023, the registrant had 7,004,159 shares of common stock, par value $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., the 98.48% owned 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

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:

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, 2022 (filed on March 27, 2023) (“2022 Annual Report”) entitled “Risk Factors” as well as in our other public filings.

In light of these risks and uncertainties, and especially given the start-up nature of our business, there can be no assurance that the forward-looking statements contained herein will in fact occur. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

On February 23, 2021, we implemented a one-for-seven reverse stock split of our Common Stock pursuant to which holders of our Common Stock received one share of our Common Stock for every seven shares of Common Stock held. Unless the context expressly dictates otherwise, all references to share and per share amounts referred to herein reflect the reverse stock split.

PART I – FINANCIAL INFORMATION

SAVE FOODS, INC.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

AS OF MARCH 31, 2023

SAVE FOODS, INC.

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

AS OF MARCH 31, 2023

IN U.S. DOLLARS

TABLE OF CONTENTS

SAVE FOODS, INC.

UNAUDITED CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS

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

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

SAVE FOODS, INC.

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

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

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

SAVE FOODS, INC.

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

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

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

SAVE FOODS, INC.

UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

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

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

SAVE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

NOTE 1 - GENERAL

On May 13, 2021, the Company completed an underwritten public offering of 1,090,909 shares of its common stock for net proceeds of $10,457,862. Commencing on May 14, 2021, the Company’s Common Stock was listed on the Nasdaq Capital under the symbol “SVFD”.

On August 15, 2022, the Company completed an underwritten public offering of 1,600,000 shares of its Common Stock for net proceeds of $4,103,330.

On March 31, 2023, the Company entered into a securities exchange agreement with Plantify Foods, Inc., a British Columbia company (“Plantify”), pursuant to which each of the respective parties agreed to issue to the opposite party 19.99% of its issued and outstanding capital stock (the “Securities Exchange”) (and 16.66% of the Company’s outstanding capital stock as of immediately following the closing). The Securities Exchange closed on April 5, 2023 (the “Closing”). See note 8(1) below.

On April 1, 2023, the Board of Directors temporarily appointed David Palach, the Chief Executive Office, as Interim Chief Financial Officer while Lital Barda is on maternity leave.

Since inception, the Company has incurred significant losses and negative cash flows from operations and has an accumulated deficit of $25 million. The Company has financed its operations mainly through fundraising from various investors.

The Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for the foreseeable future. Based on the projected cash flows and cash balances as of March 31, 2023, management is of the opinion that its existing cash will be sufficient to fund operations until the middle of Q3 2024. As a result, there is substantial doubt regarding the Company’s ability to continue as a going concern.

Management plans to continue securing sufficient financing through the sale of additional equity securities or capital inflows from strategic partnerships. Additional funds may not be available when the Company needs them, on terms that are acceptable to it, or at all. If the Company is unsuccessful in securing sufficient financing, it may need to cease operations.

The financial statements do not include adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern.

SAVE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

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

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

On February 13, 2023, the Company issued the first 25,000 shares of Common Stock. The Company determined the value of the shares issued at $29,800 based on the share price on the agreement date.

SAVE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

NOTE 3 – COMMON STOCK (continue)

The Board of Directors additionally approved the amendment to a consulting agreement with Joachim Fuchs pursuant to which he will be issued 50,000 restricted shares of Common Stock, subject to the Company’s 2022 Share Incentive Plan. These shares will be subject to a twenty four months lockup period.

NOTE 4 – STOCK OPTIONS

The following table presents the Company’s stock option activity for employees and directors of the Company for the three months ended March 31, 2023:

 SCHEDULE OF STOCK OPTION ACTIVITY

The aggregate intrinsic value of the awards outstanding as of March 31, 2023 is $0. These amounts represent the total intrinsic value, based on the Company’s stock price of $0.68 as of March 31, 2023, 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-options compensation for employees and directors, for the three months ended March 31, 2023 and 2022 were $8,460 and $11,822, respectively.

SAVE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

NOTE 5 – COMMITMENTS

NOTE 6 – RELATED PARTIES

SCHEDULE OF TRANSACTIONS AND BALANCES WITH RELATED PARTIES 

SAVE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

NOTE 6 – RELATED PARTIES (continue)

NOTE 7 – GEOGRAPHIC AREAS AND MAJOR CUSTOMERS

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

SCHEDULE OF SALES TO CUSTOMERS

The following table presents the locations of the Company’s long-lived assets as of March 31, 2023 and 2022:

SCHEDULE OF INFORMATION ON LONG LIVED ASSETS

SAVE FOODS, INC.

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)

NOTE 8 – SUBSEQUENT EVENTS

Upon the Closing, the Company issued 1,164,374 shares of the Company’s Common Stock to Plantify, which amount represented 19.99% of Save Foods’ outstanding capital stock as of immediately prior to the Closing (and 16.66% of the Company’s outstanding capital stock as of immediately following the Closing), and Plantify issued 30,004,349 common shares of Plantify to the Company, representing 19.99% of Plantify’s outstanding capital stock as of immediately prior to the Closing (and 16.66% of Plantify’s outstanding capital stock as of immediately following the Closing).

In connection with, and contingent upon, the execution of the Agreement, the Company and Plantify executed a debenture (the “Debenture”), whereby Save Foods agreed to lend C$1,500,000 (approximately $1,124,000) to Plantify (the “Principal”), which Principal will accrue interest at a rate of 8% annually and will be repayable by Plantify over approximately 18 months. The Debenture has a maturity date of October 4, 2024. The Principal may be converted, at Save Foods’ sole discretion, into common shares of Plantify at a price of C$0.05 per share until the first anniversary of the Debenture issuance date and C$0.10 per share thereafter. The accrued interest may be converted at the market price of Plantify’s common shares, subject to TSXV approval at the time of conversion. Plantify will execute a general security agreement in Company’s favor and will specifically pledge to the Company the shares of Plantify’ subsidiary, Peas of Bean Ltd. The final closing occurred on April 5, 2023.

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 2022 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 2022 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.

Overview

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 treatments 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 ingredients do not leave any toxicological residues on the fresh produce we treat. On the 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 Common Stock is listed on the Nasdaq Capital Market under the symbol “SVFD.”

Recent Developments

Plantify Transactions

On March 31, 2023, we entered into the Securities Exchange agreement with Plantify, pursuant to which each of the respective parties agreed to issue to the opposite party 19.99% of its issued and outstanding capital stock. The Securities Exchange Closing occurred on April 5, 2023.

Upon the Closing, we issued 1,164,374 shares of the Company’s Common Stock to Plantify, which amount represented 19.99% of Save Foods’ outstanding capital stock as of immediately prior to the Closing (and 16.66% of our outstanding capital stock as of immediately following the Closing), and Plantify issued 30,004,349 common shares of Plantify to us which amount represented 19.99% of Plantify’ outstanding capital stock as of immediately prior to the Closing (and 16.66% of Plantify’ outstanding capital stock as of immediately following the Closing).

In connection with, and contingent upon, the execution of the Agreement, the Company and Plantify executed the Debenture, whereby we agreed to lend C$1,500,000 (approximately $1,124,000) to Plantify, the Principal, which Principal will accrue interest at a rate of 8% annually and will be repayable by Plantify over approximately 18 months. The Debenture has a maturity date of October 4, 2024. The Principal may be converted, at our sole discretion, into common shares of Plantify at a price of C$0.05 per share until the first anniversary of the Debenture issuance date and C$0.10 per share thereafter. The accrued interest may be converted at the market price of Plantify’s common shares, subject to TSXV approval at the time of conversion. Plantify will execute a general security agreement in our favor and will specifically pledge to us the shares of Plantify’s subsidiary, Peas of Bean Ltd.

Underwritten Offering

On August 15, 2022, we entered into an underwriting agreement with ThinkEquity LLC, as representative (the “Representative”), of the several underwriters named therein, relating to our public offering of 1,600,000 shares of our Common Stock, at a public offering price of $3.00 per share (the “Offering”). The Offering closed on August 18, 2022.

The shares of Common Stock in the Offering were offered, issued and sold under a prospectus supplement filed with the Securities and Exchange Commission on August 17, 2022, in connection with a takedown from our shelf registration statement on Form S-3 (Registration No. 333-266159), which became effective on July 22, 2022. In connection with the Offering, we agreed to issue to the Representative a warrant (the “Representative Warrant”) to purchase up to 5% of the shares of Common Stock sold in the Offering. The Representative Warrant is exercisable, in whole or in part, at a per share exercise price of $3.75, which is equal to 125% of the public offering price per share of Common Stock. The Representative Warrant will be exercisable commencing on the date which is one hundred eighty (180) days following August 15, 2022 and will expire on August 15, 2027.

Corporate Information

We were incorporated in the State of Delaware on April 1, 2009. Our principal executive offices are located at HaPardes 134 (Meshek Sander), Neve Yarak, Israel, 4994500 and our telephone number is (347) 468 9583. Our website address is www.savefoods.co. The information contained on, or that can be accessed through, our websites is not incorporated by reference into this prospectus and is intended for informational purposes only.

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:

Operating Expenses

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

Research and Development Expenses

Our research and development expenses consist primarily of salaries and related personnel expenses, laboratory and field tests, professional fees and other related research and development expenses.

Following careful consideration, our board of directors decided to implement certain cost reduction measures in 2023, including, inter alia, the reduction of our research and development expenses.

Selling and Marketing Expenses

Selling and marketing expenses consist primarily of salaries and related expenses, professional fees and other expenses.

General and Administrative Expenses

General and administrative expenses consist primarily of professional services, share based compensation, insurance and other non-personnel related expenses.

Three months ended March 31, 2023 compared to three months ended March 31, 2022

Revenues

Revenues for the three months ended March 31, 2023 were $121,010, an increase of $33,380, or 38%, compared to $87,630 during the three months ended March 31, 2022. The increase is mainly a result of an increase in our sales in Mexico.

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 March 31, 2023 was $42,746, an increase of $897, or 2%, compared to total cost of revenues of $41,849 for the three months ended March 31, 2022. The increase is mainly a result of the increase in sales as well as increase in salaries associated with cost of revenues for the three months ended March 31, 2023, somewhat offset by the decrease in share based compensation expenses.

Gross Profit

Gross profit for the three months ended March 31, 2023 was $78,264, an increase of $32,483, or 71%, compared to a gross profit of $45,781 for the three months ended March 31, 2022. The increase is mainly a result of the increase in our sales as detailed above under the heading “Revenues”.

Research and Development

Research and development expenses consist of salaries and related expenses, consulting fees, service providers’ costs, related materials and overhead expenses. Research and development expenses for the three months ended March 31, 2023 were $118,908, a decrease of $90,454, or 43%, compared to total research and development expenses of $209,362 for the three months ended March 31, 2022. The decrease is mainly attributable to the decrease in salaries and related expenses, share based compensation expenses and field tests followed by our board of directors’ resolution to implement certain cost reduction measures, in light of the prevailing macroeconomic conditions and certain results of our operations. These cost reduction measures, included inter alia, the reduction of our budget in connection with our research and development activities shifting our focus mainly on the commercialization of our solutions with emphasis on converting recently completed pilots into paying customers.

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 March 31, 2023 were $69,146, a decrease of $108,990, or 61%, compared to total selling and marketing expenses of $178,136 for the three months ended March 31, 2022. The decrease is mainly attributable to the decrease in salaries and related costs and other professional fees associated with our sales resulted of a reduction in manpower following our cost reduction measures.

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 March 31, 2023 were $1,633,863, an increase of $629,906, or 63%, compared to total general and administrative expenses of $1,003,957 for the three months ended March 31, 2022. The increase is mainly a result of the increase in share-based compensation to our employees and service providers, levies partially offset by a decrease in insurance costs.

Financing Expenses, Net

Financing income, net for the three months ended March 31, 2023 was $22,104, an increase of $16,200, or 274%, compared to $5,904 for the three months ended March 31, 2022. The increase is mainly a result of the increase in interest and currency exchange gains on our cash balances.

Total Comprehensive Loss

As a result of the foregoing, our total comprehensive loss for the three months ended March 31, 2023 was $1,721,549, compared to $1,339,770 for the three months ended March 31, 2022, an increase of $381,779, or 28%.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. Since our inception through March 31, 2023, we have funded our operations, principally with approximately $20 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 an initial public offering price of $11.00 per share. The gross proceeds we received from this offering were $12,000,000 (net proceeds of $10,457,862) (the “May 2021 Underwritten Offering”).

On August 15, 2022, we completed an underwritten public offering of 1,600,000 shares of Common Stock at an initial public offering price of $3.00 per share. The gross proceeds we received from this offering were $4,800,000 (net proceeds of $4,103,330) (the “August 2022 Underwritten Offering”).

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

As of March 31, 2023, we had cash and cash equivalents of $4,595,838, as compared to $5,644,466 as of March 31, 2022. As of March 31, 2023, we had a working capital of $4,608,254, as compared to the working capital of $5,215,677 as of March 31, 2022. The decrease in our cash balance is mainly attributable to cash used in operations.

Going Concern

Since our incorporation, we incurred losses from operations and net cash outflows from operating activities as disclosed in the consolidated statements of operations and cash flows, respectively. As of March 31, 2023, we had an accumulated deficit of $25 million, and we expect to incur losses for the foreseeable future. We have financed our operations mainly through fundraising from various investors and have limited revenue from our products and therefore are dependent upon external sources to finance our operations. There can be no assurance that we will succeed in obtaining the necessary financing to continue our operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern through at least twelve months from the report date.

We believe that our existing capital resources will be sufficient to support our operating plan through June 30, 2024; however, there can be no assurance of this. We will likely seek to raise additional capital to support our growth or other strategic initiatives through debt, equity, or a combination thereof. There can be no assurance the Company will be successful in raising additional capital.

As a result, our independent registered public accounting firm has expressed substantial doubt about our ability to continue as a going concern. 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. The financial statements do not include adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern.

Operating Activities

Net cash used in operating activities was $1,105,789 for the three months ended March 31, 2023, as compared to $1,085,941 for the three months ended March 31, 2022. The increase is mainly attributable to our net loss of $1,721,549, decrease account payable and increase in accounts receivable balance offset by increase in non-cash expenses such as share-based compensation and depreciation.

Investing Activities

Net cash used in investing activities was $0 for the three months ended March 31, 2023, as compared to net cash used in investing activities of $17,864 for the three months ended March 31, 2022. The decrease is mainly attributable to purchase of property and equipment in the three months ended March 31, 2022.

Financing Activities

Net cash provided by financing activities was $0 for the three months ended March 31, 2023, as compared to net cash provided by financing activities of $2,019 for the three months ended March 31, 2022. The decrease is mainly the result of the repayment of a long-term loan during the period of three months ended March31, 2022 which was fully repaid during 2022.

Financial Arrangements

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 May 2021 Underwritten Offering pursuant to which we issued a total of 1,090,909 shares of our Common Stock at an initial public offering price of $11.00 per share. In connection with the May 2021 Underwritten Offering, we agreed to grant the Representative a 45-day option to purchase up to 163,636 additional shares of Common Stock at the initial public offering price of $11.00 per share, less the underwriting discounts and commissions solely to cover over-allotments, and to issue the Representative a five-year warrant to purchase up to 54,545 shares of Common Stock, at a per share exercise price equal to 125% of the May 2021 Underwritten Offering price per share of Common Stock. The gross proceeds from the May 2021 Underwritten Offering were approximately $12,000,000.

On August 18, 2022, we closed the August 2022 Underwritten Offering pursuant to which we issued a total of 1,600,000 shares of our Common Stock at a public offering price of $3.00 per share. In connection with the August 2022 Underwritten Offering, we agreed to grant the Representative a 45-day option to purchase up to 240,000 additional shares of Common Stock at the public offering price of $3.00 per share, less the underwriting discounts and commissions solely to cover over-allotments, and to issue the Representative a five-year warrant to purchase up to 80,000 shares of Common Stock, at a per share exercise price equal to 125% of the August 2022 Underwritten Offering price per share of Common Stock. The gross proceeds from the August 2022 Underwritten Offering were approximately $4,800,000.

Changes to Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are set forth in our 2022 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 (currently also serving as Interim Chief Financial Officer), or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our management, including our Chief Executive Officer (currently also serving as Interim Chief Financial Officer), has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2023. Based on such evaluation, our Chief Executive Officer and Interim Chief Financial Officer has concluded that, as of March 31, 2023, our disclosure controls and procedures were effective. 

Changes in Internal Control over Financial Reporting

There has been the following change in our internal control over financial reporting that occurred during the first quarter of 2023 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting:

Effective April 1, 2023, our board of directors appointed our Chief Executive Officer, David Palach, to additionally serve as Interim Chief Financial Officer, while Lital Barda is away on maternity leave.

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 2022 Annual Report. Other than as set forth below, there have been no material changes from the risk factors previously disclosed in our 2022 Annual Report. The risks described in our 2022 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 2022 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 2022 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 July 11, 2022 and September 7, 2022, we issued 6,000 and 7,500 shares of Common Stock, respectively, to a consultant in consideration for services rendered pursuant a consulting agreement by and between the Company and the consultant dated January 9, 2022.

On August 22, 2022, we issued 12,000 shares of Common Stock to a consultant in consideration for services rendered pursuant to an amended consulting agreement by and between the Company and the consultant dated June 26, 2022.

On August 29, 2022, we issued 3,000 shares of Common Stock to Mr. Joachim Fuchs, chairman of the board of directors of our subsidiary, Save Foods Ltd.

On September 7, 2022, we issued 50,000 shares of Common Stock to a consultant in consideration for services rendered pursuant to an amended consulting agreement by and between the Company and the consultant dated September 6, 2022.

On September 7, 2022, we issued 3,000 shares of Common Stock to Mr. Joachim Fuchs, chairman of the board of directors of our subsidiary, Save Foods Ltd. This grant and following grants were issued pursuant to the 2022 Plan.   

On October 26, 2022, the Board approved the issuance of 50,000 shares of Common Stock to a consultant pursuant to his investor relations consulting agreement and in addition, quarterly issuances of 9,000 shares of Common Stock commencing January 1, 2023 and ending on December 31, 2024. On November 16, 2022 we issued 50,000 shares of Common Stock. On January 2, 2023 and April 3, 2023, the Company issued to the consultant 9,000 shares of Common Stock.

On October 26, 2022, the Board approved the issuance of quarterly issuances of 5,000 shares of Common Stock to each of two consultants commencing on January 1, 2023, and ending on December 31, 2024. On January 2, 2023 and April 3, 2023 the Company issued 10,000 shares of Common Stock in respect to the Board approval for each one of the consultants.

On February 13, 2023, the Company issued 25,000 shares of Common Stock to a consultant in consideration for services rendered pursuant to a consulting agreement by and between the Company and the consultant dated January 20, 2023.

On March 29, 2023, the Board approved the issuance of an equity grant to executive officers, employees, directors and consultants amounting to a total of 1,000,000 shares of Common Stock.

On April 3, 2023, the Board approved the issuance of 147,059 shares of Common Stock to EU Agritech in consideration for services rendered pursuant to an amended consulting agreement by and between the Company and the consultant dated March 29, 2023.

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.

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.