# Nexentis Technologies Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [Nexentis Technologies Inc.](/companies/nxts.md) (CIK 1789192)
- Form: 10-Q
- Filed: 2024-11-14
- Accepted by EDGAR: Nov 14, 2024, 16:15 ET
- Period: 2024-09-30
- Accession: 0001493152-24-045890
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1789192/000149315224045890/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1789192/000149315224045890/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $9.1k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 9 months, 2024-01-01 to 2024-09-30 | $69.5k | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $76.8k | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2024-01-01 to 2024-09-30 | $110.5k | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | −$67.7k | us-gaap:GrossProfit |
| Gross profit | 9 months, 2024-01-01 to 2024-09-30 | −$41.0k | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $122.4k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2024-01-01 to 2024-09-30 | $250.0k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$1.5m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2024-01-01 to 2024-09-30 | −$3.3m | us-gaap:OperatingIncomeLoss |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$2.3m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2024-01-01 to 2024-09-30 | −$3.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.39 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2024-01-01 to 2024-09-30 | −$0.94 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.39 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2024-01-01 to 2024-09-30 | −$0.94 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 5,820,287 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2024-01-01 to 2024-09-30 | 4,069,690 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2024-01-01 to 2024-09-30 | −$2.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2024-09-30 | $2.7m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $3.4m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $5.8m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $517.4k | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $518.8k | us-gaap:Liabilities |
| Shareholders' equity | at 2024-09-30 | $5.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 29,759 characters.

*The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes included elsewhere in this Quarterly Report. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements” for a discussion of the uncertainties and assumptions associated with these statements. Our actual results may differ materially from those discussed below.*

### Overview

We are an agri-food tech company specializing in eco crop protection that helps reduce food waste and ensure food safety while reducing the use of pesticides. 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.

We operate through our two majority-owned Israeli subsidiaries, Save Foods Ltd., which focuses on post-harvest treatments in fruit and vegetables to control and prevent pathogen contamination, significantly reduce the use of hazardous chemicals and prolong fresh produce’s shelf life, and NTWO OFF Ltd., formerly known as Nitrousink Ltd. (“NTWO OFF”), which offers a pioneering solution to mitigate N₂O (nitrous oxide) emissions, a potent greenhouse gas with 310 times the global warming impact of carbon dioxide. Through NTWO OFF we aim to promote agricultural practices that are both environmentally friendly and economically viable and to become a global leader in this field by collaborating with or acquiring other companies that create innovative solutions and tools to solve other aspects of global warming’s impact of carbon dioxide. In addition, we currently own approximately 23% of Plantify Foods Inc. (“Plantify”), a Canadian-based food tech company focused on the development and production of clean-label, plant-based food products.

Our solutions are based on our proprietary blend of food acids combined with certain types of oxidizing agent-based sanitizers and in some cases with fungicides at low concentrations. Our products have a synergistic effect when combined with these oxidizing agent-based sanitizers and fungicides. Our “green” solutions 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. By forming a temporary protective shield around the fresh produce we treat, our solutions make it difficult for pathogens to develop and potentially provide protection which also reduces cross-contamination.

Additionally, we collaborate with Solterra Renewable Energy Ltd. (“Solterra”) in connection with certain investment opportunities in solar PV (photovoltaic) projects. These investment opportunities have included projects in Melz, Germany, where we, together with other investors, lent an aggregate amount of €2.08 million. We continue to collaborate with Solterra as Solterra surveys the European solar energy market for additional projects.

### Recent Developments

#### Annual Stockholder Meeting

On November 13, 2024, at our annual meeting of stockholders, our stockholders approved (i) the election of Eliahou Arbib and Udi Kalifi as the two Class III directors to serve on our board of directors for a term of three years; (ii) an amendment to our 2022 Share Incentive Plan (the “2022 Plan”) to increase in the number of shares of common stock available for issuance under the 2022 Plan by an additional 11,000,000 shares from 1,071,429 shares to 12,071,429 shares; (iii) the issuance of securities in one or more non-public offerings where the maximum discount at such securities will be offered will be equivalent to a discount of 20% below the market price, as required by Nasdaq Marketplace Rule 5635 (iv) the ratification of the appointment of Somekh Chaikin, a member of KPMG International, as our independent auditors for the year ended December 31, 2024 and (v) on an advisory basis, the grant of shares to our board of directors under the 2022 Plan. The proposal to authorize the board to amend our articles of incorporation, as amended, to increase the aggregate number of authorized shares of its capital stock, from 500,000,000 shares, consisting of 495,000,000 shares of common stock and 5,000,000 shares of preferred stock, to 10,005,000,000 shares, consisting of 10,000,000,000 shares of common stock and 5,000,000 shares of preferred stock was not approved because the requisite majority of the outstanding voting power of the Company required for approval under Nevada law was not obtained.

#### Nasdaq Non-Compliance

On July 8, 2024, we received a letter from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that for the last 30 consecutive business days the closing bid price for our common stock was below $1.00 per share, which is the minimum closing bid price required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Notice”). This Notice has no immediate effect on the listing of our common stock which will continue to trade on The Nasdaq Capital Market under the symbol “NITO”, subject to our compliance with the other Nasdaq listing requirements.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we are provided a compliance period of 180 calendar days from the date of the Notice, or until January 6, 2025 (the “Compliance Period”), to regain compliance with the minimum closing bid price requirement. If at any time during the Compliance Period, the closing bid price of our common stock is at least $1.00 per share for a minimum of ten consecutive business days (unless the Nasdaq staff exercises its discretion to extend this ten business day period pursuant to Nasdaq Listing Rule 5810(c)(3)(H)), Nasdaq will provide written confirmation of our compliance, and the matter will be closed. If we do not regain compliance during the Compliance Period, we may be eligible for an additional 180-calendar day period to regain compliance, provided that we meet the applicable market value of publicly held shares requirement for continued listing and all other applicable standards for initial listing on The Nasdaq Capital Market (except the minimum bid price requirement), and notify Nasdaq of our intent to cure the deficiency by effecting a reverse stock split of our common stock. If we do not regain compliance within the allotted compliance periods, including any extensions that may be granted by Nasdaq, our common stock will be subject to delisting.

#### Share Issuances

On September 12, 2024, we issued an aggregate of 640,000 shares of common stock under the 2022 Plan and an aggregate of 1,050,000 shares of common stock outside of the 2022 Plan in consideration of services provided to our company by certain consultants and officers, including 320,000 shares issued to David Palach, our Chief Executive Officer, and 160,000 shares issued to Lital Barda, our Chief Financial Officer.

On September 23, 2024, we issued 50,000 shares of common stock to an investor pursuant to the terms of a standby equity purchase agreement with such investor entered into on December 23, 2023.

#### Facility Agreement and Warrant Issuance

On October 1, 2024, we entered into a facility agreement (the “Facility Agreement”) with L.I.A. Pure Capital Ltd. (the “Lender”), for financing of up to EUR 6,000,000 (the “Credit Facility”), EUR 2,000,000 of which may be used to finance one project in Germany, and the remaining EUR 4,000,000 for any other projects subject to pre-approval by the Lender. Under the Facility Agreement, we agreed to issue the Lender a five-year warrant (the “Warrant”) to purchase 1,850,000 shares of its common stock (the “Warrant Shares”), with an exercise price of $1.00 per share. Such warrant may not be exercised by the Lender if such exercise would result in the Lender beneficially owning in excess of 4.99% of our outstanding shares. The Warrant Shares are immediately exercisable. Furthermore, the exercise price and number of Warrant Shares are subject to adjustments upon the issuance of common stock, issuance of options, issuance of convertible securities and stock combination events, as detailed in the Warrant.

In the event we fail to deliver the Warrant Shares in a timely manner and the Lender is required to purchase shares of common stock in the open market to cover a sale of the Warrant Shares, we will be required to compensate the Lender for any additional costs incurred. The Warrant Shares additionally have a cashless exercise mechanism in the event a registration statement covering the resale of the Warrant Shares is not available, based on a specified formula as detailed in the Warrant.

If we do not have sufficient authorized and unreserved shares of common stock to cover the exercise of the Warrant, we will be required to obtain stockholder approval within sixty days to increase its authorized shares. If we cannot deliver the required common stock upon exercise, the Lender will be entitled to demand cash compensation based on the Black Scholes Value of the Warrant.

The Lender is entitled to certain purchase rights with respect to Warrant Shares which the Lender could have acquired upon the exercise of the Warrant. We may not enter into a fundamental transaction, as described in the Warrant, unless the successor entity assumes our obligations under the Warrant. The Lender may also request that we buy back the Warrant calculated using a Black Scholes option pricing model in cash.

Pursuant to the Facility Agreement, we must file a resale registration statement with SEC within 75 days of the date of the Facility Agreement to register the Warrant Shares and must use reasonable efforts to have the registration statement declared effective by the SEC within 90 days of filing.

### Results of Operations

### Revenues and Cost of Revenues

Our total revenues consist of the sale of products and our cost of revenues consists of cost of products.

The following table sets forth our revenues and costs of revenues:

*U.S. dollars in thousands, except share and per share data*

|  | Nine Months Ended September 30, 2024 | 2023 | Three Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Revenues from sales of products | 69,481 | 157,618 | 9,104 | - |
| Cost of sales | (110,523) | (70,229) | (76,761) | - |
| Gross profit (loss) | (41,042) | 87,389 | (67,657) | - |

### 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 professional fees and other related research and development expenses.

*U.S. dollars in thousands*

|  | Nine Months Ended September 30, 2024 | 2023 | Three Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Salaries and related expenses | - | 67, 042 | - | - |
| Professional fees | 247,347 | 39,078 | 121,060 | 7,056 |
| Laboratory and field tests | - | 1,762 | - | 939 |
| Depreciation | 1,499 | 10,695 | 449 | 2,419 |
| Other expenses | \_1,120\_ | 1,710,393 | 901 | 1,682,791 |
| Total | 249,966 | 1,828,970 | 122,410 | 1,693,205 |

### Selling and Marketing Expenses

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

*U.S. dollars in thousands*

|  | Nine Months Ended September 30, 2024 | 2023 | Three Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Salaries and related expenses | 64,813 | 134,333 | 17,609 | 42,841 |
| Professional fees | 37,418 | 23,711 | 18,718 | 7,500 |
| Commissions | - | 9,204 | - | - |
| Travel | 20,267 | 13,543 | 12,837 | 5,361 |
| Transport and storage | 36,558 | 24,968 | 9,562 | 3,216 |
| Other expenses | 20,038 | 12,148 | 6,089 | 1,544 |
| Total | 179,094 | 217,907 | 64,815 | 60,462 |

25

### General and Administrative Expenses

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

*U.S. dollars in thousands*

|  | Nine Months Ended September 30, 2024 | 2023 | Three Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: | ---: | ---: |
| Professional services | 1,792,054 | 1,495,576 | 678,241 | 505,609 |
| Share based compensation | 813,919 | 1,375,675 | 553,432 | 431,588 |
| Salaries and related expenses | 34,248 | 193,308 | - | 63,670 |
| Insurance | 124,237 | 191,365 | 38,922 | 54,125 |
| Other expenses | 80,509 | 225,484 | 24,318 | 48,265 |
| Total | 2,844,967 | 3,481,408 | 1,294,913 | 1,103,257 |

### Three months ended September 30, 2024 compared to three months ended September 30, 2023

### Revenues

Revenues for the three months ended September 30, 2024 were $9,104 compared to $0 during the three months ended September 30, 2023.

### Cost of Sales

Cost of sales consists primarily of salaries, materials, and overhead costs of manufacturing our products. Cost of sales for the three months ended September 30, 2024 was $76,761, compared to cost of sales of $0 for the three months ended September 30, 2023. The increase is mainly a result of a one-time inventory write-off in South Africa.

### Gross Profit (loss)

Gross loss for the three months ended September 30, 2024 was $67,657, compared to a gross profit of $0 for the three months ended September 30, 2023. The increase is mainly a result of a one-time inventory write-off in South Africa.

### Research and Development Expenses

Research and development expenses consist of consulting fees, service providers’ costs, related materials and overhead expenses. Research and development expenses for the three months ended September 30, 2024 were $122,410, a decrease of $1,570,795, or 93%, compared to research and development expenses of $1,693,205 for the three months ended September 30, 2023. The decrease is mainly attributable to a decrease in Save Foods Ltd.’s expenses as a result of the implementation of certain cost reduction measures, including a reduction in Save Foods Ltd.’s research and development budget in light of prevailing macroeconomic conditions and the shift of our focus to the commercialization of our solutions and converting recently completed pilots into paying customers. Additionally, certain results of our operations relating to Save Foods Ltd., were offset by an increase in professional fees associated with NTWO OFF Ltd.’s research and development activities.

### Selling and Marketing Expenses

Selling and marketing expenses consisted 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 September 30, 2024 were $64,815, an increase of $4,353, or 7%, compared to selling and marketing expenses of $60,462 for the three months ended September 30, 2023. The increase is mainly attributable to the increase in other professional fees associated with our sales, offset by a decrease in salaries resulting from a reduction in personnel following our cost reduction measures.

### General and Administrative Expenses

General and administrative expenses consisted 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, directors fees and insurance costs. General and administrative expenses for the three months ended September 30, 2024 were $1,294,913, an increase of $191,656, or 17%, compared to general and administrative expenses of $1,103,257 for the three months ended September 30, 2023. The increase is mainly a result of the increase in professional services and share-based compensation, offset by a decrease in salaries and related costs, insurance costs and in franchise tax related to the Company’s reincorporation in Nevada from Delaware.

### Financing Income (expenses), Net

Financing expenses, net for the three months ended September 30, 2024 were $41,215, an increase of $51,794, or 490%, compared to financing income, net of $10,579 for the three months ended September 30, 2023. The increase is mainly a result of the interest on a $1,500,000 promissory note issued to YA II PN, Ltd. on April 4, 2024.

### Total Comprehensive Loss

As a result of the foregoing, our total comprehensive loss for the three months ended September 30, 2024 was $2,313,707, compared to $3,036,028 for the three months ended September 30, 2023, a decrease of $722,321, or 24%.

### Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

### Revenues

Revenues for the nine months ended September 30, 2024 were $69,481, a decrease of $88,137, or 56%, compared to $157,618 during the nine months ended September 30, 2023. The decrease is mainly a result of a decrease in our sales in Mexico.

### Cost of Sales

Cost of sales consists primarily of salaries, materials and overhead costs of manufacturing our products. Cost of sales for the nine months ended September 30, 2024 were $110,523, an increase of $40,294, or 57%, compared to $70,229 for the nine months ended September 30, 2023. The increase is mainly a result of a one-time inventory write-off in South Africa.

### Gross Profit (loss)

Gross loss for the nine months ended September 30, 2024 was $41,042, a decrease of $128,431, or 147%, compared to a gross profit of $87,389 for the nine months ended September 30, 2023. The decrease is mainly a result of the decrease in revenues and one-time inventory write-off in South Africa.

### Research and Development Expenses

Research and development expenses consist of salaries and related expenses, consulting fees, related materials and overhead expenses. Research and development expenses for the nine months ended September 30, 2024 were $249,966, a decrease of $1,579,004, or 86%, compared to research and development expenses of $1,828,970 for the nine months ended September 30, 2023. The decrease is mainly attributable the implementation of certain cost reduction measures in light of prevailing macroeconomic conditions and certain results of our operations relating to Save Foods Ltd., which were offset by an increase in professional fees associated with NTWO OFF Ltd.’s research and development activities. Cost reduction measures included the reduction of Save Foods Ltd.’s research and development budget, and the shift of our focus to the commercialization of its solutions with an emphasis on converting recently completed pilots into paying customers.

### Selling and Marketing Expenses

Selling and marketing expenses consist primarily of salaries and related expenses for selling and marketing personnel, travel related expenses and services providers and commissions. Selling and marketing expenses for the nine months ended September 30, 2024 were $179,094, a decrease of $38,813, or 18%, compared to total selling and marketing expenses of $217,907 for the nine months ended September 30, 2023. The decrease is mainly attributable to the decrease in salaries and related expenses commissions offset by an increase in other related costs associated with our sales.

### General and Administrative Expenses

General and administrative expenses consist primarily of professional services, salaries and related expenses including share based compensation as well as other non-personnel related expenses such as legal expenses and directors and insurance costs. General and administrative expenses for the nine months ended September 30, 2024 were $2,844,967, a decrease of $636,441, or 18%, compared to total general and administrative expenses of $3,481,408 for the nine months ended September 30, 2023. The decrease is mainly a result of the decrease in share-based compensation, insurance costs and in franchise tax related to the Company’s reincorporation in Nevada from Delaware offset by an increase in professional services partially offset by an increase in professional services.

### Financing Income (expenses), Net

Financing expenses, net, for the nine months ended September 30, 2024, were $117,335, an increase of $161,001, or 369%, compared to total financing income of $43,666 for the nine months ended September 30, 2023. The increase is mainly a result of the interest on a $1,500,000 promissory note issued to YA II PN, Ltd. on April 4, 2024.

### Total Comprehensive Loss

As a result of the foregoing, our total comprehensive loss for the nine months ended September 30, 2024 was $3,936,207, compared to $5,472,512 for the nine months ended September 30, 2023, a decrease of $1,536,305, 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 September 30, 2024, we have funded our operations, principally with the issuance of equity and debt.

As of September 30, 2024, we had cash and cash equivalents of $2,749,851, as compared to $1,934,634 as of September 30, 2023. As of September 30, 2024, we had working capital of $2,853,704, as compared to 2,211,582 as of September 30, 2023. The increase in our cash balance is mainly attributable to proceeds from our standby equity purchase agreement.

On August 18, 2022, we issued an aggregate of 228,572 shares of common stock at a public offering price of $21.00 per share in an underwritten offering for gross proceeds of approximately $4,800,000. In connection therewith, we granted the underwriter a 45-day option to purchase up to 34,286 additional shares of common stock at the public offering price of $21.00 per share, less underwriting discounts and commissions solely to cover over-allotments and issued ThinkEquity LLC a five-year warrant to purchase up to 11,429 shares of common stock, at a per share exercise price equal to 125% of the offering price per share of common stock.

On July 23, 2023, we entered into a standby equity purchase agreement with YA II PN, Ltd. (the “Investor”), pursuant to which the Investor agreed to purchase up to $3,500,000 shares of our common stock for 40 months from the date of the purchase agreement at a price per share equal to 94% of the lowest volume-weighted average price (“VWAP”) of our common stock for the three days prior to the delivery of each advance notice from us, subject to certain limitations, including that the Investor cannot purchase a number of shares that would result in it beneficially owning more than 4.99% of our outstanding shares of common stock . In December 2023, we raised an aggregate of $3,500,000 under the standby equity purchase agreement.

On December 22, 2023, we entered into an additional standby equity purchase agreement with the Investor, pursuant to which the Investor has agreed to purchase up to $20 million shares of our common stock for 36 months from the date of the purchase agreement at a price per share equal to 94% of the lowest VWAP of our common stock for the three trading days immediately following the delivery of each advance notice from us. The agreement will terminate automatically on the earlier of January 1, 2027, or when the Investor has purchased an aggregate of $20 million of our shares of common stock. We have the right to terminate the purchase agreement upon five trading days’ prior written notice to the Investor. As of November 14, 2024, we have sold an aggregate of 6,666,667 shares of common stock at an average purchase price of $0.47 per share to the Investor. The maximum number of shares allowed to be issued under the Company’s registration statement is 6,666,667 shares of common stock.

In connection with and subject to the satisfaction of certain conditions set forth in the standby equity purchase agreement, upon our request, the Investor will pre advance to us up to $3,000,000 of the $20,000,000 commitment amount (a “Pre-Advance”), with each Pre-Advance to be evidenced by a promissory note issued at a 3% discount to the principal amount equal to each such note. Each note accrues interest on the outstanding principal balance at the rate of 8% per annum. The Company is required to pay, on a monthly basis, one tenth of the outstanding principal amount of each note, together with accrued and unpaid interest, either (i) in cash or (ii) by submitting an advance notice pursuant to the purchase agreement and selling the Investor shares of our common stock, or any combination thereof as determined by us. The initial payment is due 60 days after the issuance of a note, and every 30 days thereafter. Unless otherwise agreed to by the Investor, any funds received by us pursuant to the purchase agreement for the sale of shares will first be used to satisfy any payments due under an outstanding note. As of September 30, 2024, the note was repaid and extinguished.

On April 4, 2024, the Company issued the Investor an additional promissory note in the principal amount of $1,500,000 for proceeds of $1,455,000, reflecting an original issue discount of 3%.

On October 1, 2024, we entered into the Facility Agreement for financing of up to EUR 6,000,000, as described above.

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

|  | Nine Months Ended September 30, 2024 | 2023 |
| --- | ---: | ---: |
| Net cash used in operating activities | (2,927,148) | (2,258,869) |
| Net cash used in investing activities | (1,373,044) | (1,519,559) |
| Net cash provided by financing activities | 2,601,032 | - |
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (6,033) | 8,486 |
| Decrease in cash and cash equivalents | (1,705,193) | (3,769,942) |

29

### 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. As of September 30, 2024, we had an accumulated deficit of approximately $33 million, and we expect to incur losses for the foreseeable future. We have financed our operations mainly through financing 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 date of this Quarterly Report.

We believe that our existing capital resources will be sufficient to support our operating plan through the third quarter of 2025; however, there can be no assurance of this. We will need to raise additional capital to support our operations through the issuance of debt, equity, or a combination thereof. There can be no assurance that we will be successful in raising additional capital on favorable terms, or at all.

As a result, there is substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient 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, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, and we may issue securities with rights, preferences or privileges senior to our common stock. If we issue debt securities, there may be negative covenants which may restrict our activities. 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 included in this Quarterly Report do not include adjustments for measurement or presentation of assets and liabilities, which may be required should we fail to operate as a going concern.

### Operating Activities

Net cash used in operating activities was $2,927,148 for the nine months ended September 30, 2024, as compared to $2,258,869 for the nine months ended September 30, 2023. The increase is mainly attributable to a decrease in other liabilities and an increase in accounts receivable, net.

### Investing Activities

Net cash used in investing activities was $1,373,044 for the nine months ended September 30, 2024, as compared to net cash used in investing activities of $1,519,559 for the nine months ended September 30, 2023. The decrease is due to our investment in Plantify in April 2023 partially offset by the investment in renewable energy projects and additional credit facility provided to Plantify, during the nine months ended September, 2024.

### Financing Activities

Net cash provided by financing activities was $2,601,032 for the nine months ended September 30, 2024, as compared to $0 net cash provided by financing activities for the nine months ended September 30, 2023. The increase is the result of proceeds from the standby equity purchase agreement with the Investor entered into on December 22, 2023.

## Market risk

As filed, 152 characters.

We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information required by this Item.

## Controls and procedures

As filed, 1,595 characters.

#### 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 Principal Executive Officer and our Principal Financial Officer or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our management, including each of our Principal Executive Officer and our Principal 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 September 30, 2024. Based on such evaluation, each of our Principal Executive Officer and Principal Financial Officer has concluded that, as of September 30, 2024, our disclosure controls and procedures were effective.

#### Changes in Internal Control over Financial Reporting

During the period covered by this Quarterly Report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 11,915 characters.

In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on April 1, 2024, which could materially affect our business, financial condition or future results. Except as set forth below, there have been no material changes from the risk factors previously disclosed in the “Risk Factors” section of such Annual Report on Form 10-K.

***Conditions in Israel, including the ongoing war between Israel and Hamas, and other conflicts in the region, may adversely affect our operations and limit our ability to market our products, which would lead to a decrease in revenues.***

Because a substantial part of our operations are conducted in Israel and all members of our board of directors, management, as well as a majority of our employees and consultants, including employees of our service providers, are located in Israel, our business and operations are directly affected by economic, political, geopolitical and military conditions affecting Israel. Any political instability, terrorism, armed conflicts, reserve mobilization, cyberattacks, boycotts, direct or indirect sanctions and restrictions, or any other hostilities involving Israel or the interruption or curtailment of trade between Israel and its trading partners could adversely affect our operations. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and other hostile non-state actors. These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.

In October 2023, Hamas terrorists infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on Israeli population and industrial centers located along Israel’s border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in extensive deaths, injuries and kidnapping of civilians and soldiers, as well as evacuations of tens of thousands of civilians from their homes. Following the attack, Israel’s security cabinet declared war against Hamas and a military campaign against these terrorist organizations commenced in parallel to their continued rocket and terror attacks. Furthermore, hostilities along Israel’s northern border with Hezbollah located in Lebanon have accelerated, as a result of such, Israel has begun conducting a limited ground operation in southern Lebanon, which has the potential to escalate into a wider regional conflict. In addition, Iran has directly targeted Israel with ballistic missiles and other weaponry.

The intensity and duration of Israel’s current war against Hamas is difficult to predict, as are such war’s economic implications on our business and operations and on Israel’s economy in general. These events may be intertwined with wider macroeconomic indications of a deterioration of Israel’s economic standing, for instance, a downgrade in Israel’s credit rating by rating agencies (such as the downgrade by Moody’s of its credit rating of Israel from A1 to A2, as well as the downgrade of its outlook rating from “stable” to “negative” followed by a second more recent downgrade from A2 to BAA1, and the S&P Global lowered its long-term credit rating from AA- to A+, as well as a downgrade of its short-term credit ratings from A-1+ to A-1, and recently, further downgraded this rating to A-, with an outlook on the long-term ratings “negative”, as well as the downgrade by Fitch Ratings of its credit rating of Israel from A+ to A, with an outlook rating of “negative”) which may have a material adverse effect on our company and our ability to effectively conduct its operations.

Our facilities are not only within the range of rockets from the Gaza Strip, but also within the range of rockets that can be fired from Lebanon, Syria or elsewhere in the Middle East. In the event that our facilities are damaged as a result of hostile action or hostilities otherwise disrupt the ongoing operation of our facilities, our ability to deliver products to customers in a timely manner to meet our contractual obligations with customers and vendors could be materially and adversely affected.

Furthermore, Plantify, in which we have an approximately 23% ownership interest, has facilities in Kibbutz Gonen, which is located in an area in northern Israel that has been affected by ongoing hostilities with Hezbollah in Lebanon, as part of ongoing war. Due to the continuous drone attacks, missile strikes, shootings and the limited ground operation in the region, the area has been completely evacuated of civilians, following which all the employees were put on unpaid leave until further notice. Plantify has ceased its operations at the Kibbutz Gonen facility and may not be able to resume its regular activities, including its ability to deliver products to customers in a timely manner, if the hostilities persist for an extended period which may have an adverse effect on its financial condition and ability to repay loans from us under a C$1,500,000 (approximately US$1,124,000) 8% debenture and a credit facility of up to $250,000, of which, Plantify has fully utilized to date.

We have experienced delays in our pilots and packaging activities due to the war, as certain packing houses, such as Mehadrin, have halted operations for the time being. Additionally, we anticipated engaging additional packing houses to conduct pilots on strawberries and citruses with our product, but, due to the war, we were unable to continue pursuing new collaborations for these pilots, and we may not be able to resume any potential collaborations if the current war persists for an extended duration. We are unable to predict how long the current conflict will last, as well as the repercussions these delays will have on our operations. If we are unable to renew our pilots or collaborations with local packing houses our financial results may be affected.

Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business.

As a result of the Israeli security cabinet’s decision to declare war against Hamas, and possible hostilities with other organizations, several hundred thousand Israeli military reservists were drafted to perform immediate military service. Certain of our employees and consultants in Israel and employees of our service providers located in Israel, have been called, and additional employees may be called, for service in the current or future wars or other armed conflicts with Hamas, and such persons may be absent for an extended period of time. Although we have certain manufacturing capabilities in the United States, our Israeli operations may be disrupted by such absences, which may materially and adversely affect our business and results of operations. Additionally, the absence of employees of our Israeli suppliers and contract manufacturers due to their military service in the current war or future wars or other armed conflicts may disrupt their operations, which in turn may event our materially and adversely affect our ability to deliver or provide products and services to customers.

In addition, popular uprisings in various countries in the Middle East and North Africa have affected the political stability of those countries. Such instability may lead to a deterioration in the political and trade relationships that exist between the State of Israel and these countries. Moreover, some countries around the world restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies if hostilities in Israel or political instability in the region continues or increases. These restrictions may limit materially our ability to obtain raw materials from these countries or sell our products to companies and customers in these countries.

Furthermore, following Hamas’ attack on Israel and Israel’s security cabinet declaration of war against Hamas, the Houthi movement, which controls parts of Yemen, launched a number of attacks on marine vessels traversing the Red Sea, which marine vessels were thought to either be in route towards Israel or to be partly owned by Israeli businessmen. The Red Sea is a vital maritime route for international trade traveling to or from Israel. As a result of such disruptions, we may experience in the future delays in supplier deliveries, extended lead times, and increased cost of freight, increased insurance costs, purchased materials and manufacturing labor costs. The risk of ongoing supply disruptions may further result in delayed deliveries of our products.

Prior to the Hamas attack in October 2023, the Israeli government pursued extensive changes to Israel’s judicial system, which sparked extensive political debate and unrest. In response to such initiative, many individuals, organizations and institutions, both within and outside of Israel, have voiced concerns that the proposed changes may negatively impact the business environment in Israel including due to reluctance of foreign investors to invest or transact business in Israel as well as to increased currency fluctuations, downgrades in credit rating, increased interest rates, increased volatility in security markets, and other changes in macroeconomic conditions. The risk of such negative developments has increased in light of the recent Hamas attacks and the war against Hamas declared by Israel. To the extent that any of these negative developments do occur, they may have an adverse effect on our business, our results of operations and our ability to raise additional funds, if deemed necessary by our management and board of directors.

***Our investment in the solar energy sector is both for strategic and financial reasons but we may not realize a return on our investments.***

We have made, and continue to seek to make, investments in the solar energy sector, by and through our collaborate with Solterra, which we believe furthers our strategic objectives and support our key business initiatives. We have thus far invested in certain solar energy projects in Europe and do not restrict ourselves from pursuing additional investments in the solar energy sector. If any project in which we invest fails, we could lose all or part of our investment in that project. If we determine that an other-than-temporary decline in the fair value exists for any such investment, we will have to write down the investment to its fair value and recognize the related write-down as an investment loss. The performance of any of these investments could result in significant impairment charges and gains (losses) on other equity investments. We must also analyze accounting and legal issues when making these investments. If we do not structure these investments properly, we may be subject to certain unfavorable accounting impact, such as potential consolidation of financial results. Furthermore, if the strategic objectives of an investment have been achieved, or if the investment diverges from our strategic objectives, we may seek to dispose of the investment. The occurrence of any of these events could harm our results.

Filed Nov 14, 2024.
Source: SEC EDGAR, the filing index for accession 0001493152-24-045890. Last ingested by Listed: Nov 6, 2026, 17:26 ET. No prices; not investment advice.