N2OFF Inc

Previous wording

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

Current wording

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

Previous wording

Revenues for the three months ended March 31, 2024 were $43,831, a decrease of $77,179 or 64%, compared to $121,010 during the three months ended March 31, 2023. The decrease is mainly a result of a decrease in our sales in Mexico.

Current wording

Revenues for the three months ended June 30, 2024 were $16,546, a decrease of $20,062 or 55%, compared to $36,608 during the three months ended June 30, 2023. The decrease is mainly a result of a decrease in our sales in Mexico.

Previous wording

Cost of sales consists primarily of salaries, materials, and overhead costs of manufacturing our products. Cost of sales for the three months ended March 31, 2024 was $27,980, a decrease of $14,766, or 35%, compared to cost of revenues of $42,746 for the three months ended March 31, 2023. The decrease is mainly a result of a decrease in our revenues.

Current wording

Cost of sales consists primarily of salaries, materials, and overhead costs of manufacturing our products. Cost of sales for the three months ended June 30, 2024 was $5,782, a decrease of $21,225, or 79%, compared to cost of sales of $27,007 for the three months ended June 30, 2023. The decrease is mainly a result of a decrease in our revenues as a result of a decrease in our sales in Mexico, in addition to certain cost reductions.

Previous wording

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 March 31, 2024 were $57,248, a decrease of $11,898, or 17%, compared to total selling and marketing expenses of $69,146 for the three months ended March 31, 2023. The decrease is mainly attributable to the decrease in salaries, commissions and related costs and other professional fees associated with our sales, resulting from a reduction in personnel following our cost reduction measures.

Current wording

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 June 30, 2024 were $57,031, a decrease of $31,744, or 36%, compared to selling and marketing expenses of $88,775 for the three months ended June 30, 2023. The decrease is mainly attributable to the decrease in salaries resulting from a reduction in personnel following our cost reduction measures, offset by an increase in other professional fees associated with our sales.

Previous wording

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 March 31, 2024 were $741,803, a decrease of $892,060, or 55%, compared to general and administrative expenses of $1,633,863 for the three months ended March 31, 2023. The decrease is mainly a result of the decrease in share-based compensation, professional services, insurance costs and in franchise tax related to the Company’s reincorporation in Nevada from Delaware.

Current wording

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 June 30, 2024 were $808,251, an increase of $63,964, or 9%, compared to general and administrative expenses of $744,287 for the three months ended June 30, 2023. The increase is mainly a result of the increase in professional services offset by a decrease in salaries and related costs, share-based compensation, insurance costs and in franchise tax related to the Company’s reincorporation in Nevada from Delaware.

Previous wording

Financing income, net for the three months ended March 31, 2024 was $4,936, a decrease of $17,168, or 78%, compared to financing income, net of $22,104 for the three months ended March 31, 2023. The decrease is mainly a result of a decrease in interest income on our cash balances.

Current wording

Financing expenses, net for the three months ended June 30, 2024 were $81,055, an increase of $92,037, or 838%, compared to financing income, net of $10,982 for the three months ended June 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.

Previous wording

As a result of the foregoing, our total comprehensive loss for the three months ended March 31, 2024 was $822,358, compared to $1,721,549 for the three months ended March 31, 2023, a decrease of $899,191, or 52%.

Current wording

As a result of the foregoing, our total comprehensive loss for the three months ended June 30, 2024 was $800,142, compared to $714,935 for the three months ended June 30, 2023, an increase of $85,207, or 12%.

Previous wording

Gross profit for the three months ended March 31, 2024 was $15,851, a decrease of $62,413, or 80%, compared to a gross profit of $78,264 for the three months ended March 31, 2023. The decrease is mainly a result of the decrease in revenues.

Current wording

Gross profit for the six months ended June 30, 2024 was $26,615, a decrease of $61,250, or 70%, compared to a gross profit of $87,865 for the six months ended June 30, 2023. The decrease is mainly a result of the decrease in revenues.

Previous wording

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 March 31, 2024 were $115,866, a decrease of $3,042, or 3%, compared to research and development expenses of $118,908 for the three months ended March 31, 2023. The decrease is mainly attributable to a decrease in salaries and related expenses as a result of 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 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.

Current wording

Research and development expenses consist of salaries and related expenses, consulting fees, related materials and overhead expenses. Research and development expenses for the six months ended June 30, 2024 were $127,556, a decrease of $8,209, or 6%, compared to research and development expenses of $135,765 for the six months ended June 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.

Previous wording

As of March 31, 2024, we had cash and cash equivalents of $3,490,095, as compared to $4,595,838 as of March 31, 2023. As of March 31, 2024, we had a working capital of $3,861,561, as compared to $4,608,254 as of March 31, 2023. The decrease in our cash balance is mainly attributable to cash used in operations.

Current wording

As of June 30, 2024, we had cash and cash equivalents of $4,467,529, as compared to $2,969,707 as of June 30, 2023. As of June 30, 2024, we had working capital of $3,872,992, as compared to $3,365,898 as of June 30, 2023. The increase in our cash balance is mainly attributable to proceeds from the issuance of promissory notes.

Previous wording

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 the common stock for the three days prior to the delivery of each advance notice from us, subject to certain limitations, including that (i) 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.

Current wording

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.

Previous wording

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 May 15, 2024, we have sold 426,039 shares of common stock at an average purchase price of $1.35 to the Investor.

Current wording

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 August 14, 2024, we have sold 1,170,813 shares of common stock at an average purchase price of $0.93 per share to the Investor.

Previous wording

In connection with and subject to the satisfaction of certain conditions set forth in the purchase agreement, upon our request, the Investor pre-advanced 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 (each, a “Note”). The Pre-Advance made to us will be subject to a 3% discount to the principal amount equal to each 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, or any combination of (i) or (ii) as determined by us. The initial repayment is due 60 days after the issuance of a Note, followed by subsequent payments due every 30 days after the previous payment. 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.

Current wording

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.

Previous wording

On April 4, 2024, the Company, sold a $1,500,000 promissory note (the “Note”) to YA II PN, Ltd. (the “Investor”) in exchange for proceeds of $1,455,000, reflecting an original issue discount of 3% to face value. The Note was issued pursuant to the terms of the Standby Equity Purchase Agreement, dated as of December 22, 2023, between the Company and the Investor (the “Purchase Agreement”). The terms of the Purchase Agreement were previously reported by the Company in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on December 26, 2023.

Current wording

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%.

Previous wording

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, 2024, we had an accumulated deficit of approximately $30 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 date of this Quarterly Report.

Current wording

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 June 30, 2024, we had an accumulated deficit of approximately $31 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 date of this Quarterly Report.

Previous wording

We believe that our existing capital resources will be sufficient to support our operating plan through the second quarter of 2025; however, there can be no assurance of this. We will need to raise additional capital to support our growth 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.

Current wording

We believe that our existing capital resources will be sufficient to support our operating plan through the first quarter of 2025; however, there can be no assurance of this. We will need to raise additional capital to support our growth 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.

Previous wording

Net cash used in operating activities was $1,007,516 for the three months ended March 31, 2024, as compared to $1,105,789 for the three months ended March 31, 2023. The decrease is mainly attributable to a decrease in our net loss of $899,191, and an increase in accounts payable and prepaid expenses and other current assets offset by a decrease in other liabilities.

Current wording

Net cash used in operating activities was $2,037,468 for the six months ended June 30, 2024, as compared to $1,634,418 for the six months ended June 30, 2023. The increase is mainly attributable to a decrease in other liabilities and an increase in accounts receivable, net.

Previous wording

Net cash provided by financing activities was $39,950 for the three months ended March 31, 2024, as compared to net cash provided by financing activities of $0 for the three months ended March 31, 2023. The increase is the result of proceeds from the standby equity purchase agreement with YA II PN, Ltd. (the “Investor”) entered into on December 22, 2023.

Current wording

Net cash provided by financing activities was $2,208,854 for the six months ended June 30, 2024, as compared to no net cash provided by financing activities for the six months ended June 30, 2023. The increase is the result of proceeds from the standby equity purchase agreement with the Investor entered into on December 22, 2023 and proceeds from a promissory note to the Investor in April 2024, net of repayments.