N2OFF Inc
For the period ended Sep 30, 2024. Filed Nov 14, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 14, 2024
NXTS$0.51+6.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001493152-24-032148
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-14.
0001493152-24-045890
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 73 previous paragraphs and 78 current paragraphs.
36 unchanged; 26 reworded; 16 added; 11 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 5 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
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.
Current report
Annual Stockholder Meeting
Current report
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.
Current report
Share Issuances
Current report
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.
Current report
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.
Current report
Facility Agreement and Warrant Issuance
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
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.
Current report
Revenues for the three months ended September 30, 2024 were $9,104 compared to $0 during the three months ended September 30, 2023.
Current report
Gross Profit (loss)
Current report
Gross Profit (loss)
Current report
On October 1, 2024, we entered into the Facility Agreement for financing of up to EUR 6,000,000, as described above.
Removed paragraphs (11)
Previous report
Solterra Loan Agreement
Previous report
On June 30, 2024, we entered into a loan agreement (the “Loan Agreement”) with Solterra Renewable Energy Ltd., (the “Solterra”) and certain other lenders, pursuant to which the Lenders committed to loan Solterra an aggregate principal amount of € 500,000 (approximately $541,541) (€ 375,000 (approximately $406,156) of which was committed by us) with interest accruing on the principal at the rate of 7% per annum, to be paid annually beginning on June 30, 2025. If the loan is not converted or repaid within nine months of the merger, as described below, the interest rate will increase to 12%. Furthermore, if the loan is not converted into AI shares or repaid in full by June 30, 2026, Solterra will be required to repay the loan in full. In connection with, and contingent upon, the merger of Solterra with AI Conversation Systems Ltd., an Israeli company (“AI”) on July 21, 2024, the loan may be converted, at the sole discretion of Solterra into ordinary shares of AI at a price equal to the lowest price per share of AI, under which Solterra has raised capital from June 30, 2024 until such conversion.
Previous report
Amitai Weiss currently serves as the chairman of our board of directors and is a shareholder and serves as a member of the board of directors of AI.
Previous report
Loan and Partnership Agreement
Previous report
In connection with the Loan Agreement, on July 31, 2024, we entered into a loan and partnership agreement (the “Loan and Partnership Agreement”), with Horizons RES PE1 UG (haftungsbeschränkt) & Co. KG, a German partnership which is wholly owned by Solterra (the “Partnership”), and certain other lenders (collectively, the “Lenders”), pursuant to which the Lenders committed to loan the Partnership (the “Loan”) an aggregate principal amount of € 2,080,000 (approximately $2,288,000) (€ 1,560,000 (approximately $1,716,000) of which was committed by us). Interest accrues on the loan at the rate of 7% per annum. The Loan matures on the earlier of (i) the sale of the Partnership or (ii) five years from the date of the Loan and Partnership Agreement. All loans to the Partnership from Solterra will be subordinate to the Loan.
Previous report
Pursuant to the Loan and Partnership Agreement, the Lenders are entitled to participation rights of 50% (of which we will be entitled to receive 50% thereof) of the Partnership’s profits (the “Profits”), whether directly or by way of 50% membership or ownership in the Partnership, or through legal rights for the distribution of 50% of the Partnership’s Profits where Solterra acts as a trustee on behalf of the Lenders (the “Profit Rights Alternatives”). The Lenders will decide within three months from the date of the Loan and Partnership Agreement on the chosen Profit Right Alternative. Proceeds from the sale of a Partnership asset must first be used to repay the Lenders, pro rata with each Lender’s respective portion of the Loan. Repayment of the Loan is secured by a lien on Solterra’s interests in the Partnership. If a Lender defaults on a payment as scheduled in the Loan and Partnership Agreement, such Lender’s rights to Profits will be proportionately decreased, based on the amount of the Loan that was actually provided by such Lender to the Partnership out of its Loan commitment amount.
Previous report
Special Stockholder Meeting to Approve Reverse Stock Split and Increase in Authorized Shares
Previous report
At a special meeting of our stockholders held on June 28, 2024, our stockholders approved an amendment to our Articles of Incorporation to implement a reverse stock split (the “Reverse Split Amendment”) of the issued and outstanding shares of our common stock (the “Reverse Stock Split”) at a ratio of not less than 1-for-2 and not more than 1-for-35 (the “Reverse Split Range”), and to grant our board of directors the discretionary authority to determine the exact ratio of the Reverse Stock Amendment within the Reverse Split Range and to effect the Reverse Split Amendment at such time and date, if at all, as to be determined by the board of directors in its sole discretion. The other proposal brought before the meeting to increase the aggregate number of authorized shares of our 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 by our stockholders.
Previous report
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 report
Gross Profit
Reworded paragraphs (26)
Previous wording
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 265 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.
Current wording
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.
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 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.
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 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.
Previous wording
Gross profit for the three months ended June 30, 2024 was $10,764, an increase of $1,163, or 12%, compared to a gross profit of $9,601 for the three months ended June 30, 2023. The increase is mainly a result of certain cost reductions.
Current wording
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.
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 June 30, 2024 were $11,690, a decrease of $5,167, or 31%, compared to research and development expenses of $16,857 for the three months ended June 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.
Current 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 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.
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 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.
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 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.
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 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.
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 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.
Previous 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.
Current wording
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.
Previous 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%.
Current wording
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%.
Previous wording
Six months ended June 30, 2024 compared to six months ended June 30, 2023
Current wording
Nine months ended September 30, 2024 compared to nine months ended September 30, 2023
Previous wording
Revenues for the six months ended June 30, 2024 were $60,377, a decrease of $97,241, or 62%, compared to $157,618 during the six months ended June 30, 2023. The decrease is mainly a result of a decrease in our sales in Mexico.
Current wording
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.
Previous wording
Cost of sales consists primarily of salaries, materials and overhead costs of manufacturing our products. Cost of sales for the six months ended June 30, 2024 were $33,762, a decrease of $35,991, or 52%, compared to $69,753 for the six months ended June 30, 2023. The decrease is mainly results from 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 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.
Previous 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.
Current wording
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.
Previous 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.
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 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.
Previous wording
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 six months ended June 30, 2024 were $114,279, a decrease of $43,642, or 28%, compared to total selling and marketing expenses of $157,921 for the six months ended June 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.
Current wording
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.
Previous wording
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 six months ended June 30, 2024 were $1,550,054, a decrease of $828,097, or 35%, compared to total general and administrative expenses of $2,378,151 for the six months ended June 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.
Current wording
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.
Previous wording
Financing expenses, net, for the six months ended June 30, 2024, were $76,119, an increase of $109,206, or 330%, compared to total financing expenses of $33,087 for the six 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.
Current wording
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.
Previous wording
As a result of the foregoing, our total comprehensive loss for the six months ended June 30, 2024 was $1,622,500, compared to $2,436,484 for the six months ended June 30, 2023, a decrease of $813,985, or 33%.
Current wording
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%.
Previous 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.
Current wording
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.
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 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.
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 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.
Previous 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.
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. As of September 30, 2024, the note was repaid and extinguished.
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 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.
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. 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.
Previous 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.
Current wording
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.
Previous wording
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, or 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 the Company’s 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 the Company fail to operate as a going concern.
Current wording
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.
Previous 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.
Current wording
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.
Previous wording
Net cash used in investing activities was $161,886 for the six months ended June 30, 2024, as compared to net cash used in investing activities of $1,101,669 for the six months ended June 30, 2023. The decrease is mainly attributable to our investment in Plantify in April 2023.
Current wording
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.
Previous 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.
Current wording
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.