As
filed with the Securities and Exchange Commission on January 11, 2024
Registration
No. 333-_______
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
| SAVE FOODS, INC. |
| (Exact name of registrant as specified in its charter) |
| Nevada |
|
2000 |
|
26-4684680 |
| (State
or jurisdiction of |
|
(Primary
Standard Industrial |
|
(I.R.S.
Employer |
| incorporation
or organization) |
|
Classification
Code Number) |
|
Identification
Number) |
HaPardes
134 (Meshek Sander)
Neve
Yarak, Israel
Telephone:
(347) 468-9583
(Address,
including zip code, and telephone number, including area code, of registrant’s principal executive offices)
VCorp
Services, LLC
701
S. Carson Street
Suite
200
Carson
City, Nevada 89701
Telephone:
888-528-2677
(Name,
address, including zip code, and telephone number, including area code, of agent for service)
Copies
to:
Mark
E. Crone, Esq.
The
Crone Law Group, P.C.
420
Lexington Avenue, Suite 2446
New
York, New York 10170
mcrone@cronelawgroup.com
Telephone:
(646)-861-7891
Approximate
date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement is declared effective.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, check the following box. ☒
If
this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.
☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If
this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”,
“smaller reporting company” and “emerging growth company in Rule 12b-2 of the Exchange Act. (Check one):
| Large
accelerated filer: |
☐ |
Accelerated
filer: |
☐ |
| Non-accelerated
filer: |
☐ |
Smaller
reporting company: |
☒ |
| |
|
Emerging
growth company: |
☒ |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐
The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the
Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek
an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject
to completion, dated _________, 2024
PRELIMINARY
PROSPECTUS
SAVE
FOODS, INC.
6,666,667
Shares of Common Stock
This
prospectus relates to the resale from time to time of up to 6,666,667 shares of common stock, par value $0.0001 per share (the “Common
Stock”), of Save Foods, Inc., a Nevada corporation (the “Company”), by YA II PN, Ltd. (the “Investor” or
the “Selling Stockholder”), pursuant to a standby equity purchase agreement (the “Purchase Agreement”) which
the Company entered into with the Investor, dated as of December 22, 2023. Pursuant to the Purchase Agreement, the Investor agreed to
purchase up to $20 million shares of the Company’s Common Stock over the course of thirty-six months following the date of the
Purchase Agreement. The price of the Common Stock to be issued under the Purchase Agreement shall be 94% of the lowest volume weighted
average trading price (the “VWAP”) of the Common Stock for the three consecutive trading days prior to delivery of each written
notice by the Company to the Investor requesting an advance pursuant to the Purchase Agreement.
The
Selling Stockholder, or its transferees, pledgees, donees or other successors-in-interest, may sell the Common Stock through public or
private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. The
Selling Stockholder may sell any, all or none of the securities offered by this prospectus, and we do not know when or in what amount
the Selling Stockholder may sell its shares of Common Stock hereunder following the effective date of this registration statement.
The
Selling Stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act of 1933, as amended
(the “Securities Act”).
We
provide more information about how the Selling Stockholder may sell its shares of Common Stock in the section titled “Plan of Distribution”
on page 34.
Our
Common Stock is currently traded on the Nasdaq Capital Market (“Nasdaq”) under the symbol “SVFD.” On January
9, 2024, the last reported sale price for our Common Stock was $2.04 per share. See “Determination of Offering
Price.”
We
are registering the shares of Common Stock on behalf of the Selling Stockholder, to be offered and sold by them from time to time. We
will not receive any proceeds from the sale of the Common Stock by the Selling Stockholder in the offering described in this prospectus.
We have agreed to bear all expenses incurred in connection with the registration of the Common Stock. The Selling Stockholder will pay
or assume discounts, commissions, fees of underwriters, selling brokers or dealer managers and similar expenses, if any, incurred for
the sale of the Common Stock.
We
are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and, as
such, are eligible for reduced public company reporting requirements.
Investing
in our Common Stock involves a high degree of risk. You should invest in our Common Stock only if you can afford to lose your entire
investment. Before making any investment decision, you should carefully review and consider all the information in this prospectus and
the documents incorporated by reference herein, including the risks and uncertainties described under “Risk Factors” beginning
on page 7.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is _____________, 2024.
TABLE
OF CONTENTS
You
should rely only on the information contained in this prospectus. Neither we, nor the Selling Stockholder have authorized anyone to provide
information different from that contained in this prospectus. The Selling Stockholder is offering to sell, and seeking offers to buy,
shares of Common Stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate
only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our Common Stock.
PROSPECTUS
SUMMARY
This
summary highlights selected information contained elsewhere in this prospectus. This summary does not contain all the information that
you should consider before investing in our securities. You should carefully read the entire prospectus and the information contained
in or incorporated by reference into this prospectus, including “Risk Factors,” “Selected Financial Data”, “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our Financial Statements, before making an investment
decision.
Unless
noted otherwise, all share and the price per share information in this prospectus for all periods presented reflect the reverse stock
split of our outstanding Common Stock at a ratio of 1-for-7, which became effective as of October 5, 2023. On the opening of the market
on October 6, 2023, our Common Stock began trading on the Nasdaq Capital Market on a post-reverse stock split basis.
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 Nitrousink, Ltd.(“Nitrousink”), incorporated in August 2023, 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
Nitrousink 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, the Company has a 23% ownership in 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.
We
were incorporated in the State of Delaware on April 1, 2009 and effective November 10, 2023, the Company merged with and into its wholly-owned
subsidiary established in the State of Nevada for purpose of reincorporating in the State of Nevada.
Our
principal executive offices are located at HaPardes 134 (Meshek Sander), Neve Yarak, Israel, 4994500 and our telephone number is (347)
468-9583. Our website address is www.savefoods.co. The information contained on, or that can be accessed through, our website
is not incorporated by reference into this prospectus and is intended for informational purposes only.
Our
Common Stock is listed on the Nasdaq Capital Market under the symbol “SVFD”.
Recent
Developments
Reincorporation
in Nevada
On
October 2, 2023, at our annual stockholder meeting, our stockholders approved the reincorporation of the Company from the State of Delaware
to the State of Nevada by a parent-subsidiary merger. On November 6, 2023, the Company entered into an Agreement and Plan of Merger (the
“Merger Agreement”) with Save Foods, Inc., a newly formed Nevada corporation and its wholly owned subsidiary (the “Surviving
Corporation”), pursuant to which, on the same date, the Company, as parent in this transaction, merged with and into the Surviving
Corporation (the “Reincorporation Merger”). Upon the consummation of the Reincorporation Merger, the Company ceased its legal
existence as a Delaware corporation, and the Surviving Corporation continued the Company’s business as the surviving corporation
in the Reincorporation Merger under the name “Save Foods, Inc.” succeeding to all Company’s rights, assets, liabilities
and obligations, except that its affairs ceased to be governed by the Delaware General Corporation Law and became subject to the Nevada
Revised Statutes. The Reincorporation Merger became effective on The Nasdaq Capital Market on November 10, 2023
Standby
Equity Purchase Agreement
On
December 22, 2023, we entered into a Standby Equity Purchase Agreement (the “Purchase Agreement”) with the Investor, pursuant
to which the Investor has agreed to purchase up to $20 million of the Company’s shares of common stock, par value of $0.0001 per
share (the “Common Stock”) over the course of 36 months after the date of the Purchase Agreement. The price of shares to
be issued under the Purchase Agreement will be 94% of the lowest volume weighted average price (the “VWAP”) of the Company’s
Common Stock for the three trading days immediately following the delivery of each Advance notice by the Company (the “Pricing
Period”). Each issuance and sale by the Company to the Investor under the Purchase Agreement (an “Advance”) is subject
to a maximum amount equal to the greater of 100% of the Daily Traded Amount (being the product obtained by multiplying the daily trading
volume of the Company’s Common Stock, as reported by Bloomberg L.P., by the VWAP for such trading day) during the five trading
days immediately preceding an Advance notice or $500,000 in Common Stock.
With
respect to each Advance, the Company has the option to notify the Investor of a minimum acceptable price (“MAP”) by specifying
the amount within an Advance notice. During any trading day within a Pricing Period, two conditions will trigger an automatic reduction
to the amount of the Advance by one third: either (i) the VWAP of the common stock is below the MAP specified in the Advance notice,
or (ii) when no VWAP is available (each such day, an “Excluded Day”). On each Excluded Day, an automatic one third reduction
is applied to the specified Advance amount in the Advance notice and that day will be excluded from the Pricing Period.
Each
Advance is subject to certain limitations, including that the Investor cannot purchase any shares that would result in it beneficially
owning more than 4.99% of the Company’s outstanding shares of Common Stock at the time of an Advance or acquiring more than 19.99%
of the Company’s outstanding shares of Common Stock as of the date of the Purchase Agreement (the “Exchange Cap”).
The Exchange Cap will not apply under certain circumstances, including, where the Company has obtained stockholder approval to issue
in excess of the Exchange Cap in accordance with the rules of Nasdaq or such issuances do not require stockholder approval under Nasdaq’s
“minimum price rule.”
The
Purchase Agreement will terminate automatically on the earlier of December 22, 2027 or when the Investor has purchased an aggregate of
$20 million of the Company’s shares of Common Stock. The Company has the right to terminate the Purchase Agreement upon five trading
days’ prior written notice to the Investor.
In
connection with and subject to the satisfaction of certain conditions set forth in the Purchase Agreement, upon the request of the Company,
the Investor will pre-advance to the Company 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 Company can request $1,500,000 (half of the amount
of the Pre-Advance) at any time until the earlier of (i) 120 days following December 22, 2023 and (ii) the effective date of the registration
statement, and the balance can be requested after the effectiveness of the registration statement until 60 days after such effectiveness,
in each case subject to the satisfaction of certain conditions as set forth in the Purchase Agreement. Each Pre-Advance made to the Company
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 the Company. 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 the Company pursuant to the Purchase Agreement for the sale of shares will first be
used to satisfy any payments due under an outstanding Note.
The
Company paid a subsidiary of the Investor a structuring fee in the amount of $10,000 and issued the Investor 110,554 shares of Common
Stock (the “Commitment Shares”) as a commitment fee. The Company and the Investor made certain representations and warranties
to each other that are customary for transactions similar to this one, subject to specified exceptions and qualifications. Each of the
Company and the Investor also agreed to indemnify the other.
Board
Appointments
On
November 12, 2023, Liat Sidi was appointed to the board of directors of the Company to serve as a Class II director until the Company’s
2026 annual meeting of stockholders.
On
December 20, 2023, Asaf Itzhaik was appointed to the board of directors of the Company to serve as a Class II director until the Company’s
2026 annual meeting of stockholders. Mr. Itzhaik was designated by Plantify as its representative on the board in accordance with the
Securities Exchange Agreement, dated March 31, 2023, between the Company and Plantify, to replace Dr. Roy Borochov who resigned from
the board on December 15, 2023. Dr. Borochov’s resignation was not the result of a disagreement with the Company on any matter
relating to the Company’s operations, policies or practices.
Name
Change
We
have requested stockholder approval for an amendment to our Articles of Incorporation for our board of directors to implement a name
change of our company to N2OFF, Inc. which our board of directors believes may better reflect future business expansion, including
solutions to mitigate N20 emissions.
Emerging
Growth Company
We
are an “emerging growth company,” as defined in the JOBS Act. We will remain an emerging growth company until the earlier
of (i) December 31, 2026, the last day of the fiscal year following the fifth anniversary of the date of the first sale of our Common
Stock pursuant to an effective registration statement under the Securities Act; (ii) the last day of the fiscal year in which we have
total annual gross revenues of $1 billion or more; (iii) the date on which we have issued more than $1 billion in nonconvertible debt
during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under applicable SEC rules.
We expect that we will remain an emerging growth company for the foreseeable future but cannot retain our emerging growth company status
indefinitely and will no longer qualify as an emerging growth company on or before December 31, 2026. References herein to “emerging
growth company” have the meaning associated with it in the JOBS Act. For so long as we remain an emerging growth company, we are
permitted and intend to rely on exemptions from specified disclosure requirements that are applicable to other public companies that
are not emerging growth companies.
These
exemptions include:
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● |
being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; |
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not being required to comply with the requirement of auditor attestation of our internal controls over financial reporting; |
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not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; |
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reduced disclosure obligations regarding executive compensation; and |
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not being required to hold a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. |
For
as long as we continue to be an emerging growth company, we expect that we will take advantage of the reduced disclosure obligations
available to us as a result of that classification. We have taken advantage of certain of those reduced reporting burdens in this prospectus.
Accordingly, the information contained herein may be different than the information you receive from other public companies in which
you hold stock.
An
emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for
complying with new or revised accounting standards. This allows an emerging growth company to delay the adoption of certain accounting
standards until those standards would otherwise apply to private companies. We have irrevocably elected to avail ourselves of this extended
transition period and, as a result, we will not be required to adopt new or revised accounting standards on the dates on which adoption
of such standards is required for other public reporting companies.
To
the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the
Exchange Act, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth
company may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor
attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement
to provide only two years of audited financial statements, instead of three years.
THE
OFFERING
| Common Stock to be Offered by the Selling Stockholder |
|
Up to 6,666,667 shares of Common Stock, consisting of 110,554 shares that we issued to the Investor as a commitment fee for entering into the Purchase Agreement (the “Commitment Shares”) and 6,556,113 shares that we may sell to the Investor pursuant to the Purchase Agreement from time to time after the registration statement of which this prospectus forms a part is declared effective and the other terms and conditions of the Purchase Agreement are satisfied. |
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|
|
| Common Stock outstanding before the Offering |
|
2,955,490 shares of Common Stock |
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|
|
| Common Stock outstanding after the Offering (assuming all of the shares offered in the Offering have been issued and sold) |
|
9,622,157 shares of Common Stock
|
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|
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| Use of Proceeds |
|
We will not receive any proceeds from the sale of the Common Stock by the Selling Stockholder in this offering. We may receive up to $20 million in gross proceeds from any sales we may make to the Selling Stockholder pursuant to the Purchase Agreement from time to time for up to thirty-six months from the date of the Purchase Agreement after the registration statement of which this prospectus forms a part is declared effective. Any net proceeds from the Selling Stockholder that we receive under the Purchase Agreement will be used to make any payments due under an outstanding Note, for general corporate purposes, capital expenditures, working capital and general and administrative expenses. |
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| Nasdaq symbol |
|
Our Common Stock trades on the Nasdaq Capital Market under the symbol “SVFD”. |
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| Risk Factors |
|
See “Risk Factors” beginning on page 7 and the other information included elsewhere in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our equity securities. |
The
number of shares of Common Stock to be outstanding after this offering is based on 2,955,490 shares of Common Stock outstanding as of
January 9, 2024.
Except
as otherwise indicated, all share and per share numbers contained in this prospectus are reflected on a post-split basis for all periods
presented.
Summary
Risk Factors
Our
business is subject to numerous risks and uncertainties, any one of which could have a materially adverse effect on our results of operations,
financial condition or business. These risks include, but are not limited to, those listed below. This list is not complete, and should
be read together with the section titled “Risk Factors” below:
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We
have a history of operating losses and expect to incur additional losses in the future. |
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We
may need to raise significant additional capital, which we may be unable to obtain. |
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Because
of our limited operating history, we may not be able to successfully operate our business or execute our business plan. |
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Our
customers require that our products undergo a lengthy testing period without any assurance of sales. |
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Our
products and technology require additional trials. |
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The
commercial success of our new generation products, as well as any future products, depend upon the degree of market acceptance by
the packing house community as well as by other prospect markets and industries. |
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We
may face significant competition from other companies looking to develop or acquire new alternative environmentally friendly solutions
for the treatment of fruits and vegetables, and other edible matter. |
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Our
success is dependent upon the acceptance of our environmentally friendly solutions for fruits and vegetables. |
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We
may be unable to respond effectively to technological changes in our industry, which could reduce the demand for our products. |
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We
currently rely on a limited number of suppliers to produce certain key components of our products. |
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If
we are unable to establish sales, marketing and distribution capabilities or enter into successful relationships with third parties
to perform these services, we may not be successful in commercializing our products. |
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We
rely on rapidly establishing a global distributorship network in order to effectively market our products. |
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The
results of our early tests may not be indicative of results in future tests, and we cannot assure you that any planned or future
tests will lead to results sufficient for the necessary regulatory approvals. |
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Our
products are highly regulated by governmental agencies in the countries where we conduct business and in countries in which we plan
to expand. Our failure to obtain regulatory approvals and registration, to comply with registration and regulatory requirements or
to maintain regulatory approvals would have an adverse impact on our ability to market and sell our products. |
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Our
success is dependent upon our ability to achieve regulatory approvals and registration in the United States, Mexico, Peru, Turkey,
Egypt, South Africa, Brazil, and Israel, which might take longer than expected. |
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The
inherent dangers in production and transportation of hydrogen peroxide and highly concentrated organic acids could cause disruptions
and could expose us to potentially significant losses, costs or other liabilities. |
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Our
business and operations may be affected by unexpected events, including climate change conditions and natural disasters, which could
materially harm our financial results. |
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Conditions
in the global economy, including inflation and recessionary pressures, may adversely affect our business, financial condition and
results of operation. |
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COVID-19,
including the efforts to mitigate its impact, have, and may continue to have, an impact on our business, liquidity, results of operations,
financial condition and price of our securities. |
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Increased
attention to environmental, social, and governance matters and conservation measures may adversely impact our business or that of
our manufacturers. |
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Our
relationship with our employees could deteriorate, and certain key employees could leave, which could adversely affect our business
and results of operations. |
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We
are subject to risks relating to portfolio concentration. |
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Our
operating results may fluctuate, which makes our results difficult to predict and could cause our results to fall short of expectations. |
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International
expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with
doing business outside of the United States, Mexico or Israel. |
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Our
business depends to some extent on international transactions. |
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If
we are unable to secure and maintain patent or other intellectual property protection for our products, our ability to compete may
be harmed. |
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If
we are unable to prevent unauthorized use or disclosure of our proprietary trade secrets and unprotected know-how, our ability to
compete may be harmed. |
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We
could become subject to patent and other intellectual property litigation that could be costly, result in the diversion of management’s
attention, require us to pay damages and force us to discontinue selling our products. |
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We
may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property. |
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We
may experience claims that our products infringe the intellectual property rights of others, which may cause us to incur unexpected
costs or prevent us from selling our products or services. |
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If
we or our contractors or service providers fail to comply with laws and regulations, we or they could be subject to regulatory actions,
which could affect our ability to develop, market and sell our products or future products that we may develop and may harm our reputation
in our industry. |
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Regulatory
reforms may adversely affect our ability to sell our products profitably. |
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Conditions
in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against
them, may adversely affect our operations and limit our ability to manage and market our products, which would lead to a decrease
in revenues. |
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We
may not be able to enforce covenants not-to-compete under current Israeli law that might result in added competition for our products. |
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It
may be difficult to acquire jurisdiction and enforce liabilities against our officers and directors who are based in Israel. |
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We
may not satisfy Nasdaq’s requirements for continued listing. If we cannot satisfy these requirements, Nasdaq could delist our
securities. |
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The
market price of our Common Stock may be highly volatile. |
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Sales
of a substantial number of our Common Stock in the public market by our existing stockholders could cause our share price to fall. |
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Nevada
law and provisions in our articles of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby
depressing the market price of our Common Stock. |
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We
may be subject to securities litigation, which is expensive and could divert management attention. |
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If
securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or
if they adversely change their recommendations or publish negative reports regarding our business or our Common Stock, our stock
price and trading volume could decline. |
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We
do not anticipate paying any cash dividends in the foreseeable future. |
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We
may need additional capital, and the sale of additional shares or equity or debt securities could result in additional dilution to
our stockholders. |
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Disruptions
to our information technology systems due to cyber-attacks or our failure to upgrade and adjust our information technology systems,
may materially impair our operations, hinder our growth and materially and adversely affect our business and results of operations. |
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Failure
to comply with anti-bribery, anti-corruption and anti-money laundering laws could subject us to penalties and other adverse consequences. |
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We
incur additional increased costs as a result of the listing of our Common Stock on Nasdaq, and our management is required to devote
substantial time to new compliance initiatives and reporting requirements. |
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We
face risks related to compliance with corporate governance laws and financial reporting standards. |
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The
ongoing conflict in Ukraine may result in market volatility that could adversely affect our business. |
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If
we fail to implement and maintain effective internal control over financial reporting, we may be unable to report our financial results
accurately or meet our reporting obligations. |
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FINRA
sales practice requirements may limit a stockholder’s ability to buy and sell our Common Stock. |
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It
is not possible to predict the actual number of shares we will sell under our agreement with the Investor, or the actual gross proceeds
resulting from those sales. |
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Investors
who buy shares at different times will likely pay different prices. |
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We
completed a reverse stock split on October 5, 2023, in an effort to regain compliance with Nasdaq listing rules and we cannot predict
the effect that such reverse stock split will have on the market price of our Common Stock. |
RISK
FACTORS
Investing
in our Common Stock involves a high degree of risk. Before investing in our Common Stock, you should carefully consider the risks described
below, as well as the other information in this prospectus, including our consolidated financial statements and the related notes. In
addition, we may face additional risks and uncertainties not currently known to us, or which as of the date of this registration statement
we might not consider significant, which may adversely affect our business. If any of the following risks occur, our business, financial
condition and results of operations could be materially adversely affected. In such case, the trading price of our Common Stock could
decline due to any of these risks or uncertainties, and you may lose part or all of your investment.
Risks
Related to Our Financial Condition and Capital Requirements
We
have a history of operating losses and expect to incur additional losses in the future.
We
have sustained losses in recent years, which as of September 30, 2023, accumulated to $27,626,606. We are likely to continue to incur
significant net losses for at least the next several years as we continue to pursue our strategy, which is currently focused on converting
pilots into paying customers, following lengthy sale cycles of at least two seasons. Our losses have had, and will continue to have,
an adverse effect on our stockholders’ equity and working capital. Any failure to achieve and maintain profitability would continue
to have an adverse effect on our stockholders’ equity and working capital and could result in a decline in our share price or cause
us to cease operations. As discussed in Note 1 to the financial statements, as a result of these factors, there is substantial doubt
about our ability to continue as a going concern.
We
may need to raise significant additional capital, which we may be unable to obtain.
Our
capital requirements in connection with our research and development activities and transition to commercial operations have been significant.
We will require additional funds to continue running pilots and testing our technologies and products, to obtain intellectual property
protection relating to our technologies, and to market our products. There can be no assurance that financing will be available in amounts
or on terms acceptable to us, if at all. If we are not able to procure adequate additional financing, we may not be able to fully implement
our growth plans and we will be required to stop our operations and will resume our activities only after capital is raised. Any Additional
financings that we may require in the future will dilute the percentage ownership interests of our stockholders and may adversely affect
our earnings and net book value per share.
Risks
Related to Our Business, Industry and Business Operations
Because
of our limited operating history, we may not be able to successfully operate our business or execute our business plan.
In
September 2018, the Company changed its organizational structure and management team. After reviewing the Company’s then existing
strategy and results of operation, as well as examining market opportunities, the new management team decided to update the Company’s
strategy, reduce the marketing and sales of its existing products, and focus the Company’s efforts and financial resources on developing
its next generation of products. From 2019 to 2020, we developed, validated and tested the efficacy of our next generation product -
a blend of food acids - on a variety of crops in both small- and large-scale commercial pilots. In 2021, we commenced commercialization
in various jurisdictions, while continuing to conduct commercial pilots. In 2022, we extended our commercial pilots in additional locations
in the Northern and Southern hemispheres to address the seasonal effect.
Given
our limited operating history, it is hard to evaluate our proposed business and prospects. Our proposed business operations will be subject
to numerous risks, uncertainties, expenses and difficulties associated with early-stage enterprises. Such risks include, but are not
limited to, the following:
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the
absence of a lengthy operating history, in connection with, inter alia, implementation of effective logistics for the export
of our product globally; |
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insufficient
capital to fully realize our operating plan; |
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expected
continual losses for the foreseeable future; |
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operating
in multiple currencies; |
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our
ability to anticipate and adapt to a developing market(s); |
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acceptance
of our products by pre- and post-harvest industry players and consumers; |
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limited
marketing experience; |
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a
competitive environment characterized by well-established and well-capitalized competitors; |
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the
ability to identify, attract and retain qualified personnel; and |
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operating
in an environment that is highly regulated. |
Because
we are subject to these risks, evaluating our business may be difficult, our business strategy may be unsuccessful and we may be unable
to address such risks in a cost-effective manner, if at all. If we are unable to successfully address these risks our business could
be harmed.
Our
customers require that our products undergo a lengthy testing period without any assurance of sales.
Our
prospective customers generally test and evaluate our solutions before applying them to their commercial product lines or integrating
them into their facilities. This testing period takes at least two seasons and could be longer or subject to delays. Even after our solutions
are approved by customers, due to seasonal effects, it could take several months before they begin purchasing our solutions, if at all.
Nothing guarantees that following such pilots, the targeted packing house will choose to use our solutions on its products or continue
the process further and complete the sale cycle. The combination of the longer sales cycle and the unique nature of our solutions that
could have different results following seasonal changes could have an impact on our profitability and business. As a result, we could
have limited revenues, or no revenues, from prospective customers, even after we have invested significant amounts of time in the pilot
phase and sales of our solutions, which in turn could adversely affect our business and financial results.
Our
products and technology require additional trials.
The
efficacy of our products has only been shown in the limited number of pathogens tested on certain produce and climates, and therefore
our products have yet to be proven against certain additional pathogens, produce and market climates to validate the efficacy and benefits
of our products. These trials are lengthy and prolong our sale cycle by at least two seasons, and
no assurance can be made that such packing facilities will chose to implement our solutions in their facilities.
The
commercial success of our new generation products, as well as any future products, depend upon the degree of market acceptance by the
packing house community as well as by other prospect markets and industries.
To
achieve high volume sales and attain a leading market share and become the new standard of treatment, our products must not only be approved
by the regulators, but also endorsed by the major packing houses and service providers, retailers of fruits and vegetables as well as
environmental organizations. Our success depends on our ability to create significant value to the growers, the packing houses and the
food retailers. We are aware of this key factor and are focusing on conducting large scale pilots with major fruits and vegetables packers
and retail suppliers of fresh consumed goods in several countries, to show the efficacy of the products and our technology, and to receive
the recognition of packers and retailers. However, there can be no assurances that we will succeed in such an endeavor, nor is it clear
how long it will take until we receive market recognition.
There
can be no assurance that any product that we bring to the market will gain market acceptance by prospective customers. The commercial
success of our new generation products and any future product depends in part on the packing house community as well as other industries
for various use cases, depending on the acceptance by such industries of our technology as a useful and cost-effective solution compared
to current solutions. If our new generation products or any future product does not achieve an adequate level of acceptance, we may not
generate significant product revenue and may not become profitable. The degree of market acceptance of our products will depend on a
number of factors, including:
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the
results of our large-scale pilots; |
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the
cost, safety, efficacy, and convenience of our new generation products; |
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the
acceptance of our products as a superior solution in the fresh produce industry; |
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the
ability of third parties to enter into relationships with us without violating their existing agreements; |
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the
effectiveness of our selling and marketing efforts; |
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the
strength of marketing and distribution support for, and timing of market introduction of, competing products; and |
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publicity
concerning our products or competing products. |
Our
efforts to penetrate the packing house industry and educate the marketplace on the benefits of our products may require significant resources
and may never be successful.
We
may face significant competition from other companies looking to develop or acquire new alternative environmentally friendly solutions
for the treatment of fruits and vegetables, and other edible matter.
We
expect to face significant competition in every aspect of our business, and particularly from other companies that seek to enter our
focal market. As regulators continue to move away from current residue chemical solutions, such as chlorpropham or CIPC, existing suppliers
of these solutions are continually looking to develop or acquire new alternative environment-friendly solutions that can sustain their
market share and revenue streams, or to enable the continuance of CIPC at current levels in new ways of treatment. Additionally, as market
opportunity becomes eminent, competitors and new players will most likely attempt to develop similar or comparable solutions. It is possible
that superior or more cost-effective alternative technology will emerge that will achieve greater market acceptance and render our products
less competitive. Furthermore, existing vendors can cooperate to combat new players by reducing market prices and margins or other competitive
initiatives. Our future success will therefore depend, to a large extent, upon our ability to achieve market acceptance of our innovative
solutions as well as develop and introduce new products and enhancements to existing products. No assurance can be given that we will
be able to compete in such a marketplace.
The
market for post-harvest solutions is fragmented with various regional suppliers. The market of post-harvest treatments for fruits and
vegetables is dominated by five large players with wide reach across the globe, which players may perceive us as a competitive threat
and institute commercial measures to reduce our market share, including by aggressively ‘bundling’ their products and services
to compete with us. We believe that the principal competitive factors in our industry include reputation, product quality, customer service
and customer intimacy, product innovation, technical service, and value creation.
Our
success is dependent upon the acceptance of our environmentally friendly solutions for fruits and vegetables.
Our
future success is dependent upon the acceptance of our environmentally friendly, non-toxic residual solutions for fruits and vegetables.
While the market is signaling that such a direction is likely, certain trends as well as the future size of this market, and other potential
markets for our products, rely upon a number of factors, many of which are beyond our control. For example, both the failure to convince
retailers to bear additional costs for “green” fruit and vegetables as well as the failure to persuade consumers to purchase
“green” fruits and vegetables for higher prices may adversely affect our business, financial condition, operating results
and cash flow going forward.
We
may be unable to respond effectively to technological changes in our industry, which could reduce the demand for our products.
Our
future business success will depend upon our ability to maintain and enhance our technological capabilities and develop and market products,
services and applications that meet changing customer needs and market conditions in a cost-effective and timely manner. Maintaining
and enhancing technological capabilities and developing new products may also require significant investments in research and development,
which following financial cutbacks, we have shifted our focus to the commercialization of our solutions with emphasis on converting recently
completed pilots into paying customers. We may not be successful in converting our completed pilots into paying customers or to develop
new products, services and technology that successfully compete or are able to anticipate changing customer needs and preferences, and
our customers may not accept one or more of our new products or services. If we fail to keep pace with evolving technological innovations
or fail to modify our products and services in response to customers’ needs or preferences, then our business, financial condition
and results of operations could be adversely affected.
We
currently rely on a limited number of suppliers to produce certain key components of our products.
We
rely on unaffiliated contract manufacturers to produce certain key components of our products. In Israel, we work exclusively with a
well-known producer of chemicals, Zohar Dalia, who is responsible for the production of our products. Zohar Dalia is well known for its
knowledge and handling of hydrogen peroxide. In the United States, we have worked for the past few years with Seeler Industries, a national
leader in the marketing and handling of hydrogen peroxide. We additionally work with a producer in South Africa. There is limited available
manufacturing capacity that meets our quality standards and regulatory requirements, especially for the manufacturing of the SF3H and
SF3HS with one of their active ingredients - hydrogen peroxide - as well as for FreshProtect with one of its active ingredients - PO3.
If we are unable to arrange for sufficient production capacity among our contract manufacturers or if our contract manufacturers encounter
production, quality, financial, or other difficulties, including labor or geopolitical disturbances, we may encounter difficulty in meeting
customer demands as we seek alternative sources of supply, or we may have to make financial accommodations to such contract manufacturers
or otherwise take steps to mitigate supply disruption. We may be unable to locate an additional or alternate contract manufacturer that
meets our quality controls and standards and regulatory requirements in a timely manner or on commercially reasonable terms. Any such
difficulties could have an adverse effect on our business, financial condition and results of operations, which could be material.
If
we are unable to establish sales, marketing and distribution capabilities or enter into successful relationships with third parties to
perform these services, we may not be successful in commercializing our products.
We
have a limited selling and marketing infrastructure and have limited experience in the sale, marketing or distribution of products. To
achieve commercial success for any product for which we have obtained marketing approval, we will need to enter into collaborations with
third parties, like post-harvest service companies, and establish a selling and marketing infrastructure or to out-license our products.
In
the future, we may consider building a focused selling and marketing infrastructure to market our products in the United States or elsewhere
in the world. There are risks involved with establishing our own sales, marketing and distribution capabilities. For example, recruiting
and training a sales force could be expensive and time consuming and could delay any product launch. This may be costly, and our investment
may be lost if we cannot retain or reposition our selling and marketing personnel.
Factors
that may inhibit our efforts to commercialize our products on our own include:
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our
inability to recruit, train and retain adequate numbers of effective selling and marketing personnel; |
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the
inability of sales personnel to obtain access to potential customers; |
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the
lack of complementary products to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies
with more extensive product lines; and |
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unforeseen
costs and expenses associated with creating an independent selling and marketing organization. |
If
we are unable to establish our own sales, marketing and distribution capabilities, or enter into successful arrangements with third parties
to perform these services, our revenues and our profitability may be materially adversely affected.
In
addition, we may not be successful in entering into arrangements with third parties to sell, market and distribute our products in our
target markets, including Chile, Mexico, Peru, Columbia, the United States, South Africa, the Philippines,
Thailand, Turkey, Egypt, Morocco, Spain, Italy, Brazil and Israel, or may be unable to do so on terms that are favorable to us.
We likely will have little control over such third parties, and any or all of them may fail to devote the necessary resources and attention
to sell and market our products effectively. If we do not establish sales, marketing and distribution capabilities successfully, either
on our own or in collaboration with third parties, we may not be successful in commercializing our product candidates.
We
rely on rapidly establishing a global distributorship network in order to effectively market our products.
We
have developed initial partnerships with local partners. In order to expand selling and marketing globally and capture leading market
share before any potential reaction from competitors, we will need to rapidly expand geographically and establish a global distribution
network. This will likely put pressure on our management as well as on our financial and operational resources. To mitigate this factor,
once we establish a significant presence in the market, we will proceed to establish strategic partnerships with leading market players;
however, there are no assurances that we will succeed in establishing such partnerships, which may harm the marketing of our products
and the development of our business.
The
results of our early tests may not be indicative of results in future tests, and we cannot assure you that any planned or future tests
will lead to results sufficient for the necessary regulatory approvals.
Our
products have been tested in multiple commercial and small-scale pilots on certain types of produce and during specific times of the
year. We are currently in the development and optimization phases of these products. Results from our later-stage commercial tests may
show lower efficacy than our early-tests conducted previously, and we cannot guarantee that when commercialized, our products will be
effective and stable and product improvements as well as possible changes in the application and usage protocol may be required. Our
results could further be affected by the changing behavior of the fruits throughout the season, therefore demonstrating inconsistent
results. These factors may significantly delay receipts of regulatory approvals, and the introduction of our products into the market.
Likewise, we cannot be sure these products will be commercially viable and have no assurances that we will be able to expand upon our
current product offerings or that any such expansion will generate revenue.
Our
products are highly regulated by governmental agencies in the countries where we conduct business and in countries in which we plan to
expand. Our failure to obtain regulatory approvals and registration, to comply with registration and regulatory requirements or to maintain
regulatory approvals would have an adverse impact on our ability to market and sell our products.
Some
of our products are subject to technical review and approval by government authorities in each country where we currently conduct our
business and where we intend to sell our products.
The
regulatory requirements to which we are subject are complex and vary from country to country. To obtain new registrations, it is necessary
to have a local registrant, and to understand the country’s regulatory requirements, both at the time an application for registration
is submitted and when the registration decision is made, which may be several years later. A significant investment in registration data
is required (covering all aspects from manufacturing specifications through storage and transport, use, and disposal of unwanted product
and used containers) to ensure that product performance (e.g., efficacy), intrinsic hazards and use patterns are fully characterized.
Risk assessments are conducted by government regulatory authorities who make the final decision on whether the documented risk associated
with a product and active ingredient is acceptable prior to granting approval for sale. This process may be prolonged due to requirements
for additional data or internal administrative processes. There is a risk that registration of a new product may not be obtained or that
a product label may be severely reduced, restricting the use of the product. If these circumstances arise, there is a risk that the substantial
investments made in product development will generate the projected sales that justified the investment, and our business, financial
condition and results of operations may be adversely affected by failure to obtain new registrations.
Products
that are already approved may be subject to periodic review by regulatory authorities in many countries. Such reviews frequently require
the provision of new data and more complex risk assessments. The outcome of such reviews of existing registrations cannot be guaranteed
and registrations may be modified or canceled. Since all government regulatory authorities have the right to review existing registrations
at any time, the sustainability of the existing portfolio cannot be guaranteed. Existing registrations may be lost at any time, resulting
in an immediate impact on sales. Furthermore, prior to expiration, it is necessary to renew registrations. The renewal period and processes
vary by country and may require additional studies to support the renewal process. Failure to comply could result in cancellation of
the registration, resulting in an impact on sales.
In
addition, new laws and regulations may be introduced, or existing laws and regulations may be changed or may become subject to new interpretations,
which could result in additional compliance costs, seizures, confiscations, recalls, monetary fines or delays that could affect us or
our customers.
Our
success is dependent upon our ability to achieve regulatory approvals and registration in the United States, Mexico, Peru, Turkey, Egypt,
South Africa, Brazil, and Israel, which might take longer than expected.
We
are subject to extensive national, state and local government regulation. A critical key to our success and ability to expand our business
is our ability to obtain regulatory approvals and registration in the United States and in other countries for the use of our products.
The regulatory approvals of some of our products are dependent on trials to show the efficacy and non-toxicity of our products and are
time and cost consuming. We do not anticipate any significant problems in obtaining future required licenses, permits or approvals necessary
to expand our business, however, such licenses, permits or approvals may take longer than expected due to various factors, which may
cause operational delays in these countries and other jurisdictions.
The
inherent dangers in production and transportation of hydrogen peroxide and highly concentrated organic acids could cause disruptions
and could expose us to potentially significant losses, costs or other liabilities.
Our
operations are subject to significant hazards and risks inherent to the transportation of the active ingredient of one of our products
- hydrogen peroxide. In high concentrations, our blend of acids has a very low pH which may lead to skin burn and hydrogen peroxide is
an aggressive oxidizer and both can corrode many materials. We are working with limited low concentration of the material, however in
high concentrations of H2O2 it will react violently. Hydrogen peroxide should be stored in a cool, dry, well-ventilated
area and away from any flammable or combustible substances. It should be transported in special tanks and vehicles and should be stored
in a container composed of non-reactive materials. These hazards and risks include, but are not limited to fires, explosions, third-party
interference (including terrorism) and mechanical failure of equipment at our or third-party facilities. The occurrence of any of these
events could result in production and distribution difficulties and disruptions, personal injury or wrongful death claims and other damage
to properties.
Our
business and operations may be affected by unexpected events, including climate change conditions and natural disasters, which could
materially harm our financial results.
Unexpected
events, including fires or explosions at our facilities, natural disasters such as earthquakes and wildfires, unplanned power outages,
supply disruptions, failure of equipment or systems, and severe weather events, such as droughts, heat waves, hurricanes, and flooding,
could adversely affect our reputation and results of operations through physical damage to our facilities and equipment and through physical
damage to, or disruption of, local infrastructure or disrupt our operations generally. During the past several years we have seen an
increase in the frequency and intensity of severe weather events and we expect this trend to continue due to climate change.
Our
business, in particular, may be affected from changes in climate conditions as such events would affect the crops yield and their storability
in those cases where there is unusually warm, dry, humid or cold weather before cropping.
In
such instances, we may suffer a decrease in revenues as a result of a smaller storage volume of rooms or shorter storage period. We anticipate
that once we increase our operations and enter certain markets which experience or will experience significant climate change, such as
above-common rain fall, heat waves, dry air conditions, and unusually cold or prolonged cold weather conditions, such events may materially
impact our financial results.
Furthermore,
certain natural disasters may affect our operations. For example, our partner in Turkey is located in eastern Turkey, which is the region
that sustained an earthquake that registered a 7.8 magnitude on February 6, 2023. Given that our operations are global in nature, and
our partnerships are located in various geographic locations subject to certain inherent dangers, it is plausible that our business and
operations may be adversely affected by any such future natural disasters.
Conditions
in the global economy, including inflation and recessionary pressures, may adversely affect our business, financial condition and results
of operation.
The
recent historically high inflation in the U.S., geopolitical issues, continuous increases in interest rates, unstable global conditions
and changes in exchange rates have led to global economic instability. Although demand for fresh horticultural products is considered
inelastic in developed economies, the fresh produce and citrus industries that we sell to may be affected by material changes in supply,
market prices, exchange rates and general economic conditions. As a result of the high inflation and recession, we are seeing record
high levels of unemployment and consumer spending trends are changing. Delays or reductions in our customers’ purchasing or shifts
to lower-cost alternatives that result from tighter economic market conditions would reduce demand for our products and services and
could, consequently, have a material adverse effect on our business, financial condition and results of operations.
COVID-19,
including the efforts to mitigate its impact, have, and may continue to have, an impact on our business, liquidity, results of operations,
financial condition and price of our securities.
The
COVID-19 pandemic, as well as the measures designed to contain and mitigate its effects, have had and may continue to have an impact
on our business and operations, as well as the operations of our customers. Our operations were moderately impacted by certain restrictions
that were put in place in effort to contain or mitigate the spread of COVID-19, specifically given the increasing difficulty with travelling
abroad for on-site visits with suppliers and other business partners, as well as various packing houses’ restrictions on our entry
into their facilities for operational purposes. In the event future variants emerge and trigger additional restrictions and other preventative
measures, such efforts may contribute to an economic downturn, which could decrease consumer spending on our products and services, as
well as impact our ability to expand our customer base or provide additional services to our current users.
In
addition, continuation or exacerbation of the global supply chain crisis, whether resulting from the COVID-19 pandemic or for reasons
otherwise unrelated, may impact our ability to forecast and control costs for raw materials necessary for our solutions. For instance,
given our dependency on third-party suppliers, our operations may be adversely affected by disruptions or delays to the supply chain
resulting from temporary closures of our supplier’s facilities, spikes in demand for our supplier’s goods and/or services
from other customers, interruptions in product supply, restrictions on export or shipment or disruptions in product fulfillment due to
closure or delays of our supplier’s delivery process.
Increased
attention to environmental, social, and governance (“ESG”) matters and conservation measures may adversely impact our business
or that of our manufacturers.
Public
companies are facing increasing scrutiny related to ESG practices and disclosures from certain investors, capital providers, shareholder
advocacy groups, other market participants, and other stakeholder groups. For example, certain institutional and individual investors
have requested various ESG-related information and disclosures as they increasingly incorporate ESG criteria in making investment and
voting decisions. With this increased focus, public reporting regarding ESG practices is becoming more broadly expected. Such increased
scrutiny may result in increased costs, enhanced compliance or disclosure obligations, or other adverse impacts on our business, financial
condition or results of operations. If our ESG practices and reporting do not meet investor or other stakeholder expectations, which
continue to evolve, we may be subject to investor or regulator engagement regarding such matters.
In
addition, new sustainability rules and regulations have been adopted and may continue to be introduced in various states and other jurisdictions.
For example, on March 21, 2022, the SEC issued a proposed climate disclosure rule, subject to which we would be required to disclose
certain climate-related information such as governance of climate-related risks and relevant risk management processes that could affect
us, a climate related financial statements matrix and more. While the proposed rule has yet to be finalized and we cannot predict the
ultimate scope and impact this will have on our business, if finalized, it would likely result in additional legal, accounting and financial
compliance and increased general and administrative expenses. Moreover, this could result in increased management time and attention
to ensure we are compliant with the regulations and expectations. Our failure to comply with any applicable rules or regulations could
lead to penalties and adversely impact our reputation, access to capital and employee retention. Such ESG matters may also impact third
parties on which we rely, which may augment or cause additional impacts on our business, financial condition, or results of operations.
Our
relationship with our employees could deteriorate, and certain key employees could leave, which could adversely affect our business and
results of operations.
Our
business involves complex operations and demands a management team to determine and implement our strategy and workforce that is knowledgeable
and has expertise in many areas necessary for our operations. As a company focused on commercializing our completed pilots into paying
customers in the highly-specialized horticultural post-harvest field, we rely on our ability to attract and retain skilled employees,
consultants and contractors. The departure of highly skilled employees, consultants or contractors or one or more employees who hold
key regional management positions could have an adverse impact on our operations.
In
addition, to execute our growth plan we must attract and retain highly qualified personnel. Competition for these employees exists; new
members of management must have significant industry expertise when they join us or engage in significant training which, in many cases,
requires significant time before they achieve full productivity. If we fail to attract, train, retain, and motivate our key personnel,
our business and growth prospects could be severely harmed.
Furthermore,
we are dependent upon managers to oversee our operations. Thus, there can be no assurance that a managers’ experience will be sufficient
to successfully achieve our business objectives. All decisions regarding the management of our affairs will be made exclusively by our
officers and directors. In the event these persons are ineffective, our business and results of operation would likely be adversely affected.
We
are subject to risks relating to portfolio concentration.
Our
business is highly dependent on a small number of products, which are based on our main ingredients. Our core post-harvest business includes
solutions designed to improve the yields of the packing house but mainly ensure food safety and assisting packing houses to meet the
new FSMA requirements. Our ability to market and sell products containing our ingredient to key service providers for treatment in post-harvest
food safety industry in order to utilize their market position is important to our future success.
Our
operating results may fluctuate, which makes our results difficult to predict and could cause our results to fall short of expectations.
Our
operating results may fluctuate as a result of a number of factors, many of which are outside of our control. As a result, comparing
our operating results on a period-to-period basis may not be meaningful, and you should not rely on our past results as an indication
of our future performance. Our quarterly, year-to-date and annual expenses as a percentage of our revenues may differ significantly from
our historical or projected rates. Our operating results in future quarters may fall below expectations. Any of these events could cause
our stock price to fall. Each of the following factors, among the other risks described herein, may affect our operating results:
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our
ability to penetrate the packing house industry with our products; |
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our
ability to generate revenue from our products; |
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the
amount and timing of operating costs and capital expenditures related to the maintenance and expansion of our businesses, and operations; |
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our
focus on long-term goals over short-term results; |
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the
global economic situation; and |
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fluctuations
in weather conditions and its impact on the growing of fruits and vegetables. |
International
expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing
business outside of the United States, Mexico or Israel.
Other
than our headquarters and other operations which are located in Israel (as further described below), we currently have limited international
operations. Our business strategy incorporates potentially significant international expansion, particularly in anticipation of approval
of our product candidates and we plan to retain sales representatives and third-party distributors, outside of the United States and
Israel at a later date. Doing business internationally involves a number of risks, including but not limited to:
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conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws,
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failure
by us to obtain regulatory approvals for the use of our product candidates in various countries; |
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additional
potentially relevant third-party patent or other intellectual property rights; |
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complexities
and difficulties in obtaining protection and enforcing our intellectual property; |
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limits
in our ability to penetrate international markets; |
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financial
risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises
on demand and payment for our products and exposure to foreign currency exchange rate fluctuations; |
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natural
disasters, political and economic instability, including wars, terrorism, and political unrest, outbreak of disease, boycotts, curtailment
of trade, and other business restrictions; |
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certain
expenses including, among others, expenses for travel, translation and insurance; and |
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regulatory
and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the
purview of the U.S. Foreign Corrupt Practices Act, as amended (the “FCPA”) its books and records, or its anti-bribery
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Any
of these factors could significantly harm our future international expansion and operations and, consequently, our results of operations.
Our
business depends to some extent on international transactions.
As
a result of the international nature of our business, we are exposed to risks associated with changes in foreign currency exchange rates.
A majority of our revenues and substantially all of our cost of sales are in U.S. dollars and our management, marketing, sales and research
and development costs are in New Israeli Shekels. We are therefore exposed to foreign currency risk due to fluctuations in exchange rates.
This may result in gains or losses with respect to movements in exchange rates, which may be significant and may also cause fluctuations
in reported financial information that are not necessarily related to our operating results.
Risks
Related to Intellectual Property
If
we are unable to secure and maintain patent or other intellectual property protection for our products, our ability to compete may be
harmed.
Our
commercial success depends, in part, on obtaining and maintaining patent and other intellectual property protection for the proprietary
blend used in our products and our manufacturing process, as well as continuing to develop and secure trade secrets. We might in the
future opt to license intellectual property from other parties. If we, or the other parties from whom we may license intellectual property,
fail to obtain and maintain adequate patent or other intellectual property protection for intellectual property used in our products,
or if any protection is reduced or eliminated, others could use the intellectual property used in our products, resulting in harm to
our competitive business position. In addition, patent and other intellectual property protection may not provide us with a competitive
advantage against competitors that devise ways of making competitive products without infringing any patents that we own or to which
we have rights.
U.S.
patents and patent applications may be subject to interference proceedings, and U.S. patents may be subject to re-examination proceedings
in the U.S. Patent and Trademark Office. Foreign patents may be subject to opposition or comparable proceedings in the corresponding
foreign patent offices. Any of these proceedings could result in loss of the patent or denial of the patent application, or loss or reduction
in the scope of one or more of the claims of the patent or patent application. Changes in either patent laws or in interpretations of
patent laws may also diminish the value of our intellectual property or narrow the scope of our protection. Interference, re-examination
and opposition proceedings may be costly and time consuming, and we, or the other parties from whom we might potentially license intellectual
property, may be unsuccessful in defending against such proceedings. Thus, any patents that we own or might license may provide limited
or no protection against competitors. In addition, our pending patent applications and those we may file in the future may have claims
narrowed during prosecution or may not result in patents being issued. Even if any of our pending or future applications are issued,
they may not provide us with adequate protection or any competitive advantages. Our ability to develop additional patentable technology
is also uncertain.
Non-payment
or delay in payment of patent fees or annuities, whether intentional or unintentional, may also result in the loss of patents or patent
rights important to our business. Many countries, including certain countries in Europe, have compulsory licensing laws under which a
patent owner may be compelled to grant licenses to other parties. In addition, many countries limit the enforceability of patents against
other parties, including government agencies or government contractors. In these countries, the patent owner may have limited remedies,
which could materially diminish the value of the patent. In addition, the laws of some foreign countries do not protect intellectual
property rights to the same extent as do the laws of the United States.
If
we are unable to prevent unauthorized use or disclosure of our proprietary trade secrets and unprotected know-how, our ability to compete
may be harmed.
Proprietary
trade secrets, copyrights, trademarks and unprotected know-how are also very important to our business. We rely on a combination of trade
secrets, copyrights, trademarks, confidentiality agreements and other contractual provisions and technical security measures to protect
certain aspects of our technology, especially where we do not believe that patent protection is appropriate or obtainable. We require
our office holders, employees, consultants and distributers of our products and most third parties to execute confidentiality agreements
in connection with their relationships with us. However, these measures may not be adequate to safeguard our proprietary intellectual
property and conflicts may, nonetheless, arise regarding ownership of inventions. Such conflicts may lead to the loss or impairment of
our intellectual property or to expensive litigation to defend our rights against competitors who may be better funded and have superior
resources. Our office holders, employees, consultants and other advisors may unintentionally or willfully disclose our confidential information
to competitors. In addition, confidentiality agreements may be unenforceable or may not provide an adequate remedy in the event of unauthorized
disclosure. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and
the outcome is unpredictable. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Unauthorized
parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary. As a result, other
parties may be able to use our proprietary technology or information, and our ability to compete in the market may be harmed.
We
could become subject to patent and other intellectual property litigation that could be costly, result in the diversion of management’s
attention, require us to pay damages and force us to discontinue selling our products.
Determining
whether a product infringes a patent involves complex legal and factual issues, and the outcome of a patent litigation action is often
uncertain. No assurance can be given that patents containing claims covering our products, parts of our products, technology or methods
do not exist, have not been filed or could not be filed or issued. Furthermore, our competitors or other parties may assert that our
products and the methods we employ in the use of our products are covered by U.S. or foreign patents held by them. In addition, because
patent applications can take many years to issue and because publication schedules for pending applications vary by jurisdiction, there
may be applications now pending of which we are unaware and which may result in issued patents which our current or future products infringe.
Also, because the claims of published patent applications can change between publication and patent grant, there may be published patent
applications with claims that we infringe. There could also be existing patents that one or more of our products or parts may infringe
and of which we are unaware. As the number of competitors in the post-harvest market grows, and as the number of patents issued grows,
the possibility of patent infringement claims against us increases.
Infringement
actions and other intellectual property claims and proceedings brought against or by us, whether with or without merit, may cause us
to incur substantial costs and could place a significant strain on our financial resources, divert the attention of management from our
business and harm our reputation. Some of our competitors may be able to sustain the costs of complex patent or intellectual property
litigation more effectively than we can because they have substantially greater resources.
We
cannot be certain that we will successfully defend against allegations of infringement of patents and intellectual property rights of
others. In the event that we become subject to a patent infringement or other intellectual property lawsuit and if the other party’s
patents or other intellectual property were upheld as valid and enforceable and we were found to infringe the other party’s patents
or violate the terms of a license to which we are a party, we could be required to pay damages. We could also be prevented from selling
our products unless we could obtain a license to use technology or processes covered by such patents or will be able to redesign the
product to avoid infringement. A license may not be available at all or on commercially reasonable terms or we may not be able to redesign
our products to avoid infringement. Modification of our products or development of new products could require us to conduct clinical
trials and to revise our filings with the applicable regulatory bodies, which would be time consuming and expensive. In these circumstances,
we may be unable to sell our products at competitive prices or at all, our business and operating results could be harmed.
We
may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.
We
may be subject to claims that former employees, collaborators, or other third parties have an ownership interest in our patents or other
intellectual property. Ownership disputes may arise in the future, for example, from conflicting obligations of consultants or others
who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging
inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual
property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material
adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs
and be a distraction to management and other employees.
We
may experience claims that our products infringe the intellectual property rights of others, which may cause us to incur unexpected costs
or prevent us from selling our products or services.
We
continually seek to improve our business processes and develop new products and applications in a crowded patent space that we must continually
monitor to avoid infringement. We cannot guarantee that we will not experience claims that our processes and products infringe issued
patents (whether present or future) or other intellectual property rights belonging to others.
From
time to time, we oppose patent applications that we consider overbroad or otherwise invalid in order to maintain the ability to operate
freely in our various business lines without the risk of being sued for patent infringement. If, however, patents are subsequently issued
on any such applications by other parties, or if patents belonging to others already exist that cover our products, processes or technologies,
we could experience claims for infringement or have to take other remedial or curative actions to continue our manufacturing and sales
activities with respect to one or more products. Likewise, our competitors may also already hold or have applied for patents in the United
States or abroad that, if enforced or issued, could prevail over our patent rights or otherwise limit our ability to manufacture or sell
one or more of our products in the United States or abroad. Any actions asserted against us could include payment of damages for infringement,
stopping of use of said product, or a requirement that we obtain licenses from these parties or substantially re-engineer our products
or processes in order to avoid infringement. We may not be able to obtain the necessary licenses on acceptable terms, or at all, or be
able to re-engineer our products successfully. Further, intellectual property litigation is expensive and time-consuming, regardless
of the merits of any claim, and could divert our management’s attention from operating our business.
Risks
Related to Regulatory Compliance
If
we or our contractors or service providers fail to comply with laws and regulations, we or they could be subject to regulatory actions,
which could affect our ability to develop, market and sell our products or future products that we may develop and may harm our reputation
in our industry.
If
we or our manufacturers or other third-party contractors fail to comply with applicable federal, state or foreign laws or regulations,
including with respect to food treatment, we could be subject to regulatory actions, which could affect our ability to develop, market
and sell our current products or any future products which we may develop in the future and could harm our reputation and lead to reduced
demand for or non-acceptance of our proposed products by the market.
Regulatory
reforms may adversely affect our ability to sell our products profitably.
From
time to time, legislation is drafted and introduced in the United States, Mexico, Israel or other countries in which we operate, that
could significantly change the statutory provisions governing the clearance or approval, manufacture and marketing of our products, including
in the food health industry. In addition, regulations and guidance may often be revised or reinterpreted by the regulatory authorities
in ways that may significantly affect our business and our products. It is impossible to predict whether legislative changes will be
enacted, or interpretations changed, and what the impact of such changes, if any, may be.
Risks
Related to Our Operations in Israel
Conditions
in Israel, including the recent attack by Hamas and other terrorist organizations from the Gaza Strip and Israel’s war against
them, may adversely affect our operations and limit our ability to manage and market our products, which would lead to a decrease in
revenues.
Because
most 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. 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. 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, and this clash may escalate in the future into
a greater regional conflict.
The
intensity and duration of Israel’s current war against Hamas is difficult to predict, as are such war’s economic implications
on the Company’s 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, which may have a material adverse effect on the Company and its ability
to effectively conduct its operations.
It
is possible that other terrorist organizations will join the hostilities as well, including Hezbollah in Lebanon, and Palestinian military
organizations in the West Bank, as well as other hostile countries, such as Iran, will join the hostilities. 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.
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, including Save Foods Ltd.’s chief executive officer, 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. In addition, there have been increased efforts by activists to cause companies
and consumers to boycott Israeli goods. Such efforts, particularly if they become more widespread, may materially and adversely impact
our ability to sell our products outside of Israel.
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.
We
may not be able to enforce covenants not-to-compete under current Israeli law that might result in added competition for our products.
We
have non-competition agreements with all of our employees, all of which are governed by Israeli law. These agreements prohibit our employees
from competing with or working for our competitors, generally during their employment and for up to 12 months after termination of their
employment. However, Israeli courts are reluctant to enforce non-compete undertakings of former employees and tend, if at all, to enforce
those provisions for relatively brief periods of time in restricted geographical areas, and only when the employee has obtained unique
value to the employer specific to that employer’s business and not just regarding the professional development of the employee.
If we are not able to enforce non-compete covenants, we may be faced with added competition.
It
may be difficult to acquire jurisdiction and enforce liabilities against our officers and directors who are based in Israel.
All
of our officers and directors reside outside of the United States and most of our operations are located outside the United States. As
a result, it may not be possible for United States investors to enforce their legal rights, to effect service of process upon our directors
or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties of our directors
and officers under federal securities laws. Moreover, we have been advised that Israel does not have treaties providing for the reciprocal
recognition and enforcement of judgments of courts with the United States. Further, it is unclear if extradition treaties now in effect
between the United States and Israel would permit effective enforcement of criminal penalties of the federal securities laws.
Risks
Related to Ownership of Our Common Stock
We
may not satisfy Nasdaq’s requirements for continued listing. If we cannot satisfy these requirements, Nasdaq could delist our securities.
Our
Common Stock is listed on Nasdaq under the symbol “SVFD”. To continue to be listed on Nasdaq, we are required to satisfy
a number of conditions, including a minimum bid price of at least $1.00 per share of Common Stock, a market value of our publicly held
shares of at least $1 million and shareholders’ equity of at least $2.5 million.
On
April 25, 2023, we received a letter from Nasdaq’s Listing Qualifications Department that for the last 30 consecutive business
days, the closing bid price for our Common Stock was below $1.00, which is the minimum closing bid price required for continued listing
on Nasdaq pursuant to Nasdaq Listing Rule 5450(a)(1). We were provided a compliance period until October 22, 2023, to regain compliance
with the minimum closing bid price requirement. We effected the 1-for-7 reverse stock split of our Common Stock on October 5, 2023, and
our Common Stock began to trade on the Nasdaq Capital Market on a post-reverse stock split basis at $3.08 per share on October 6, 2023.
On October 20, 2023, Nasdaq’s Listing Qualification Department notified us that from October 6, 2023, to October 19, 2023, the
closing bid price of our Common Stock has been $1.00 per share or greater. Accordingly, Nasdaq informed the Company that it regained
compliance with the Minimum Bid Price and that this matter is now closed. However, we cannot guarantee that in the future we will continue
to be in compliance with the requirements for continued listing on the Nasdaq Capital Market.
If
we are delisted from the Nasdaq Capital Market, trading in our securities may be conducted, if available, on the OTC Markets or, if available,
via another market. In the event of such delisting, our shareholders would likely find it significantly more difficult to dispose of,
or to obtain accurate quotations as to the value of our securities, and our ability to raise future capital through the sale of our securities
could be severely limited. In addition, if our securities were delisted from the Nasdaq, our Common Stock could be considered a “penny
stock” under the U.S. federal securities laws. Additional regulatory requirements apply to trading by broker-dealers of penny stocks
that could result in the loss of an effective trading market for our securities.
The
market price of our Common Stock may be highly volatile.
The
market price of our Common Stock is likely to be volatile. Our Common Stock price could be subject to wide fluctuations in response to
a variety of factors, including the following:
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reports of adverse events with respect
to the commercialization and distribution of our products; |
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inability to obtain additional funding; |
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any delay in filing a regulatory submission for any
of our products and any adverse development or perceived adverse development with respect to the review of that regulatory submission
by the EPA, the FDA or other regulatory authority; |
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failure to successfully develop and commercialize our
products; |
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failure to enter into strategic collaborations; |
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failure by us or strategic collaboration partners to
prosecute, maintain or enforce our intellectual property rights; |
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changes in laws or regulations applicable to future
products; |
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inability to scale up our manufacturing capabilities
through third-party manufacturers, inability to obtain adequate product supply for our products or the inability to do so at acceptable
prices; |
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introduction of new products or technologies by our
competitors; |
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failure to meet or exceed financial projections we
may provide to the public; |
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failure to meet or exceed the financial expectations
of the investment community; |
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announcements of significant acquisitions, strategic
partnerships, joint ventures or capital commitments by our competitors; |
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disputes or other developments relating to proprietary
rights, including patents, litigation matters and our ability to obtain patent protection for our platform technologies, technologies,
products or product candidates; |
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additions or departures of key scientific or management
personnel; |
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significant lawsuits, including patent or stockholder
litigation; |
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changes in the market valuations of similar companies; |
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sales of our securities by us or our stockholders in
the future; and |
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In
addition, companies trading in the stock market have experienced extreme price and volume fluctuations that have often been unrelated
or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market
price of our Common Stock, regardless of our actual operating performance.
Sales
of a substantial number of shares of our Common Stock in the public market by our existing stockholders could cause our share price to
fall.
Sales
of a substantial number of shares of our Common Stock in the public market, or the perception that these sales might occur, could depress
the market price of our Common Stock and could impair our ability to raise capital through the sale of additional equity securities.
We are unable to predict the effect that sales may have on the prevailing market price of our Common Stock.
Nevada
law and provisions in our articles of incorporation and bylaws could make a merger, tender offer or proxy contest difficult, thereby
depressing the market price of our Common Stock.
Our
status as a Nevada corporation and the anti-takeover provisions of the Nevada Revised Statutes may discourage, delay or prevent a change
in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after
the date of the transaction in which the person became an interested stockholder, even if a change of control would be beneficial to
our existing stockholders. In addition, our articles of incorporation (the “Articles of Incorporation”) and bylaws contain
provisions that may make the acquisition of the Company more difficult, including the following:
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our stockholders will only be able
to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; |
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our board of directors is classified into three classes
of directors with staggered three-year terms; |
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a special meeting of our stockholders may only be called
by a majority of our board of directors; |
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advance notice procedures apply for stockholders to
nominate candidates for election as directors or to bring matters before an annual meeting of stockholders; and |
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certain litigation against us can only be brought in
Nevada. |
These
provisions, alone or together, could discourage, delay or prevent a transaction involving a change in control of the Company. These provisions
could also discourage proxy contests and make it more difficult for stockholders to elect directors of their choosing and to cause us
to take other corporate actions they desire, any of which, under certain circumstances, could limit the opportunity for our stockholders
to receive a premium for their shares of our Common Stock, and could also affect the price that some investors are willing to pay for
our Common Stock.
We
may be subject to securities litigation, which is expensive and could divert management attention.
In
the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action
litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs
and diversion of management’s attention and resources, which could seriously hurt our business. Any adverse determination in litigation
could also subject us to significant liabilities.
If
securities or industry analysts do not publish or cease publishing research or reports about us, our business, or our market, or if they
adversely change their recommendations or publish negative reports regarding our business or our Common Stock, our stock price and trading
volume could decline.
The
trading market for our Common Stock will be influenced by the research and reports that industry or securities analysts may publish about
us, our business, our market or our competitors. We do not have any control over these analysts and we cannot provide any assurance that
analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding
our shares, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any analysts
who may cover us were to cease coverage of the Company or fail to regularly publish reports on us, we could lose visibility in the financial
markets, which in turn could cause our stock price or trading volume to decline.
We
do not anticipate paying any cash dividends in the foreseeable future.
We
have never declared or paid cash dividends, and we do not anticipate paying cash dividends in the foreseeable future. Therefore, you
should not rely on an investment in our Common Stock as a source for any future dividend income. Our board of directors has complete
discretion as to whether to distribute dividends. Even if our board of directors decides to declare and pay dividends, the timing, amount
and form of future dividends, if any, will depend on our future results of operations and cash flow, our capital requirements and surplus,
the amount of distributions, if any, received by us from our subsidiary, our financial condition, contractual restrictions and other
factors deemed relevant by our board of directors.
We
may need additional capital, and the sale of additional shares or equity or debt securities could result in additional dilution to our
stockholders.
We
may require additional cash resources due to changed business conditions or other future developments, including adverse effects to our
business from global inflation and recession related issues. If these resources are insufficient to satisfy our cash requirements, we
may seek to sell additional equity or debt securities or obtain one or more credit facilities. The sale of additional equity securities
could result in additional dilution to our stockholders. The incurrence of indebtedness would result in increased debt service obligations
and could result in operating and financing covenants that would restrict our operations. It is uncertain whether financing will be available
in amounts or on terms acceptable to us, if at all.
General
Risk Factors
Disruptions
to our information technology systems due to cyber-attacks or our failure to upgrade and adjust our information technology systems, may
materially impair our operations, hinder our growth and materially and adversely affect our business and results of operations.
We
believe that an appropriate information technology (“IT”), infrastructure is important in order to support our daily operations
and the growth of our business. If we experience difficulties in implementing new or upgraded information systems or experience significant
system failures, or if we are unable to successfully modify our management information systems or respond to changes in our business
needs, we may not be able to effectively manage our business, and we may fail to meet our reporting obligations. Additionally, if our
current back-up storage arrangements and our disaster recovery plan are not operated as planned, we may not be able to effectively recover
our information system in the event of a crisis, which may materially and adversely affect our business and results of operations.
In
the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, hacktivists,
state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error. High-profile security breaches
at other companies and in government agencies have increased in recent years, and security industry experts and government officials
have warned about the risks of hackers and cyber-attacks targeting businesses such as ours. Computer hackers and others routinely attempt
to breach the security of technology products, services and systems, and to fraudulently induce employees, customers, or others to disclose
information or unwittingly provide access to systems or data. We can provide no assurance that our current IT system or any updates or
upgrades thereto and the current or future IT systems of our distributors use or may use in the future, are fully protected against third-party
intrusions, viruses, hacker attacks, information or data theft or other similar threats. Legislative or regulatory action in these areas
is also evolving, and we may be unable to adapt our IT systems or to manage the IT systems of third parties to accommodate these changes.
We have experienced and expect to continue to experience actual or attempted cyber-attacks of our IT networks. Although none of these
actual or attempted cyber-attacks has had a material adverse impact on our operations or financial condition, we cannot guarantee that
any such incidents will not have such an impact in the future.
Failure
to comply with anti-bribery, anti-corruption and anti-money laundering laws could subject us to penalties and other adverse consequences.
We
are subject to the FCPA and other anticorruption, anti-bribery and anti-money laundering laws in the jurisdictions in which we do business,
both domestic and abroad. These laws generally prohibit us and our employees from improperly influencing government officials or commercial
parties in order to obtain or retain business, direct business to any person or gain any advantage. The FCPA and other applicable anti-bribery
and anti-corruption laws also may hold us liable for acts of corruption and bribery committed by our third-party business partners, representatives
and agents. In addition, we leverage third parties to sell our products and conduct our business abroad. We and our third-party business
partners, representatives and agents may have direct or indirect interactions with officials and employees of government agencies, or
state-owned or affiliated entities and we may be held liable for the corrupt or other illegal activities of these third-party business
partners and intermediaries, our employees, representatives, contractors, channel partners and agents, even if we do not explicitly authorize
such activities. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures
designed to prevent any such actions. While we have policies and procedures to address compliance with such laws, we cannot assure you
that our employees and agents will not take actions in violation of our policies or applicable law, for which we may be ultimately held
responsible and our exposure for violating these laws increases as our international presence is established and as we increase sales
and operations in foreign jurisdictions. Any violation of the FCPA or other applicable anti-bribery, anti-corruption laws and anti-money
laundering laws could result in whistleblower complaints, adverse media coverage, investigations, imposition of significant legal fees,
loss of export privileges, severe criminal or civil sanctions or suspension or debarment from U.S. government contracts, substantial
diversion of management’s attention, a decline in the market price of our Common Stock or overall adverse consequences to our reputation
and business, all of which may have an adverse effect on our results of operations and financial condition.
We
incur additional increased costs as a result of the listing of our Common Stock on Nasdaq, and our management is required to devote substantial
time to new compliance initiatives and reporting requirements.
As
a public company, we incur significant accounting, legal and other expenses as a result of the listing of our Common Stock on Nasdaq.
These include costs associated with corporate governance requirements of the Securities Exchange Commission, or the SEC, and the Marketplace
Rules of Nasdaq, as well as requirements under Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley
Act. These rules and regulations increase our legal and financial compliance costs, introduce costs such as investor relations, stock
exchange listing fees and shareholder reporting, and make some activities more time consuming and costly. Any future changes in the laws
and regulations affecting public companies in the United States, including Section 404 and other provisions of the Sarbanes-Oxley Act,
the rules and regulations adopted by the SEC and the rules of the Nasdaq Stock Market may result in increased costs to us as we respond
to such changes. These laws, rules and regulations could make it more difficult or more costly for us to obtain certain types of insurance,
including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially
higher costs to obtain the same or similar coverage. The impact of these requirements could also make it more difficult for us to attract
and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
We
face risks related to compliance with corporate governance laws and financial reporting standards.
The
Sarbanes-Oxley Act of 2002, as well as related new rules and regulations implemented by the SEC and the Public Company Accounting Oversight
Board, require changes in the corporate governance practices and financial reporting standards for public companies. These new laws,
rules and regulations, including compliance with Section 404 of the Sarbanes-Oxley Act of 2002 relating to internal control over financial
reporting, have materially increased the legal and financial compliance costs of small companies and have made some activities more time-consuming
and more burdensome.
The
ongoing conflict in Ukraine may result in market volatility that could adversely affect our business.
In
late February 2022, Russia invaded Ukraine, significantly amplifying already existing geopolitical tensions among Russia and other countries
in the region and in the west, including the U.S. Russia’s invasion, the responses of countries and political bodies to Russia’s
actions, the larger overarching tensions, and Ukraine’s military response and the potential for wider conflict may increase financial
market volatility and could have severe adverse effects on regional and global economic markets. The foregoing may adversely affect our
customers’ ability to sell produce to Russia or other countries in the geographic vicinity.
Following
Russia’s actions, various countries, including the U.S., Canada, the United Kingdom, Germany and France, as well as the European
Union, issued broad-ranging economic sanctions against Russia. Such sanctions included, among other things, a prohibition on doing business
with certain Russian companies, officials and oligarchs; a commitment by certain countries and the European Union to remove selected
Russian banks from the Society for Worldwide Interbank Financial Telecommunications electronic banking network that connects banks globally;
and restrictive measures to prevent the Russian Central Bank from undermining the impact of the sanctions. To date the ongoing conflict
has not affected our financial condition, yet the current sanctions (and potential further sanctions in response to continued Russian
military activity) and other actions may have adverse effects on regional and global economic markets and may result in increased volatility
in the price of our Common Stock.
If
we fail to implement and maintain effective internal control over financial reporting, we may be unable to report our financial results
accurately or meet our reporting obligations.
The
process of determining whether our existing internal controls over financial reporting systems are compliant with Section 404(a) and
whether there are any material weaknesses or significant deficiencies in our existing internal controls requires the investment of substantial
time and resources, including by our Chief Executive Officer, Chief Financial Officer and other members of our senior management and
finance team. This determination and any remedial actions required could divert internal resources and take a significant amount of time
and effort to complete and could result in us incurring additional costs that we did not anticipate, including the hiring of outside
consultants. We could experience higher than anticipated operating expenses and higher independent auditor fees during and after the
implementation of these changes.
Irrespective
of compliance with Section 404, any failure of our internal controls could have a material adverse effect on our stated results of operations
and harm our reputation. In connection with the issuance of our financial statements for each of the years ended December 31, 2019, and
2020, we identified a material weakness in our internal control over financial reporting that we subsequently remediated. If we identify
future material weaknesses in our internal control of financial reporting, and if we are unable to implement any of the required changes
to our internal control over financial reporting effectively or efficiently or are required to do so earlier than anticipated, it could
adversely affect our operations, financial reporting and/or results of operations and could result in an adverse opinion on internal
controls from our management and, once we lose our emerging growth company status, our independent auditors. Further, if our internal
control over financial reporting is not effective, the reliability of our financial statements may be questioned, and our share price
may suffer.
Risks
Related to this Offering
FINRA
sales practice requirements may limit a stockholder’s ability to buy and sell our Common Stock.
The
Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending
speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information
about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these
rules, the FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some
customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which
may have the effect of reducing the level of trading activity in our Common Stock. As a result, fewer broker-dealers may be willing to
make a market in our Common Stock, reducing a stockholder’s ability to resell shares of our Common Stock.
It
is not possible to predict the actual number of shares we will sell under our agreement with the Investor, or the actual gross proceeds
resulting from those sales.
On
December 22, 2023, we entered into the Purchase Agreement with the Investor pursuant to which the Investor has agreed to purchase up
to $20 million shares of Common Stock over the course of 36 months after the date of the Purchase Agreement. The price of shares to be
issued under the Purchase Agreement will be 94% of the lowest VWAP of the Company’s Common Stock for the three trading days immediately
following the delivery of each Advance notice by the Company. Each Advance is subject to a maximum amount equal to the greater of 100%
of the Daily Traded Amount (being the product obtained by multiplying the daily trading volume of the Company’s Common Stock as
reported by Bloomberg L.P., by the VWAP for such trading day) during the five trading days immediately preceding an Advance notice or
$500,000 in Common Stock. With respect to each Advance notice, if the Company notifies the Investor of a minimum acceptable price with
respect to such Advance, then if there is no VWAP or if such price is below the minimum price indicated by the Company, there will be
an automatic reduction to the amount of the Advance by one third, and that day will be excluded from the pricing period.
The
conditions that must be satisfied prior to the Investor advancing the Company funds pursuant to the terms of a promissory note include
obtaining shareholder approval of the transactions contemplated by the Purchase Agreement, no events which could have a material adverse
on the Company and other conditions customary of financings of this nature.
We
generally have the right to control the timing and amount of any sales of our Common Stock to the Investor under the Purchase Agreement.
Sales of our shares of Common Stock, if any, to the Investor under the Purchase Agreement will depend upon market conditions and other
factors to be determined by us. We may ultimately decide to sell to the Investor all, some or none of the shares of Common Stock that
may be available for us to sell to the Investor pursuant to the Purchase Agreement.
Because
the purchase price per share to be paid by the Investor for the shares of Common Stock that we may elect to sell to the Investor under
the Purchase Agreement, if any, will fluctuate based on the market prices of our shares of Common Stock at the time we elect to sell
shares to the Investor, if any, it is not possible for us to predict, as of the date of this prospectus and prior to any such sales,
the number of shares of Common Stock that we will sell to the Investor under the Purchase Agreement, the purchase price per share that
the Investor will pay for shares purchased from us under the Purchase Agreement, or the aggregate gross proceeds that we will receive
from those purchases by the Investor under the Purchase Agreement.
Investors
who buy shares at different times will likely pay different prices.
Pursuant
to the Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold
to the Investor. If and when we do elect to sell our shares of Common Stock to the Investor pursuant to the Purchase Agreement, after
the Investor has acquired such shares, the Investor may resell all, some or none of such shares at any time or from time to time in its
discretion and at different prices. As a result, investors who purchase shares from the Investor in this offering at different times
will likely pay different prices for those shares, and thus may experience different levels of dilution and outcomes in their investment
results. Investors may experience a decline in the value of the shares they purchase from the Investor in this offering because of future
sales made by us to the Investor at prices lower than the prices such investors paid for their shares in this offering. In addition,
if we sell a substantial number of shares to the Investor under the Purchase Agreement, or if investors expect that we will do so, the
actual sales of shares or the mere existence of our arrangement with the Investor may make it more difficult for us to sell equity or
equity-related securities in the future at a time and at a price that we might otherwise wish to effect such sales.
We
completed a reverse stock split on October 5, 2023, in an effort to regain compliance with Nasdaq listing rules and we cannot predict
the effect that such reverse stock split will have on the market price of our Common Stock.
On
April 25, 2023, we received a deficiency letter from Nasdaq notifying us that for the last 30 consecutive business days the bid price
for our Common Stock had closed below the Minimum Bid Price requirement for continued listing on the Nasdaq Capital Market pursuant to
Nasdaq Listing Rule 5550(a)(2) and that we had until October 22, 2023, to regain compliance with the Bid Price Rule.
Our
board of directors approved a 1-for-7 reverse stock split of our Common Stock which became effective on October 5, 2023, in order to
regain compliance with the Minimum Bid Price. We cannot predict the effect that the reverse stock split will have on the market price
for shares of our Common Stock, and the history of similar reverse stock splits for companies in like circumstances has varied. Some
investors may have a negative view of a reverse stock split. Even if the reverse stock split has a positive effect on the market price
for shares of our Common Stock, performance of our business and financial results, general economic conditions and the market perception
of our business, and other adverse factors which may not be in our control could lead to a decrease in the price of our Common Stock
following the reverse stock split.
Furthermore,
even if the reverse stock split does result in an increased market price per share of our Common Stock, the market price per share following
the reverse stock split may not increase in proportion to the reduction of the number of shares of our Common Stock outstanding before
the implementation of the reverse stock split. Accordingly, even with an increased market price per share, the total market capitalization
of shares of our Common Stock after a reverse stock split could be lower than the total market capitalization before the reverse stock
split. Also, even if there is an initial increase in the market price per share of our Common Stock after a reverse stock split, the
market price may not remain at that level.
If
the market price of shares of our Common Stock declines following the reverse stock split, the percentage decline as an absolute number
and as a percentage of our overall market capitalization may be greater than would occur in the absence of the reverse stock split due
to decreased liquidity in the market for our Common Stock. Accordingly, the total market capitalization of our Common Stock following
the reverse stock split could be lower than the total market capitalization before the reverse stock split.
CAUTIONARY
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are based upon our current assumptions, expectations and beliefs concerning future developments and their potential effect
on our business. In some cases, you can identify forward-looking statements by the following words: “may,” “will,”
“could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,”
“believe,” “approximately,” “estimate,” “predict,” “project,” “potential,”
“continue,” “ongoing,” or the negative of these terms or other comparable terminology, although the absence of
these words does not necessarily mean that a statement is not forward-looking. This information may involve known and unknown risks,
uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from the future
results, performance or achievements expressed or implied by any forward-looking statements.
This
prospectus should be read in conjunction with the consolidated financial statements for the years ended December 31, 2022, and 2021 and
related notes and other documents incorporated by reference herein. We cannot predict all the risks and uncertainties. Accordingly, such
information should not be regarded as representations that the results or conditions described in such statements or that our objectives
and plans will be achieved, and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking
statements. These forward-looking statements are found at various places throughout this prospectus and include information concerning
possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies;
future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash
needs, future operations, business plans and future financial results, and any other statements that are not historical facts.
All
forward-looking statements speak only as of the date of this prospectus. We undertake no obligation to update any forward-looking statements
or other information contained herein. Shareholders and potential investors should not place undue reliance on these forward-looking
statements. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements
in this prospectus are reasonable, we cannot assure stockholders and potential investors that these plans, intentions or expectations
will be achieved.
These
forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject
to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ
materially from the results expressed or implied by those forward-looking statements. Considering these risks, uncertainties and assumptions,
the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than
we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date
of this prospectus. All subsequent written and oral forward-looking statements concerning other matters addressed in this prospectus
and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements.
Except
to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of
new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
USE
OF PROCEEDS
This
prospectus relates to shares of Common Stock that may be offered and sold from time to time by the Selling Stockholder. We will receive
none of the proceeds from the sale of Common Stock by the Selling Stockholder in this Offering.
We
may receive up to $20 million in gross proceeds from any sales we may make to the Selling Stockholder pursuant to the Purchase Agreement
from time to time for up to thirty-six months from the date of the Purchase Agreement after the registration statement of which this
prospectus forms a part is declared effective. Any net proceeds from the Selling Stockholder that we receive under the Purchase Agreement
will be used to make any payments due under an outstanding Note, for general corporate purposes, capital expenditures, working capital
and general and administrative expenses.
However,
as we are unable to predict the timing or amount of
potential issuances of shares of Common Stock issuable under the Purchase Agreement, we cannot specify with certainty all of the particular
uses for the net proceeds that we will have from the sale of such shares. Accordingly, our management will have broad discretion in the
application of the net proceeds. We may use the proceeds for purposes that are not contemplated at the time of this Offering. It is possible
that no additional shares will be issued under the Purchase Agreement.
DETERMINATION
OF THE OFFERING PRICE
The
Selling Stockholder will offer shares of our Common Stock at the prevailing market prices or at privately negotiated prices. The offering
price of our Common Stock does not necessarily bear any relationship to our book value, assets, past operating results, financial condition
or any other established criteria of value. Our Common Stock may not trade at the market prices in excess of the offering prices for
Common Stock in any public market, will be determined in the marketplace and may be influenced by many factors, including the depth and
liquidity of the market for our Common Stock.
MARKET
PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market
Price for our Common Stock
Our
Common Stock is listed on the Nasdaq Capital Market under the symbol “SVFD.” The last reported sales price of our Common
Stock on Nasdaq on January 9, 2024, was $2.04 per share.
Holders
As
of January 9, 2024, there were 186 holders of record of our Common Stock.
Penny
Stock Regulations
The
Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security
that has a market price of less than $5.00 per share. Our Common Stock is currently within the definition of a penny stock and will be
subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000
individually, or $300,000, together with their spouse).
For
transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities
and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt
transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated
by the SEC relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer
must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing
recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently,
the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of
investors to sell their Common Stock in the secondary market.
In
addition to the “penny stock” rules promulgated by the SEC, FINRA has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer.
Prior to recommending speculative low-priced securities to their non-institutional customers, broker-dealers must make reasonable efforts
to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations
of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least
some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our Common Stock,
which may limit the investors’ ability to buy and sell our stock.
Dividend
Policy
We
have never paid cash dividends on any of our capital stock, and we currently intend to retain our future earnings, if any, to fund the
development and growth of our business. We do not intend to pay cash dividends to holders of our Common Stock in the foreseeable future.
Securities
Authorized for Issuance under Equity Compensation Plans
The
following table provides information regarding our equity compensation plans as of December 31, 2023.
| Plan Category | |
(a)
Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options, Warrants
and Rights | | |
(b)
Weighted-average
Exercise Price of
Outstanding
Options, Warrants
and Rights | | |
(c)
Number of
Securities
Remaining
Available for
Future Issuance
under Equity
Compensation
Plans (Excluding
Securities
Reflected in
Column (a)) | |
| Equity compensation plans approved by security holders: | |
| | | |
| | | |
| | |
| 2018 Equity Incentive Plan | |
| 27,518 | | |
$ | 23.66 | | |
| 12,995 | |
| 2022 Share Incentive Plan | |
| - | | |
$ | - | | |
| 641,787 | |
| Total equity compensation plans approved by securityholders | |
| 33,533 | | |
$ | 21.00 | | |
| 654,782 | |
| Equity compensation plans not approved by securityholders | |
| - | | |
| - | | |
| - | |
2018
Equity Incentive Plan
The
2018 Equity Incentive Plan provides for the grant of incentive stock options to employees of the Company, including officers and directors,
and non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance
shares and other stock or cash awards as the board of directors may determine, to the Company’s employees, directors and consultants.
12,995 shares of Common Stock are issuable under the 2018 Equity Incentive Plan.
2022
Share Incentive Plan
The
2022 Share Incentive Plan (the “2022 Plan”) provides for the grant of incentive stock options and nonqualified stock options,
restricted shares of Common Stock, restricted stock units and other share-based awards to any employee, director, officer, consultant,
advisor and any other person or entity who provides services to the Company or any parent, subsidiary, or affiliate thereof. 641,787
shares of Common Stock are issuable under the 2022 Plan.
The
2022 Plan is currently administered by the board of directors Subject to the provisions of the 2022 Plan, the board determines subject
to applicable law, awards granted thereunder, designates recipients of awards, determines and amends the terms of awards, including any
vesting schedule applicable to an award. The board also has the authority to amend and rescind rules and regulations relating to the
2022 Plan or terminate the 2022 Plan at any time before the date of expiration of its ten-year term.
The
2022 Plan provides for granting awards under various tax regimes, including, without limitation, in compliance with Section 102 of the
Israeli Income Tax Ordinance (New Version), 5721-1961 (the “Ordinance”), and Section 3(i) of the Ordinance and for awards
granted to our United States employees or service providers, including those who are deemed to be residents of the United States for
tax purposes, Section 422 of the Code and Section 409A of the Code. Section 102 of the Ordinance allows employees, directors and officers
who are not controlling shareholders and are considered Israeli residents to receive favorable tax treatment for compensation in the
form of shares or options. Our non-employee service providers and controlling shareholders may only be granted options under section
3(i) of the Ordinance, which does not provide for similar tax benefits.
Awards
granted under the 2022 Plan to U.S. residents may qualify as “incentive stock options” within the meaning of Section 422
of the Code. The exercise price for “incentive stock options” must not be less than the fair market value on the date on
which an option is granted, or 110% of the fair market value if the option holder holds more than 10% of our share capital. Notwithstanding
the foregoing provisions, options may be granted with a per share exercise price of less than 100% of the fair market value per share
on the date of grant pursuant to the issuance or assumption of an option in a transaction to which Section 424(a) of the Code applies
in a manner consistent with said Section 424(a).
With
regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2022 Plan, the board
may, in its discretion, accept cash, provide for net withholding of shares in a cashless exercise mechanism or direct a securities broker
to sell shares and deliver all or a part of the proceeds to the Company or the trustee.
In
the event of termination of a grantee’s employment or service with the Company or any of its affiliates, all vested and exercisable
awards held by such grantee as of the date of termination generally may be exercised within three months after such date of termination.
After such three-month period, all such unexercised awards will terminate and the shares covered by such awards shall again be available
for issuance under the 2022 Plan. In the event of termination of a grantee’s employment or service with the company or any of its
affiliates due to such grantee’s death, permanent disability or retirement, all vested and exercisable awards held by such grantee
as of the date of termination may be exercised by the grantee or the grantee’s legal guardian, estate, or by a person who acquired
the right to exercise the award by bequest or inheritance, as applicable, within twelve months after such date of termination. Any awards
which are unvested as of the date of such termination or which are vested but not then exercised within the twelve-month period following
such date, will terminate and the shares covered by such awards shall again be available for issuance under the 2022 Plan. Notwithstanding
any of the foregoing, if a grantee’s employment or services with the Company or any of its affiliates is terminated for “cause”
(as defined in the 2022 Plan), all outstanding awards held by such grantee (whether vested or unvested) will terminate on the date of
such termination and the shares covered by such awards shall again be available for issuance under the 2022 Plan.
Other
than by will, the laws of descent and distribution or as otherwise provided under the 2022 Plan, neither the options nor any right in
connection with such options are assignable or transferable.
In
the event of a share split, reverse share split, share dividend, recapitalization, combination or reclassification of our shares, or
any other increase or decrease in the number of issued shares effected without receipt of consideration by the company (but not including
the conversion of any convertible securities of the company), the board in its sole discretion shall make an appropriate adjustment in
the number of shares related to each outstanding award and to the number of shares reserved for issuance under the 2022 Plan, to the
class and kind of shares subject to the 2022 Plan, as well as the exercise price per share of each outstanding award, as applicable,
the terms and conditions concerning vesting and exercisability and the term and duration of outstanding awards, or any other terms that
the board adjusts in its discretion, or the type or class of security, asset or right underlying the award (which need not be only that
of the Company, and may be that of the surviving corporation or any affiliate thereof or such other entity party to any of the above
transactions); provided that any fractional shares resulting from such adjustment shall be rounded down to the nearest whole share unless
otherwise determined by the administrator. In the event of a distribution of a cash dividend to all shareholders, the administrator may
determine, without the consent of any holder of an award, that the exercise price of an outstanding and unexercised award shall be reduced
by an amount equal to the per share gross dividend amount distributed by the Company, subject to applicable law.
In
the event of a merger or consolidation, or a sale of all, or substantially all, of the Company’s shares or assets or other transaction
having a similar effect on the Company, or change in the composition of the board of directors, or liquidation or dissolution, or such
other transaction or circumstances that the board of directors determines to be a relevant transaction, then without the consent of the
grantee, the administrator may but is not required to (i) cause any outstanding award to be assumed or substituted by such successor
corporation, or (ii) regardless of whether or not the successor corporation assumes or substitutes the award (a) provide the grantee
with the option to exercise the award as to all or part of the shares, and may provide for an acceleration of vesting of unvested awards,
or (b) cancel the award and pay in cash, shares of the company, the acquirer or other corporation which is a party to such transaction
or other property as determined by the administrator as fair in the circumstances. Notwithstanding the foregoing, the administrator may
upon such event amend, modify or terminate the terms of any award as it shall deem, in good faith, appropriate.
Effect
of Performance of the Purchase Agreement on Our Stockholders
All
6,666,667 shares of our Common Stock being registered for resale by the Investor under the registration statement that includes this
prospectus which have been or may be issued or sold by us to the Investor under the Purchase Agreement are expected to be freely tradable.
It is anticipated that shares registered in this offering will be sold until the earlier of January 2027 or when the Investor has purchased
an aggregate of $20 million of our shares.
The
sale by the Investor of a significant amount of shares registered in this offering at any given time could cause the market price of
our Common Stock to decline and to be highly volatile. Sales of our Common Stock to the Investor, if any, will depend upon market conditions
and other factors to be determined by us. We may ultimately decide to sell to the Investor all, some or none of the additional shares
of our Common Stock that may be available for us to sell pursuant to the Purchase Agreement. If and when we do sell shares to the Investor,
after the Investor has acquired the shares, the Investor may resell all, some or none of those shares at any time or from time to time
in its discretion. Therefore, sales to the Investor by us under the Purchase Agreement may result in substantial dilution to the interests
of other holders of our Common Stock. In addition, if we sell a substantial number of shares to the Investor under the Purchase Agreement,
or if investors expect that we will do so, the actual sales of shares or the mere existence of our arrangement with the Investor may
make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise
wish to effect such sales. However, we have the right to control the timing and amount of any additional sales of our shares to the Investor
and the Purchase Agreement may be terminated by us at any time at our discretion without any cost to us.
If
and when we elect to sell shares of our Common Stock to the Investor pursuant to the Purchase Agreement, after the Investor has acquired
such shares, the Investor may resell all, some or none of such shares at any time or from time to time in its discretion and at different
prices. As a result, investors who purchase shares from the Investor in this offering at different times will likely pay different prices
for those shares, and so may experience different levels of dilution and in some cases substantial dilution and different outcomes in
their investment results. Investors may experience a decline in the value of the shares they purchase from the Investor in this offering
as a result of future sales made by us to the Investor at prices lower than the prices such investors paid for their shares in this offering.
Pursuant
to the Purchase Agreement, we will have discretion, subject to market demand, to vary the timing, prices, and numbers of shares sold
to the Investor. Sales of our Common Stock, if any, to the Investor under the Purchase Agreement will depend upon market conditions and
other factors to be determined by us. We may ultimately decide to sell to the Investor all, some or none of the shares of our Common
Stock that may be available for us to sell to the Investor pursuant to the Purchase Agreement. Because the purchase price per share to
be paid by the Investor for the shares of Common Stock that we may elect to sell to the Investor under the Purchase Agreement, if any,
will fluctuate based on the market prices of our Common Stock at the time we elect to sell shares to the Investor pursuant to the Purchase
Agreement, if any, it is not possible for us to predict, as of the date of this prospectus and prior to any such sales, the number of
shares of Common Stock that we will sell to the Investor under the Purchase Agreement, the purchase price per share that the Investor
will pay for shares purchased from us under the Purchase Agreement, or the aggregate gross proceeds that we will receive from those purchases
by the Investor under the Purchase Agreement.
Moreover,
although the Purchase Agreement provides that we may, in our discretion, from time to time after the date of this prospectus and during
the term of the Purchase Agreement, direct the Investor to purchase shares of our Common Stock from us in one or more purchases under
the Purchase Agreement, for a maximum aggregate purchase price of up to $20 million, only 6,666,667 shares of Common Stock (including
110,554 Commitment Shares that have been issued by us to the Investor on December 28, 2023, for which we received no cash proceeds)
are being registered for resale under the registration statement of which this prospectus forms a part. Therefore, only 6,556,113 of
such shares of Common Stock represent shares that we may issue and sell to the Investor for cash consideration in purchases under the
Purchase Agreement from time to time, at our sole discretion, during the term of the Purchase Agreement. If we elect to sell to the Selling
Stockholder all of the 6,666,667 shares of Common Stock being registered for resale under this prospectus that are available for sale
by us to the Selling Stockholder in purchases under the Purchase Agreement, depending on the market prices of our Common Stock at the
time of such sales, the actual gross proceeds from the sale of all such shares may be substantially less than the $20 million total purchase
commitment available to us under the Purchase Agreement, which could materially adversely affect our liquidity.
Additionally,
under applicable Nasdaq rules, and as provided in the Purchase Agreement, until our stockholders approve the issuance of 20% or more
of the issued and outstanding shares of Common Stock (calculated at the time immediately prior to the execution of the Purchase Agreement)
to the Investor, we would be subject to the Exchange Cap with respect to such issuances of shares of Common Stock. Our stockholders approved
the issuance of 20% or more of our issued and outstanding Common Stock pursuant to the Purchase Agreement at a special meeting of the
stockholders currently expected to be held on February 8, 2024. Accordingly, we now may request Advances from the Investor under the
Purchase Agreement that will result in the issuance of more than 20% of our issued and outstanding shares of Common Stock in accordance
with the terms of the Purchase Agreement without being subject to the limitations under the Exchange Cap, subject only to Investor’s
4.99% beneficial ownership limitation at the time of an Advance. However, we may be subject to limitations with respect to the maximum
number of shares of Common Stock that may be registered for resale in this registration statement pursuant
to Rule 415 under the Securities Act. If we elect to issue and sell to the Investor more than the 6,666,667 shares of our Common
Stock under the Purchase Agreement and to register them for resale by the Investor hereunder, which we have the right, but not the obligation,
to do, we must first file with the SEC one or more additional registration statements to register under the Securities Act for resale
by the Investor such additional shares of our Common Stock we wish to sell from time to time under the Purchase Agreement, which the
SEC must declare effective, in each case before we may elect to sell any additional shares of our Common Stock to the Investor under
the Purchase Agreement. Furthermore, the issuance and sale by us of a substantial number of shares of Common Stock to the Investor under
the Purchase Agreement registered for resale by the Investor hereunder could cause additional substantial dilution to our stockholders.
The
number of shares of Common Stock ultimately resold by the Investor through this prospectus is dependent upon the total number of shares
of Common Stock, if any, we elect to issue and sell to the Investor under the Purchase Agreement during the term of the Purchase Agreement.
Issuances of our Common Stock to the Investor under the Purchase Agreement will not affect the rights or privileges of our existing stockholders,
except that the economic and voting interests of each of our existing stockholders will be diluted as a result of any such issuance.
Although the number of shares of our Common Stock that our existing stockholders own will not decrease, the shares of our Common Stock
owned by our existing stockholders will represent a smaller percentage of our total outstanding shares of our Common Stock after any
such issuance of shares of our Common Stock to the Investor under the Purchase Agreement.
The
following table sets forth the amount of gross proceeds we would receive from the Investor from our sale of up to 6,556,113 shares of
Common Stock (which excludes the 110,554 Commitment Shares we issued to the Investor for which we did not receive cash proceeds) that
we are registering hereby that we may issue and sell to the Investor in the future under the Purchase Agreement at varying purchase prices:
| Assumed Average Purchase Price Per Share | | |
Number of Registered Shares to be Issued if Full Purchase(1) | | |
Percentage of Outstanding Shares After Giving Effect to the Issuance to the Investor(2) | | |
Proceeds from the Sale of Shares to the Investor Under the Purchase Agreement(1) | |
| $ | 1.50 | | |
| 6,556,113 | | |
| 68.9 | % | |
$ | 9,834,179 | |
| $ | 2.00 | | |
| 6,556,113 | | |
| 68.9 | % | |
$ | 13,112,226 | |
| $ | 2.04 | (3) | |
| 6,556,113 | | |
| 68.9 | % | |
$ | 13,374,471 | |
| $ | 2.50 | | |
| 6,556,113 | | |
| 68.9 | % | |
$ | 16,390,283 | |
| $ | 3.00 | | |
| 6,556,113 | | |
| 68.9 | % | |
$ | 19,668,339 | |
| (1) |
Although the
Purchase Agreement provides that we may sell up to $20 million of our Common Stock for resale under the registration statement of
which this prospectus forms a part, (including the 110,554 Commitment Shares we issued to the Investor on December 28, 2023 in consideration
of the Investor’s commitment to purchase shares of our Common Stock at our direction under the Purchase Agreement, for which
we did receive cash proceeds), only 6,556,113 of such shares represent shares that we may issue and sell to the Investor for cash
consideration in purchases under the Purchase Agreement from time to time, at our sole discretion, which may or may not cover all
the shares of our Common Stock we ultimately sell to the Investor under the Purchase Agreement, if any, depending on the purchase
price per share. We have included in this column only the 6,556,113 shares that we may issue and sell to the Investor for cash consideration
in purchases under the Purchase Agreement that are being registered for resale in the offering made by this prospectus (excluding
the 110,554 Commitment Shares), without giving effect to the 19.99% limitation on the issuance of shares to the Selling Stockholder
under the Exchange Cap, since our stockholders approved the issuance of more than 20% of our issued and outstanding Common Stock
pursuant to the Purchase Agreement. Accordingly, depending on the assumed average price per share, we may or may not be able to ultimately
sell to the Investor a number of shares of our Common Stock with a total value of $20 million. |
| |
|
| (2) |
The
denominator is based on 2,955,490 shares of our Common Stock outstanding as of January 9, 2024 (which includes the 110,554
Commitment Shares issued to the Investor), adjusted to include the number of shares of our Common Stock set forth in the adjacent
column. The numerator is based on the number of shares of our Common Stock set forth in the adjacent column. |
| |
|
| (3) |
The
closing sale price of our Common Stock on January 9, 2024. |
SELLING
STOCKHOLDER
This
prospectus covers the resale by the Selling Stockholder of up to an aggregate of 6,666,667 shares of Common Stock issuable pursuant to
the Purchase Agreement.
The
Selling Stockholder may dispose of the shares covered by this prospectus from time to time at such prices as it may choose. The following
table provides, as of the date of this prospectus, information regarding the beneficial ownership of our Common Stock held by the Selling
Stockholder and the percentage owned by the Selling Stockholder. Assuming all the shares registered below are sold by the Selling Stockholder,
the Selling Stockholder will not own more than 1% of our Common Stock.
| | |
Number of Shares Beneficially Owned Prior to Offering | | |
Maximum Number of Shares which may be offered Pursuant to this Offering | | |
Number of Shares Beneficially Owned After Offering | | |
Percentage of Shares Beneficially Owned After Offering | |
| Name | |
Number | | |
| | |
| | |
| |
| YA II PN, Ltd. | |
| 110,554 | (1) | |
| 6,556,113 | (2) | |
| 6,666,667 | | |
| 70.1 | % |
(1)
Represents Commitment Shares issued pursuant to the Purchase Agreement.
(2)
Such amount of Common Stock is solely for the purposes of making a good faith estimate as to the number of shares issuable to be registered.
This number includes 110,554 Commitment Shares.
PLAN
OF DISTRIBUTION
The
Selling Stockholder and its pledgees, assignees and successors-in-interest may, from time to time, sell any or all of their securities
covered hereby on any trading market, stock exchange or other trading facility on which the securities are traded or in private transactions.
These sales may be at fixed or negotiated prices. The Selling Stockholder may use any one or more of the following methods when selling
securities:
| |
● |
ordinary brokerage
transactions and transactions in which the broker-dealer solicits purchasers; |
| |
● |
block trades in which the
broker-dealer will attempt to sell the securities as agent but may position and resell a portion of the block as principal to facilitate
the transaction; |
| |
● |
purchases by a broker-dealer
as principal and resale by the broker-dealer for its account; |
| |
● |
an exchange distribution
in accordance with the rules of the applicable exchange; |
| |
● |
privately negotiated transactions; |
| |
● |
settlement of short sales; |
| |
● |
in transactions through
broker-dealers that agree with the Selling Stockholder to sell a specified number of such securities at a stipulated price per security; |
| |
● |
through the writing or
settlement of options or other hedging transactions, whether through an options exchange or otherwise; |
| |
● |
a combination of any such
methods of sale; or |
| |
● |
any other method permitted
pursuant to applicable law. |
The
Selling Stockholder may also sell securities under Rule 144 under the Securities Act, if available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholder may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholder (or, if any broker-dealer acts as agent for the purchaser of securities, from the purchaser)
in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in
excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or
markdown in compliance with FINRA IM-2440.
In
connection with the sale of the securities covered hereby, the Selling Stockholder may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the securities in the course of hedging the positions it
assumes. The Selling Stockholder may also sell securities short and deliver these securities to close out its short positions, or loan
or pledge the securities to broker-dealers that in turn may sell these securities. The Selling Stockholder may also enter into option
or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the
delivery to such broker-dealer or other financial institution of securities offered by this prospectus, which securities such broker-dealer
or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The
Selling Stockholder is an “underwriter” within the meaning of Section 2(a)(11) of the
Securities Act.
Any
broker-dealer or agent that is involved in selling the securities may be deemed to be an “underwriter” within the meaning
of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealer or agent and any profit
on the resale of the securities purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
We are requesting that the Selling Stockholder inform us that it does not have any written or oral agreement or understanding, directly
or indirectly, with any person to distribute the securities. We will pay certain fees and expenses incurred by us incident to the registration
of the securities.
Because
the Selling Stockholder is deemed an underwriter within the meaning of the Securities Act, the Selling Stockholder will be subject to
the prospectus delivery requirements of the Securities Act, including Rule 172 thereunder. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than under this prospectus.
We are requesting that the Selling Stockholder confirm that there is no underwriter or coordinating broker acting in connection with
the proposed sale of the resale securities by the Selling Stockholder.
We
intend to keep this prospectus effective until the earlier of (i) the date on which the securities may be resold by the Selling Stockholder
without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144, without the requirement for
us to be in compliance with the current public information requirement under Rule 144 under the Securities Act or any other rule of similar
effect or (ii) all of the securities have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule
of similar effect. The resale securities will be sold only through registered or licensed brokers or dealers if required under applicable
state securities laws. In addition, in certain states, the resale securities covered hereby may not be sold unless they have been registered
or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is
complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the resale securities may not simultaneously
engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M,
prior to the commencement of the distribution. In addition, the Selling Stockholder will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of the common
stock by the Selling Stockholder or any other person. We will make copies of this prospectus available to the Selling Stockholder and
are informing the Selling Stockholder of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the
sale (including by compliance with Rule 172 under the Securities Act).
SELECTED
CONSOLIDATED FINANCIAL DATA
The
following tables summarize our consolidated financial data. The summary consolidated balance sheets, statements of operations and comprehensive
loss and of cash flows information for the years ended December 31, 2022, and December 31, 2021, have been derived from our audited consolidated
financial statements for the fiscal years ended December 31, 2022, and December 31, 2021, and related notes, which are incorporated by
reference into this prospectus. The summary consolidated financial statements for the three months and nine months ended September 30,
2023 and September 30, 2022 have been derived from our unaudited consolidated financial statements for the quarterly periods ended September
30, 2023 and September 30, 2022 and related notes, which are also incorporated by reference herein. The unaudited interim consolidated
financial statements were prepared on a basis consistent with our audited consolidated financial statements and include, in management’s
opinion, all adjustments, consisting only of normal recurring adjustments, that we consider necessary for a fair statement of the financial
information set forth in those statements. Effective October 5, 2023, we effected a 1-for-7 reverse stock split. All shares and per-share
numbers in the selected consolidated financial data have been retroactively restated to reflect this 1-for-7 reverse stock split. Our
historical results are not necessarily indicative of the results that may be expected for any period in the future. You should read the
following summary of consolidated financial data together with the section titled “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and our consolidated financial statements for the fiscal years ended December 31,
2022 and December 31, 2021 and our unaudited consolidated financial statements for the three months and nine months ended September 30,
2023 and September 30, 2022, together with related notes, which are incorporated by reference into this prospectus. See the section “Incorporation
by Reference” on page 75 for additional details.
CONSOLIDATED
BALANCE SHEETS
(U.S.
dollars except share and per share data)
| | |
September 30, 2023 | | |
December 31, 2022 | | |
December 31, 2021 | |
| Assets | |
| | | |
| | | |
| | |
| Current Assets | |
| | | |
| | | |
| | |
| Cash and cash equivalents | |
| 1,934,634 | | |
| 5,700,709 | | |
| 6,750,938 | |
| Restricted cash | |
| 46,195 | | |
| 50,062 | | |
| 56,674 | |
| Accounts receivable, net | |
| 45,766 | | |
| 192,597 | | |
| 172,630 | |
| Inventories | |
| 90,764 | | |
| 81,706 | | |
| 22,603 | |
| Prepaid expenses | |
| 707,684 | | |
| - | | |
| - | |
| Other current assets | |
| 20,012 | | |
| 247,370 | | |
| 226,252 | |
| Total Current assets | |
| 2,845,055 | | |
| 6,272,444 | | |
| 7,229,097 | |
| | |
| | | |
| | | |
| | |
| Right-of-use asset arising from operating leases | |
| 72,915 | | |
| 121,855 | | |
| 129,613 | |
| | |
| | | |
| | | |
| | |
| Property and equipment, net | |
| 51,855 | | |
| 97,914 | | |
| 100,944 | |
| | |
| | | |
| | | |
| | |
| Investment in nonconsolidated affiliate | |
| 2,281,478 | | |
| - | | |
| - | |
| | |
| | | |
| | | |
| | |
| Funds in respect of employee rights upon retirement | |
| - | | |
| - | | |
| 137,625 | |
| | |
| | | |
| | | |
| | |
| Total assets | |
| 5,251,303 | | |
| 6,492,213 | | |
| 7,597,279 | |
| | |
| | | |
| | | |
| | |
| Liabilities and Shareholders’ Equity | |
| | | |
| | | |
| | |
| Current Liabilities | |
| | | |
| | | |
| | |
| Short-term loan from banking institutions | |
| - | | |
| - | | |
| 8,390 | |
| Accounts payable | |
| 415,830 | | |
| 419,814 | | |
| 539,360 | |
| Other liabilities | |
| 217,643 | | |
| 295,035 | | |
| 383,554 | |
| Total current liabilities | |
| 633,473 | | |
| 714,849 | | |
| 931,304 | |
| | |
| | | |
| | | |
| | |
| Operating lease liabilities | |
| - | | |
| 40,023 | | |
| 87,287 | |
| | |
| | | |
| | | |
| | |
| Liability for employee rights upon retirement | |
| - | | |
| - | | |
| 166,077 | |
| | |
| | | |
| | | |
| | |
| Total liabilities | |
| 633,473 | | |
| 754,872 | | |
| 1,184,668 | |
| | |
| | | |
| | | |
| | |
| Shareholders’ Equity | |
| | | |
| | | |
| | |
| Common stock of $ 0.0001 par value each (“Common Stock”): 495,000,000 shares authorized as of September 30, 2023, December 31, 2022 and December 31, 2021; issued and outstanding 1,455,558, 688,272 and 429,953 shares as of September 30, 2023, December 31, 2022, and December 31, 2021, respectively. | |
| 146 | | |
| 69 | | |
| 43 | |
| Preferred stock of $ 0.0001 par value (“Preferred stock”): 5,000,000 shares authorized as of September 30, 2023, December 31, 2022, and December 31, 2021; issued and outstanding 0 shares as of September 30, 2023, December 31, 2022, and December 31, 2021. | |
| - | | |
| - | | |
| - | |
| Additional paid-in capital | |
| 32,238,304 | | |
| 28,710,412 | | |
| 23,607,741 | |
| Foreign currency translation adjustments | |
| (26,275 | ) | |
| (26,275 | ) | |
| (26,275 | ) |
| Accumulated deficit | |
| (27,626,606 | ) | |
| (22,837,827 | ) | |
| (17,098,227 | ) |
| Total Company’s stockholders’ equity | |
| 4,585,569 | | |
| 5,846,379 | | |
| 6,483,282 | |
| Non-controlling interests | |
| (32,261 | ) | |
| (109,038 | ) | |
| (70,671 | ) |
| Total equity | |
| 4,617,830 | | |
| 5,737,341 | | |
| 6,412,611 | |
| Total liabilities and equity | |
| 5,251,303 | | |
| 6,492,213 | | |
| 7,597,279 | |
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE LOSS
(U.S.
dollars except share and per share data)
| | |
Nine months ended | | |
Three months ended | | |
Year ended | |
| | |
September 30 | | |
September 30 | | |
December 31 | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | | |
2022 | | |
2021 | |
| Revenues from sales of products | |
| 157,618 | | |
| 169,943 | | |
| - | | |
| 51,233- | | |
| 394,004 | | |
| 438,141 | |
| Cost of sales | |
| (70,229 | ) | |
| (79,249 | ) | |
| - | | |
| (24,402 | ) | |
| (158,313 | ) | |
| (135,943 | ) |
| Gross profit | |
| 87,389 | | |
| 90,694 | | |
| - | | |
| 26,831 | | |
| 235,691 | | |
| 302,198 | |
| Research and development expenses | |
| (1,828,970 | ) | |
| (521,239 | ) | |
| (1,693,205 | ) | |
| (198,501 | ) | |
| (770,826 | ) | |
| (538,684 | ) |
| Selling and marketing expenses | |
| (217,907 | ) | |
| (440,156 | ) | |
| (60,462 | ) | |
| (117,107 | ) | |
| (567,598 | ) | |
| (200,299 | ) |
| General and administrative expenses | |
| (3,481,408 | ) | |
| (3,519,746 | ) | |
| (1,103,257 | ) | |
| (1,479,064 | ) | |
| (4,716,909 | ) | |
| (4,266,854 | ) |
| Operating loss | |
| (5,440,896 | ) | |
| (4,390,447 | ) | |
| (2,856,924 | ) | |
| (1,767,841 | ) | |
| (5,819,642 | ) | |
| (4,703,639 | ) |
| Financing income (expenses), net | |
| 43,666 | | |
| 17,498 | | |
| 10,579 | | |
| (1,334 | ) | |
| 39,801 | | |
| (161,737 | ) |
| Other income | |
| 12,294 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| - | |
| Changes in fair value of an investment in an associate measured under the fair value option | |
| (87,576 | ) | |
| - | | |
| (189,683 | ) | |
| - | | |
| - | | |
| - | |
| Net loss | |
| (5,472,512 | ) | |
| (4,372,949 | ) | |
| (3,036,028 | ) | |
| (1,769,175 | ) | |
| (5,779,841 | ) | |
| (4,865,376 | ) |
| Less: net loss attributable to non-controlling interests | |
| 683,733 | | |
| 27,116 | | |
| 670,432 | | |
| 9,762 | | |
| 40,241 | | |
| 44,796 | |
| Net loss attributable to the Company’s stockholders’ equity | |
| (4,788,779 | ) | |
| (4,345,833 | ) | |
| (2,365,596 | ) | |
| (1,759,413 | ) | |
| (5,739,600 | ) | |
| (4,820,580 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Loss per share (basic and diluted) (*) | |
| (4.69 | ) | |
| (9.12 | ) | |
| (1.78 | ) | |
| (3.15 | ) | |
| (10.85 | ) | |
| (13.25 | ) |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Basic and diluted weighted average number of shares of Common Stock outstanding (*) | |
| 1,020,339 | | |
| 476,314 | | |
| 1,331,070 | | |
| 557,827 | | |
| 528,776 | | |
| 363,739 | |
| * |
Effective
October 5, 2023, we effected a 1-for-7 reverse stock split. Share and per-share amounts have been retroactively restated. |
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(U.S.
dollars)
| | |
Nine months ended | | |
Year ended | |
| | |
September 30 | | |
December 31 | |
| | |
2023 | | |
2022 | | |
2022 | | |
2021 | |
| | |
| | |
| | |
| | |
| |
| Net cash used in operating activities | |
| (2,258,869 | ) | |
| (4,126,702 | ) | |
| (5,097,126 | ) | |
| (4,113,307 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net cash used in investing activities | |
| (1,519,559 | ) | |
| (35,430 | ) | |
| (51,689 | ) | |
| (67,749 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net cash used in financing activities | |
| - | | |
| (4,097,441 | ) | |
| 4,094,940 | | |
| 10,725,016 | |
OUR
BUSINESS
Corporate
History
We
were incorporated under the name Pimi Agro Cleantech, Inc. on April 1, 2009, under the laws of the State of Delaware. On April 11, 2016,
we changed our name from Pimi Agro Cleantech, Inc. to Save Foods, Inc. Our subsidiary was incorporated on January 14, 2004, under the
name Pimi Marion Holdings Ltd., to exploit the knowledge, intellectual property and business assets of Nir Ecology Ltd., a company founded
in September 1989, focused on developing sanitizing solutions for the water and food industry. During the initial years of its activity
and until 2009, Pimi Marion Holdings Ltd. focused on the development of new products and applications within the potato-growing industry.
On October 5, 2008, Pimi Marion Holdings Ltd. changed its name to Pimi Agro Cleantech Ltd. In September 2018, we changed our organizational
structure and leadership team to support our new strategy and objectives. The goal of the organizational change was to drive us towards
regulatory approvals for our new generation of products. Our revamped strategy was developed following research we conducted on the applicable
and potential commercial markets for our products. The results of this research demonstrated a clear and significant market for our new
products to be deployed as sanitizers for the agricultural and food tech industries. On May 2, 2019, Pimi Agro Cleantech Ltd. changed
its name to Save Foods Ltd.
Business
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 Nitrousink, 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 Nitrousink 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, the Company
has a 23% ownership in 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 solutions is that our ingredients do not leave any toxicological residues on the fresh produce we treat. In contrary, by forming
a temporary protective shield around the fresh produce we treat, our solutions make it difficult for pathogens to develop and potentially
provide protection which also reduces cross-contamination.
The
Food Safety Modernization Act (the “FSMA”) is transforming the United States’ food safety system by shifting the focus
from responding to foodborne illness to preventing it. According to the recent data from the Centers for Disease Control and Prevention,
approximately 48 million people in the United States get sick each year from foodborne diseases. We believe this is a significant public
health burden that is largely preventable. Since 2011, U.S. Food and Drug Administration (“FDA”) has had a legislative mandate
to require comprehensive, science-based preventive controls across the food supply. In the context of fresh produce at packing houses,
the FDA’s final produce safety rule (with an initial compliance date of January 26, 2018) provides for the use of sanitizers to
ensure produce is cleaned from human pathogens.
In
addition, most conventional chemical pesticides (fungicides), which are currently used to protect fresh produce from microbial spoilage
and reduce food waste, are potentially toxic, they remain on fruit peel and present health concerns, while also polluting the environment.
Therefore, the use of these products is strictly regulated and their residue on food and on the environment are carefully monitored.
Today’s trends led by both consumers and regulatory bodies are to significantly reduce the use of fungicides and switch to greener
solutions. In a series of studies conducted in collaboration with a large post-harvest service company during the second quarter of 2020,
our products have shown impressive results in extending the shelf life of fresh produce in “organic” (where no fungicides
are used at the post-harvest stage) and conventional (where fungicides are being used at the post-harvest stage) settings. On average,
our products may reduce the rotten fruits at the retail level by up to 50%.
We
believe that we have a unique opportunity to make a positive difference throughout the food value chain from field to fork and address
two of the major’s challenges in the food industry today - safety and waste. We target major markets that use conventional chemical
pesticides and sanitizers, including the pre- and post-harvest market, the greenhouse market and the fresh-cut market, where our “green”
treatments are used as alternatives for, or mixed with, conventional products in order to reduce (i) health and environmental concerns,
and/or (ii) microbial resistance that has reduced the efficacy of conventional chemical pesticides.
Industry
Overview and Market Opportunity
Background
The
world’s population is expected to grow to almost 10 billion people by 2050, boosting agricultural demand by some 50%, according
to the Food and Agriculture Organization, an agency of the United Nations (“FAO”). Providing healthy and safe food to feed
the world’s population is one of the biggest challenges of the twenty first century, accentuated with the backdrop of a fragile
global economy. Globally, around one-third of the food produced (estimated at circa 1.3 billion tons), is lost or wasted along the food
chain - from production to consumption according to the FAO.
Fruits
and vegetables are considered essential food commodities and demonstrate their best benefits when consumed fresh. Consumption as well
as production of fresh fruit and vegetables is growing globally; in 2020, the global production of fresh fruit amounted to about 887
million tons, while the production of fresh vegetable amounted to about 1.09 billion tons (2018) according to statista.com global fresh
vegetable production research. According to a report published by Technavio in October 2020, the fresh food market size has the potential
to grow by 337.76 million tons from 2020 to 2024, growing at a compound annual growth rate (“CAGR”) of almost 3% during the
forecast period, and the market’s growth momentum will accelerate during the forecast period due to the steady increase in year-over-year
growth. In the United States, according to a report by Grand View Research, increasing health awareness among the U.S. population and
potential development of secondary diseases due to obesity and unhealthy eating habits are propelling the market of fruit and vegetables
to reach an estimated $1.1 billion by 2025.
Food
Safety and Food Loss
Food
Safety
We
believe foodborne diseases are a significant public health concern globally. Hundreds of diseases are caused by eating contaminated food.
Many diseases are spread through unwashed or untreated produce. With approximately 48 million people in the United States (one in six)
getting sick, 128,000 hospitalized, and 3,000 die each year from foodborne diseases, according to recent data published by the FDA, and
23 million in the European region getting sick due to food borne disease, food safety is another major concern and source of waste, placing
a material burden on public health and significant healthcare cost. The economic burden of foodborne illness has been estimated to be
as high as $90 billion annually.
When
considering the farm-to-fork chain, microbial contamination of fresh produce can occur at multiple steps. Contamination can take place
during the cultivation of fresh produce, at harvest, during preparation/washing, within distribution chains and transport to shops, and
even at the final step in the consumers’ kitchen. We believe this is a significant public health burden that is largely preventable.
The FSMA is transforming the United States food safety system by shifting the focus from responding to foodborne illness to preventing
it. The Produce Safety rule of the FSMA establishes, for the first time, science-based minimum standards for the safe growing, harvesting,
packing, and holding of fruits and vegetables grown for human consumption. The final rule went into effect on January 26, 2016. Sanitization
is a cornerstone of FSMA compliance, which requires preventing or eliminating food safety hazards or reducing such hazards to a minimal
level.
Markets
require many types of produce to be washed prior to sale in order to remove dirt and other debris. Produce can be contaminated with foodborne
pathogens before it enters the packing house, and these pathogens cannot be seen with the naked eye. Inability to visually spot pathogens
make the washing step one of the most important steps in packing because, if washing process is not controlled, it can become a source
of cross-contamination (when foodborne pathogens fall off contaminated produce into the water where they can contaminate more produce).
These washing steps are defined by the packing house safety managers as critical point because water mixed with organic materials are
good conditions for pathogens to develop. Therefore, the use of sanitizers should be introduced during the washing step because they
are, most of the time, one of the last solutions applied before the produce meets the consumer. Sanitizers are designed to inactivate/kill
any bacteria in the water, drastically reducing the possibility of cross-contamination. We believe this represents a significant opportunity
for us.
Food
Loss
The
Food and Agriculture Organization of United Nations predicts that about one-third of the food produced globally is wasted or lost every
year. Approximately 644 million tons of fruits and vegetables are thrown away each year (representing 42% of the total food wasted every
year). A report published in April 2020, generated by the European Innovation Partnership Agricultural Productivity and Sustainability,
estimates that in Europe an estimated 9 million tons of food is lost at the production stage (farm), while up to 16.9 million tons are
lost at the processing stage (packing houses, etc.).
Much
of this loss is caused by spoilage, which can be caused by microorganisms - primarily fungi and mold. In addition, mold and fungi represent
the highest numbers of incidents of post-harvest microbial diseases in fresh produce worldwide. Taken together, we estimate that nearly
a third of all food grown is lost between the time that it is grown and harvested and the time that it is packaged for retail sale. Such
waste equates to roughly $680 billion in industrialized countries and $310 billion in developing countries.
Post-harvest
losses due to spoilage represent a significant problem along the supply chain and lead to profit losses in the millions. The main causes
of these losses are pest or disease infestation and incorrect storage conditions, which lead to rotting or loss of fresh mass. Fruits
and vegetables are largely damaged after harvest by fungi and other pathogens. It is estimated that an average of 45% of harvested fruit
and vegetables are lost globally. Post-harvest diseases have been identified as the greatest cause of post-harvest losses in fruits and
vegetables, causing significant economic losses. According to Mycofumigation for the Biological
Control of Post-Harvest Diseases in Fruits and Vegetables: A Review, estimates that approximately 20 to 25% of the fruit and vegetables
harvested are lost due to microbial spoilage during post-harvest handling in developed countries. Furthermore, the demand for fresh fruits
and vegetables, especially exotic tropical fruit has contributed to the demand for post-harvest treatments to increase shelf life and
maintain quality, resulting in more efficient export trade.
Today,
the most common way to protect fresh produce and prevent loss is the use of hazardous chemicals such as fungicides in post-harvest applications.
Post-harvest diseases are generally controlled by fungicides. Systemic (non-organic) fungicides are one of the most commonly used fungicides,
for example, non-organic citrus fruits are completely covered by the fungicides, and the residue is persistent for the life of the fruit
providing protection. However, as they tend to affect a single biochemical pathway within the pathogen, fungi may readily develop resistance
to systemic fungicides. To avoid potential issues with resistance, maximum concentration of fungicides will be generally used to ensure
highly efficient eradication of the targeted pathogen which leaves high residue level on the treated produce. Such high concentration
levels may have severe negative effects on human health, and the environment mainly due to the carcinogenic and/or teratogenic properties
of the compounds, and by their cumulative toxic effects.
The
effects of exposure to these hazardous chemicals on humans and the environment are a continuing concern as they are intrinsically toxic
and pollute the environment through wastewater discharge from the packing house or a discarded fruit. Therefore, the agricultural use
of certain pesticides (in the field or in the packing house) has been significantly reduced or abandoned in some countries leaving the
growers with significant challenges.
To
control and monitor the potential negative impacts pesticides might have over time, regulatory agencies that regulate pesticides - for
example, the United States Environmental Protection Agency (the “EPA”), the Pest Management Authority Agency in Canada, and
the European Food Safety Authority (“EFSA”) in Europe, have defined a maximum residue level (the “MRL”) that
can be present on the treated produce. Additionally, more countries require an MRL for the commodity to be imported into their country.
As there is increased awareness regarding compliance with MRLs, MRLs have become a much greater concern. These changes have also impacted
the market and we believe that consumers spearheaded this change by demanding organic or pesticide-free foods. Recently, consumers have
increasingly wanted to understand where and how their food is grown. Retailers and processors have capitalized on what they view as an
opportunity to offer more information to consumers. It is more common now for retailers and processors to ask which products have been
used on the commodities they are purchasing. There are also retailers and processors banning the use of certain products, requiring any
residues to be below the established MRLs. The reduction in MRLs results in lower efficacy of fungicide and increased loss.
We
believe that the rising demand for healthy food among the global population will trigger the market’s growth in the forthcoming
years. Over the last decade, the organic market in Europe continued to grow and reached €40.7 billion in 2018 with 15.6 million
hectares (approximately 38,548,439 acres) (including 2.2 million hectares in Spain, the largest organic area in Europe, followed by 2.0
million hectares in France and 2.0 million hectares in Italy), providing farmers with further added value on their production. The strong
growth rates in both production and consumption indicate that the organic market has not yet reached its peak and further growth can
still be expected. Organic farming is already responding to further emerging consumer trends such as veganism and demand for locally
produced food products, turning these challenges into opportunities.
As
consumer demand for organic fruits and vegetables is increasing globally and there is an increasing promotion by government organizations
for the adoption of environmentally friendly pesticides, the biorational pesticides market is expected to be approximately $10.4 billion
by 2028 growing at a compound annual growth rate (“CAGR”) of 12.5% during the forecast period 2022-2028. A biorational pesticide
is a term used to define any pesticide material that causes relatively no harm to humans or animals and does little or no damage to the
environment. We believe that our products could be defined as biorational products.
The
global organic food market grew from $259.06 billion in 2022 to $294.54 billion in 2023 at a CAGR of 13.7%. According to the 2023 Organic
Food Global Market Report, the organic food market is expected to grow from $512.01 billion in 2027 at a CAGR of 14.8%1. In
addition, strict regulations have been imposed on the usage of pesticides and GMO-produced crops worldwide. This, in turn, has influenced
consumer demand for organic fruits and vegetables.
Case
Study - Citrus Fruit
Citrus
fruit, which represent one of the main fruits produced worldwide with more than 100 million tons produced worldwide, can be infected
by many fungal pathogens, and these pathogens can cause considerable losses during storage and transportation. Losses are mainly caused
by Penicillium digitatum, P. italicum, Aspergillus flavus and Alternaria alternata for citrus fruit. Post-harvest treatments such as
thiabendazole, imazalil, sodium ortho-phenil phenate or other active ingredients have been used for many years. They are currently the
most commonly used fungicides effective for controlling post-harvest fungal pathogens in citrus and they are used in citrus packing houses
to maintain fresh fruit, control post-harvest decay, and extend fruit shelf life. However, significant problems such as environmental
issues and health concerns have risen in the citrus industry due to chemical residues or the occurrence of pathogenic resistant strains
which require the use of even higher concentration of these post-harvest treatments. However, currently, the residues of imazalil on
citrus fruits is being revised by the European Commission. The EFSA put forward a proposal in 2018 to cut the MRL for imazalil from 5
milligrams per kilogram to 0.01 milligrams per kilogram, causing worry among Europe’s main citrus producing countries and packers
exporting their produce to European countries. Due to the significant impact this proposal could have on the citrus industry, the European
Council has decided, in the meantime, to start reducing imazalil residues to four milligrams per kilogram for citrus fruit for a limited
period of time to allow the citrus industry an extra time to find green and safe alternatives. Our solutions have already shown its benefits
in reducing significantly the residues of imazalil while maintaining the produce shelf life.
Current
Market Drivers and Trends
In
addition to food safety and food waste concerns, the following market drivers are also shaping the food industry by setting standards
and conditions on the main actors in the industry:
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Focus of consumers
on health characteristics: consumers are more aware and conscious of the health characteristics of the food they consume.
Consumers pay more attention to the qualities of the fresh produce they buy. Particularly in the United States and Europe, products
such as berries, avocados, mangoes, pomegranates, papayas and sweet potatoes are gaining popularity and considered “super foods,”
and these products are showing a strong annual import growth of 10% to 20% according to Inspirafarms, a designer and developer of
cooling technology, including for fresh fruit and vegetables. |
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Increasing demand
for organic produce: the demand for organic products is growing rapidly particularly in both Europe and North America and
is closely related to consumer interest in healthy and pure eating. While the increasing demand created potential for oversees supply,
it can be challenging and expansive for exporters in tropical climates to comply with the increasingly demanding organic standards. |
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Success of retailers
determined by quality of produce: a recent report by Fruit Logistica published in 2019, based on consumer surveys that involved
almost 7,000 consumers in 14 different markets across Europe and North America, demonstrated the increased importance of fresh produce
for the profitability of food retailers. According to the report, when choosing the place to buy their groceries, consumers focus
on the quality of the stores’ fresh food, with freshness of fruits and vegetable being their top priority. The report also
showed that customers who are satisfied with the store’s fresh food quality, would visit the store more frequently than those
who are not. In addition, consumers are also willing to pay more for better-quality produce and their basked will be 4% larger. |
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Promoting sustainability:
a large range of sustainability aspects are directly related and affected by the fresh produce industry. We believe food waste accounts
for 8% of global greenhouse gas emissions. Both consumers and businesses, are becoming more aware of the growing importance of sustainability
issues. As consumers increasingly embrace social causes, they seek products and brands that align with their values. According to
a recent analysis published by Research Insights, nearly 6 in 10 consumers surveyed are willing to change their shopping habits to
reduce environmental impact, nearly 8 in 10 respondents indicated sustainability is important for them, and among those respondents
that indicated that sustainability is very or extremely important, over 70% indicated that they would pay a premium of 35%, on average,
for brands that are sustainable and environmentally responsible. Increasing number of companies in the fresh food sector are investing
in sustainability. Survey conducted by Champions 12.3 in 2017 showed that 99% of businesses that invested in reduction of food loss
and waste, received a net positive financial return. Primary production companies are investing in aspects of food losses, energy
efficiency and carbon footprint, through innovations such as drying produce, on-farm and off-grid cold rooms and post-harvest treatments. |
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Food retailers seek
to reduce their waste and maximize their revenues: according to according to ReFED, a not-for-profit organization concerned
with food loss and waste, in its report “Retail Food Waste Action Guide” more than eight million tons of food are wasted
every year in the United States in the retail sector alone, which translates into $18 billion in lost value (cost of waste) every
year. Some retailers, including Walmart, have already committed to implement a zero-waste policy by 2025. Prevention solutions across
the retail value chain offer the highest returns to retailers and are growing the fastest. |
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Regulators are promoting
the use of safer chemical-based product: for example, the EPA offers a “Safer Choice” label that product manufacturers
may use on qualifying products to help consumers and commercial buyers identify products with safer chemical ingredients. The EPA
requires that every chemical, regardless of percentage, in a Safer Choice-certified product is evaluated and allows only the safest
ingredients. |
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Increasing investment
in foodtech and agritech companies: according to a recent report published by AgFunder, a venture capital firm active
in the foodtech and agritech, startups developing agri-food tech solutions and products, raised approximately $51.7 billion into
agrifood technologies in 2021; an 85% increase over 2020. Reduction of food waste, extension of the shelf life of fresh produce and
reduction of the use of pesticides are main focus of the industry and many companies are addressing these objectives, including: |
The
increased consumption of fruits and vegetables in combination with the current regulation and consumers’ demand for healthier food
has placed a greater burden on the fresh produce industry to provide food products that are fresher in quality, demonstrate an extended
shelf life and are safer to consume.
The
aforementioned changes provide a unique opportunity for us to introduce our products and solutions. We are aiming to become a significant
player in post-harvest green produce treatment, fully responsive to the world’s ongoing change in fruit and vegetables consumption,
food safety requirements as well as regulations and consumer demand to eliminate the use of hazardous chemicals.
Our
Core Products and Solutions
Our
innovative products address what we believe to be two of the most significant challenges in the food industry: food safety promotion
and food loss reduction. Our main product lines consist of a proprietary blend of organic food acids applied in pre-and post-harvest
applications, which is designed to work together with an oxidizing agent (together, the Save Foods solution) in order to improve food
safety and increase fruit and vegetable’ shelf life by reducing microbial spoilage.
In
pre-harvest application, our solutions could be applied several times up to 24 hours prior to the harvest. In post-harvest applications,
the main steps are cleaning, sanitization and coating (wax). Our solutions address the cleaning and sanitization application points which
are the critical first steps for preserving the quality of fresh produce by controlling microbial contamination related to food safety
(e.g., Listeria, Salmonella, E. coli) and food loss due to microbial spoilage (e.g., fungi, mold and yeast). In general, the current
process includes an initial washing step to remove soil and other debris, which improves the product appearance and lowers the product
temperature. The next step includes sanitation or disinfection methods combined with fungicides that can further reduce the presence
and prevent the transfer of spoilage and pathogenic microorganisms on fresh produce surfaces. The last step usually includes application
of wax sometimes combined with an additional application of fungicides to prevent or reduce physiological changes and risks of spoilage.
Our main products and solutions are applied at the cleaning and sanitization steps.
One
of the main advantages of our solutions is its non-toxic residues that are providing protection to the treated produce. And we believe
that all the blend ingredients are recognized by the FDA as GRAS when used as intended in fruit
and vegetable wash applications. Moreover, they significantly reduce or eliminate the need for additional post-harvest applications
with conventional fungicide by at least 50%, and in some cases entirely, and can reduce food waste due to spoilage by up to 50% (see
results below on easy peelers and mango) at the retail level.
Our
main products are SavePROTECT or PeroStar, which are an application added to fruit and vegetable wash water as a processing aid
to peracetic acid (oxidizing agent) to increase its efficiency against plant pathogens and reduce produce loss.
Processing
Aids - SavePROTECT or PeroStar
Processing
aids are products that are intended to be used with other products to aid the application or enhance the effect of that product. Save
Foods processing aids, which are marketed as SavePROTECT in the Americas and PeroStar in the rest of the world, are based on our proprietary
blend of food acids and are added to the wash water at the cleaning and sanitization stages simultaneously with a low concentration of
peracetic acid (“PAA”), the active agent. This food acid blend serves several functions:
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SavePROTECT/PeroStar keeps
the process wash waters at a relatively low stable pH level. We have observed that low pH levels strengthen the effectiveness of
the PAA and the fungicide used which result in increased sanitation and biocide activity; |
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PAA-based products are
used as disinfectant in wash water. When used with PAA-based products, SavePROTECT/PeroStar may optimize the efficacy of PAA and
eliminates the strong odor of PAA, creating a more friendly and safe working environment; |
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When used with fungicides,
including imidazole, imazalil, thiabendazole, etc. - most commonly used fungicides - SavePROTECT/PeroStar may optimize the efficacy
of the fungicides used and prevent resistance buildup; |
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SavePROTECT/PeroStar helps
to clean the fruit surface and can improve the performance of the wax applied leading to an improved appearance of treated fruit
by leaving a glossy finish on the outer skin of the fruit; and |
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SavePROTECT/PeroStar helps
to extend shelf life. |
During
2020, we ran a series of proof of concept and small trials in collaboration with commercial partners on pears, avocado, easy peelers,
lime, mango, bell pepper, lemons, fresh cut vegetables and figs. During 2021 and the first quarter of 2022, we initiated a proof of concept
in bananas, lychee, berries, pomegranate, broccoli, tomato and eggplant. Since the fourth quarter of 2021, we have expanded our footprint
to additional countries that are facing export challenges to Europe such as Peru, Turkey, South Africa, Mexico and recently Brazil. As
of June 30, 2023, we fully commercialized our solution with respect to easy peelers, lime, bell peppers, dates, pears and avocado.
Results
on Berries
Berries
are easily perishable and maintaining fresh quality after harvest depends on proper handling, transportation, and storage. If berries
are not properly handled during and after the harvest, they lose nutritional and monetary value.
Strawberries,
raspberries, black raspberries, blackberries, and blueberries are picked fully ripe for best appearance and eating quality. Because they
are so delicate and easily damaged, they are usually picked directly into final containers to minimize handling, so grading and sorting
of damaged or decaying fruit happens as the crop is picked. Even when they are handled under optimal harvesting temperature and humidity
conditions, their shelf life is still short compared to most fruits and vegetables. Finally, even though it is common knowledge that
consumers should be washing the berries before consuming them, this does not always happen. That makes farm food safety procedures crucial
to minimize the risk of spreading foodborne pathogens.
During
the fiscal quarter ended December 31, 2021, and the fiscal quarter ended March 31, 2022, we began working with raspberries and strawberries
producers to apply our solutions with the goal to extend their shelf life. The results of the trials have shown that for raspberries,
our solutions have reclaimed 80% of the raspberries that would otherwise have gone to waste. The trial pushed the boundaries of the raspberries’
shelf life, with 10 days in cold storage and three more days at room temperature, after which three times as many berries were viable
to be sold. For strawberries, our treatments have shown a waste reduction of 85% after 15 days.
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In
addition, after successful pilots on raspberries and strawberries, we decided to conduct a pilot on blueberries in February 2022. In
most cases, there are no known treatments for disinfection or post-harvest pathogen prevention in blueberries. The experiment simulated
long shipment of blueberries in cold storage for one month. The results demonstrated that our solution protected blueberries from pathogens’
contamination and, subsequently, extended their shelf life by seven days.
Results
on Avocado
During
September 2021, we began a commercial pilot with Milopri, the avocado packer of Galilee Export, to evaluate Save Foods’ solution
on avocados. While our application was applied on the packing line, boxes of avocado were put aside for shelf-life evaluation. After
16 days at room temperature, the avocado treated with our solution showed the lowest percentage of decay resulting in two times more
avocado available for consumption.
Following
this successful commercial pilot, Milopri fully adopted and implemented our solutions by August 2022.
Results
on Bell-peppers
The
Arava region in southern Israel produces approximately 60% of all the fresh vegetables that Israel exports, and bell peppers are its
leading exported vegetable. At the beginning of the bell pepper season (September 2021), we began commercial pilots in two large packing
houses in order to evaluate the benefits of our solution as applied to bell peppers. During September 2022, after successfully evaluating
our solutions, these two large packing houses began using our solutions as their commercial treatment.
Our
solutions have shown a decay reduction compared to the current industry standards and have maintained the firmness of the bell pepper
overtime. While Israeli packers in the region are struggling to maintain a reasonable shelf life for their produce during the export
process, our solutions have shown a significant improvement in export performance. The foregoing pilot demonstrated that bell peppers,
after applying our solution, sustained 70% less decay after 28 days (23 days in cold storage and an additional five days at room temperature)
translating into 20% more bell peppers to sell and consume. The post-harvest team at the Central-and Northern-Arava Research and Development
center validated these results and the results were thereafter published in an Israeli local professional agriculture journal.
Results
on Easy Peelers
Easy
peelers are citrus fruits that are easier to peel, such as tangerines, mandarins, satsumas, and clementines. As previously described,
imazalil is currently one of the most commonly used fungicide that is effective in controlling post-harvest fungal pathogens in citrus.
Currently, the residues of imazalil on citrus fruit is being revised by the European Commission and have already been reduced, and this
reduction poses challenges, especially to packing houses exporting to Europe.
Between
February and June 2020, we collaborated with the Israeli branch of one of the largest worldwide post-harvest service companies to demonstrate
the safety and ability of PeroStar to meet the new requirement of reduced residue level of imazalil and efficiently control decay against
the most common pathogens attacking citrus fruit such as green mold (Penecillium digitatum) and sour rot (Geotrichum candidum). The experiment
simulated the applications in a packing house which tested the use of imazalil with and without our products. The reference used in the
trials to compare the results was the maximum amount of imazalil allowed and the current treatment in the packing house which is a combination
of PAA and imazalil as well as PAA alone to simulate treatment in organic settings.
To
ensure the efficacy of the products, it is customary to deliberately infect the fruit with the target pathogen at a concentration of
around 10 and to inoculate it for 16 to 24 hours before applying the solution. Following the application, the fruit was stored in cold
storage for between 9 to 21 days and then stored in room temperature for shelf-life evaluation.
During
these months, we ran a series of trials from small scale/lab test (between 350 to 500 fruits per trial) to semi-commercial application
(more than 1000 fruits per trial). The semi-commercial pilots were run in Ashkelon, Israel on the packing line of Mehadrin in Israel,
a well-know and recognized citrus packer. From January 2022 until January 2023, Mehadrin was applying our solutions on produce in one
of its packing-lines in Ashkelon, Israel, in which Mehadrin had reported a reduction of 50% of pesticide usage. Due to technical reasons,
our commercial implementation with Mehadrin recently transitioned to a packing-line in Netanya, Israel, for additional pilots. These
pilots are expected to continue during the 2023-2024 season.
The
results of the trials have shown that PeroStar significantly reduced the need for additional post-harvest applications with imazalil
by at least 50%, and in some cases entirely while improving the fruit shelf life, reducing waste). In addition, the use of PeroStar allows
the packing house to meet the new limitations of imazalil utilization as well as meet its goal to apply greener and safer products (see
graph below).
Results
on Mangos
We
recently tested our PeroStar on mangos in collaboration with the Israeli-based Volcani Center for Agricultural Research. The goal of
the test was to evaluate the effectiveness of PeroStar in preventing decay in harvested mangos in comparison with fludioxonil. Fludioxonil
is a fungicide that is commercially available in Israel at a level of 250 to 300 parts per million. Fludioxonil is deemed to be an effective
fungicide against fungi that attack the mango post-harvest, yet there is a growing need for “greener” solutions, given Fludioxonil’s
level of toxicity.
Mangos
were stored for three weeks after treatment at 12°C and an additional week of shelf life at 20°C in what would typically simulate
a mango crate shipment to Europe and retailers in similarly distanced markets.
Results
after evaluation have shown us that the treatment with PeroStar, improved the biocide activity of the PAA, which resulted in a reduction
in both side decay and stem-end rot (common pathogens in mango) leading to an extended shelf life with no use of fungicide (as demonstrated
in the picture below). In addition, the results also showed that the combination of PeroStar with a low concentration of fludioxonil
reduced the post-harvest decay to zero. The results (as presented in the graph below) demonstrate that applying PeroStar enables mango
producers to achieve an improved shelf life of produce compared to the current solution while reducing the use of conventional chemical
pesticides.
During
2022, an independent study, performed by Itay Noked, agronomist and independent researcher (M.Sc. Post-Harvest), showed that our solution
can extend the shelf life and freshness of mangos while virtually eliminating the use of post-harvest pesticides; after 21 days in storage
and 15 days on the shelf, twice as many mangos were still edible when compared to mangos that didn’t undergo treatment, and 75%
less pesticides were used.
Following
these pilots, a small commercial application was performed with an Israeli mango packer, in which only 25% fungicide were used together
with our solution and compared to the current commercial application with 100% fungicide. Following such application, both batches of
fruits were sent to a leading fresh produce distributor in Europe, and both were successfully distributed, demonstrating that our solutions
help reduce up to 75% of the applied fungicide. Following these results, a larger commercial application was performed during August
2023 to evaluate our solution on mango at the end of the season.
Results
on Limes
Following
a successful pilot in Mexico on Persian lime (where SavePROTECT has reduced to zero the fruit decay after 21 days as shown in the graph
below), the packing house bought its first batch to start its utilization of our product. Thereafter, and beginning in June 2021, the
packing house began applying our solution to all of its packing facilities in Mexico.
Based
on these results, food retailers may benefit from additional income of up to $126 per ton of limes assuming a conservative average price
of $3,000 per ton (based on an average price per pound lime of $1.49 in 2019), as presented in the graph below.
The
European Union is a significant target market for our organic food acid blends because of strict regulations that are being imposed on
the use of pesticides and GMO-produced crops, as well as health-conscious consumers who represent a growing demand for organic fruits
and vegetables. In August 2020, we submitted a regulatory dossier for our PeroStar as a processing aid to be used with PAA in Spain and
Italy, two of the largest fruit and vegetables producers in Europe. See “Government Regulation and Product Approval”
below.
Commercialization
Stage
The
table below summarizes our commercialization efforts and activities as of December 31, 2023.
| |
|
Easy
peeler |
|
|
Lime |
|
|
Avocado |
|
|
Bell
pepper |
|
|
Lemon |
|
|
Dates |
|
|
Pears |
|
| California, USA |
|
|
v |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Israel |
|
|
v |
|
|
|
|
|
|
|
v |
|
|
|
v |
|
|
|
v |
|
|
|
v |
|
|
|
v |
|
| Mexico |
|
|
|
|
|
|
v |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Turkey |
|
|
v |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
v |
|
|
|
|
|
|
|
|
|
Sanitizer
– SF3HS or SF3H
Post-harvest
sanitizers are considered a pesticide and regulated by the EPA in the United States. The EPA will review toxicity data and results from
tests to show how well the product kills bacteria to determine if the product should be approved. See “Government Regulation
and Product Approval” below.
This
sub-category of products is based on our proprietary blend of food acids combined with hydrogen peroxide as the oxizider and includes
SF3HS and SF3H. We believe that this category of products will be an improved sanitizer as compared to traditional sanitizers. SF3HS
and SF3H are public health antimicrobial pesticide products that bear a claim to control by at least a 3 log10 reduction (99.9%) pest
microorganisms that pose a threat to human health (foodborne pathogens), and whose presence cannot readily be observed by the consumer.
After
we have finalized our toxicological studies, we conducted a series of microbial trials in laboratories in both the United States and
Israel in non-Good Laboratory Practice settings in order to evaluate the efficacy of SF3H as an antimicrobial agent to reduce foodborne
pathogenic bacteria in “processing water” for fruit and vegetables. We used a modification of the Association of Official
Agricultural Chemists Germicidal and Detergent Sanitizing Action of Disinfectants method and test protocol EN1276 (European standard
for the evaluation of chemical disinfectant or antiseptic for bactericidal activity). The tested organisms are Listeria monocytogenes,
Salmonella enterica and Escherichia coli O157:H7.
The
last test was performed by Analytical Lab Group on a mix culture of Listeria monocytogenes with an exposure time of 30 seconds. The results
showed more than 99.99999% (>7.51 Log10) reduction. In Israel, the tests were performed by the Institute for Food Microbiology and
Consumer Good Health on a single strain for each pathogen (Listeria monocytogenes, Salmonella typhimurium and E. coli) with exposure
time of 30 seconds and the results have shown between 99.99% to 99.9999% reduction. Exposure time is a key parameter in sanitization
process, therefore allowing a short contact time is a significant advantage over the competition where the current minimum contact time
available is 45 seconds.
During
2020 we decided to postpone our good laboratory practices efficacy studies in order to concentrate our efforts on the commercialization
of our adjuvant, SavePROTECT/ PeroStar solutions.
Results
on Avocados (food safety)
We
have tested the efficacy of our SF3H and SF3HS products against Listeria on 40 avocados of which 10 avocados were treated with our SF3H
and SF3HS products. The peel of the avocado was punctured and infected with high level of Listeria. The results have shown a 99.99% reduction
within fifteen seconds of exposure time. In addition, we have also tested the efficacy of SF3H on avocado’s shelf life compared
to current treatments (12 avocados per treatment). The results (demonstrated below) show that after 18 days in room temperature the treated
avocados display material reduction in microbial spoilage as compared to avocados treated with water and chlorine, a well-known sanitizer.
Results
on Microgreens (food safety)
An
increasing number of studies point to the growing demand for locally sourced, organic vegetables. Various types of “young vegetables,”
such as sprouts, microgreens and baby greens, are becoming increasingly popular due to their high nutritional value. Microgreens are
deemed premium products and command higher retail value. They also belong to a group of “functional foods” and have high
levels of bioactive compounds, while requiring less water and energy to grow, which they do year-round. Currently, microgreens are largely
being cultivated in major greenhouses across the United States. According to Agrilyst, an agro-intelligence platform, greenhouse cultivation
of microgreens was the highest in South and Northeast regions, each accounting for 71% and 59% in 2017. While consumers in the United
States are more focused on growing leafy greens and microgreens than any other vegetables.
We
have tested the efficacy of our SF3H products to control and prevent potential pathogen contamination on microherbs (pea and sorrel)
produced by Israeli-based microgreens exporter 2BFresh. Our treatment combined a post-harvest spray application and a fogging treatment
to be used in the cooldown storage room. In order to determine the efficacy of the product, 25 swabs were taken across 18 trays (nine
of each microgreen species). The results showed more than 90% reduction of the total bacterial load post-treatment.
We
believe that our SF3HS and SF3H provide improved sanitization of bacteria (including E. coli, Salmonella and Listeria) while leaving
no toxic residues on fruits and vegetables.
We
expect the first commercialization of SF3H and SF3HS at the earliest by the end of 2025.
Other
Products
Our
product portfolio also includes the SpuDefender and FreshProtect.
SpuDefender
SpuDefender
is one of our EPA-registered products which targets and is designed to control the post-harvest potato sprout. Due to the European Commission’s
decision on January 1, 2020, to no longer allow the use of the herbicide chlorpropham (the “CIPC”), the post-harvest potato
industry is looking for new solutions. For over 50 years, CIPC was widely used as a sprout suppressing agrochemical agent applied to
potatoes that were stored in processing facilities.
Following
recent discussions with post-harvest experts and potential customers, we believe we should concentrate our efforts on the commercialization
of our adjuvants. Furthermore, we believe that our SpuDefender product may offer a successful alternative to CIPC. We currently intend
to initiate pilot tests with potential customers to treat potatoes pre-storage (three to six months storage in average) in 2024.
FreshProtect
FreshProtect
is our second EPA registered product, which targets and is designed to control spoilage-creating microorganisms on post-harvest citrus
fruit. The registered label of the product only allows us to market and sell FreshProtect in the United States (excluding California).
However, we believe that FreshProtect has a significant potential in reducing the bacterial load entering the packing house in the pre-harvest
market. The non-toxicity of FreshProtect allows its application up to the day of harvest (0-day pre-harvest interval), which is critical
to prolong crop protection and reduce microbial spoilage.
We
recently ran a proof-of-concept study under a controlled group environment of different plant fungi responsible for decay which showed
promising initial results.
Dr.
Jim Adaskaveg, Professor at the Microbiology and Plant Pathology Department at the University of California, Riverside, reported the
completion of several successful field trials with FreshProtect on citrus trees where he demonstrated a significant reduction of decay
in treated fruit and a reduction in bacterial populations.
The
main conclusions of the trials were that FreshProtect with concentration of 1% and 2% applied at 400 gallons per acre materially reduced
sour-rot on inoculated fruit. While both rates were also effective against fruit inoculated with P. digitatum, (i.e., fungus found
in the soil of citrus-producing areas and major source of post-harvest decay), the 2% concentration of FreshProtect demonstrated significantly
more efficacy at reducing sour-rot. Natural incidence of Penicillium spp. (a family of fungi) was also reduced on fruit inoculated
with G. candidum, fungus that is a member of the human microbiome.
Furthermore,
FreshProtect can be used in combination with several different kinds of pesticides and fertilizers which allows the application of more
than one pesticide at once. This in turn reduces cost and facilitates implementation. The graph below summarizes these results:
The
regulation for pre-harvest (in the field) application especially in California as well as in Israel may take more time than post-harvest
application due the potential impact on the environment. We submitted the pre-harvest regulatory dossier on January 2023 in the US. In
parallel, we started to run additional pilots in Israel with potential strategic partners in order for them to evaluate and validate
the potential of FreshProtect for the pre-harvest market. We expect the registration of the product in the U.S. by mid 2024. Once
registered at the EPA level, we would be able to start the registration in California.
Our
Strengths
We
believe that our main strengths include:
| |
● |
Strong Management
Team with Commitment to Green Products. Led by an experienced team in developing products and solutions for the agriculture
industry, we plan on becoming a significant player in providing consumers with healthy and green fresh produce from farm to fork
while endeavoring to ensure food safety and reducing food waste. We believe that our proprietary blend of food acids provides protection
to the treated produce and works in synergy with well-known fungicides and sanitizers. This synergy allows us to significantly reduce
the concentration of the fungicides that are heavily regulated in several countries and, in certain countries, outright banned and
meet the food trends of sustainable and green produce. |
| |
● |
Multi-Purpose Products
that Simplify Crop Treatment Routine and Save Money. While most chemicals marketed in the industry address either
food safety or food waste, our multi-purpose solution are intended to provide a solution for both problems, while simplifying crop
treatment and achieving cost saving. Our solutions are capable of cleaning and controlling pathogens that would otherwise render
fresh produce as unsafe for human consumption. Our proprietary blend of food acids combined with well-known sanitizers are very efficient
against foodborne pathogens like E. coli, Salmonella and Listeria as well as plant pathogens in short contact time (99.999% reduction
within 30 seconds of contact). In addition, with multipurpose products, there is no need to order, ship or dispose of bottles of
product, resulting in less energy consumed, less CO2, less fuel, and less waste. We believe our focus on natural product chemistries
will allow us to continually drive lower costs, higher product gross margins and efficacy through longer shelf life and reduction
of food waste. |
| |
|
|
| |
● |
Strong Intellectual
Property Portfolio. We believe that we have built a strong intellectual property position throughout the food chain (from
field to fork) as our patents claim compositions and methods that can be used to protect food and agricultural products from decay.
We rely on a combination of important intellectual property assets, to protect our innovation. Our employees, consultants, customers,
and vendors are subject to confidentiality agreements that protect our proprietary manufacturing processes. Our patent portfolio
includes granted patents in the United States, Europe, and Israel, as well as several priority applications, across several patent
families, including composition-of-matter claims, methods of use claims, including for treating edible matter, for improving the
appearance of edible plant matter, and sterilization methods, as well as for articles for implementing these methods. These patents
directly protect a proprietary method for extending life shelf and reducing edible matter from microbial decay. |
| |
● |
Commercially Available
Products and Seamless Implementation. One of the oxidizers being used with our products is PAA, a well-known and widely used
sanitizer. Following the enforcement of the FSMA in connection with the use of sanitizers, more and more packers have been choosing
this healthy and eco-friendly sanitizer over chlorine, and this choice facilitates implementation of our products. In addition, the
application of our products does not require special equipment as they are used in combination with or replace existing products
applied on the packing line or in the mix tank in the field. This allows a relatively cheap, seamless and fast implementation. |
| |
|
|
| |
● |
Significant Reduction
of Hazardous Chemicals Food Residue. All the ingredients in our blend of food acids are recognized by the FDA as GRAS
when used as intended in fruit and vegetable wash applications, while oxidizers we use such as hydrogen peroxide rapidly decompose
into water and oxygen. The absence of toxicological residues not only improves food quality but also promotes occupational safety
for the employees of packing houses, contributing to a friendlier and safer working environment. |
Our
Strategy
In
September 2018, we changed our organizational structure and management team. After reviewing the then existing strategy and results of
operation, as well as examining the market opportunities, the new management team decided to update our strategy, reduce the marketing
and sales of its existing products, and focus our efforts and financial resources in developing its next generation products. During
2019 and 2020, we developed, validated and tested the efficacy of our next generation product - a blend of food acids - on a variety
of crops in small- and large-scale commercial pilots. During 2021, following the completion of certain successful pilots conducted in
2020, we shifted our strategic focus to marketing, sales and overall commercialization of its products.
Over
the course of 2022, we understood that working with global post-harvest service companies is challenging, especially when considering
that our solutions reduce or replace their lucrative products (fungicides) on the packing line. Furthermore, we concluded that the validation
of our solutions by these post-harvest service companies is long and required multiple pilots over several years. In addition, following
the positive results on berries, and taking into account the short shelf life and the lack of existing solutions, we decided to focus
our efforts on developing such solutions since a shorter shelf life may reduce our sale cycle and, accordingly, present greater market
opportunity.
Therefore,
we have revised our strategy, to commercialize our products directly to leading packing houses and through strategic partnerships with
post-harvest service companies that work with local partners and/or distributors and focus more on produce that is significantly improved
by our solutions while shortening the evaluation period. Our ultimate goal is to eventually gain presence in a variety of businesses
compromising the food industry, including pre-harvest, post-harvest, retail and consumer businesses.
In
order to achieve our goals, we intend to:
| ● |
Develop
a Strong Marketing Message Around Promoting Safe Food While Avoiding Food Waste. We plan to brand our fresh produce with
a “chemical residues free” seal of approval and we believe that like-minded fruit packers around the globe will seek
to differentiate themselves from their competitors by obtaining this seal. |
| |
|
| ● |
Expand
Our Activities to Include Focus on Various Berries. The berry market is virtually untapped and consists of very sensitive
produce with limited shelf-life that stand to benefit from our solutions. Berries can be harvested several times throughout the course
of the year and are considered to be a high value crop. |
| |
|
| ● |
Acquire
or License Complementary Products and Technologies. We actively search for products and technologies that can enhance our
portfolio and grow our business to address all the post-harvest treatments such as fruit coating products or technologies. |
| |
|
| ● |
Expand to Additional
Produce and Geographies. Our plan is to focus first on key countries and regions with the largest markets for our crops,
including Mexico, Israel, Turkey, Egypt, key markets in the United States such as California and Brazil. In
the future, we are also planning to increase the variety of crops that can be treated with our products, to include produce such
as apples, tomatoes, pomegranate, eggplant, broccoli, and papayas. |
| ● |
Focus
on Exportation to Europe. We plan to increase our focus on exports to Europe as EU regulations permit a limited use of fungicides.
When taking into account these regulations, which are becoming increasingly difficult, and the long transportation time, there is
a significant increase to the risk of produce decay. |
| |
|
| ● |
Leverage
Our Products Through Collaborations. Our focus and expertise in the development of green products for the agritech industry
and in post-harvest treatments allow us to be a partner of choice for other businesses looking for development partners and for larger
companies wanting to leverage their product such as PAA into new combination products. For example, companies selling or owning fungicides,
the MRL of which is being reduced, and that are working in synergy with our products are good partners. This type of collaboration
could allow them to continue selling their product. |
Selling
and Marketing
Although
over the course of 2022, we ran over fifty successful pilots with potential commercial partners, we discovered that the sale cycle is
significantly longer than we had anticipated and noted it would take on average, at least two seasons for our new solutions to be fully
implemented.
Therefore,
to maximize our efforts during 2023, we optimized our marketing and sales strategy. We now concentrate our efforts first on high value
crops, such as avocado, mango, citrus, pears, various berries, dates and bell peppers, while targeting larger producing countries in
both the northern and southern hemispheres to overcome the seasonal effect. In the last 12 months, we conducted pilots in South and Central
America, the United States, South Africa, Turkey, Egypt, and Israel, and we are exploring collaboration opportunities in Morocco. In
addition, to shorten the length of our pilots, we now aim to target fresh produce with a comparatively shorter shelf life, including
various berries. Over the next 12 months, we intend to focus mainly on following up with the pilots performed during the last 18 months
and convert them into full commercial applications. To facilitate our market penetration, we are collaborating with local agents and
experts in various jurisdictions, each of which has connections with packers and retailers on the ground, which helps us bridge the language
and cultural gaps.
The
table below summarizes the market opportunities for selected produce in our target markets.
| |
|
Apples
& Pears |
|
|
Avocado |
|
|
Bananas |
|
|
Berries |
|
|
Bell
pepper |
|
|
Citrus |
|
|
Lettuce
& Chicory |
|
|
Mango |
|
|
Papaya |
|
|
Tomato |
|
| Global Production
of the Crop (in million ton) |
|
|
113,920 |
|
|
|
7,687 |
|
|
|
120,207 |
|
|
|
10,765 |
|
|
|
35,886 |
|
|
|
157,535 |
|
|
|
26,992 |
|
|
|
56,134 |
|
|
|
14,074 |
|
|
|
184,282 |
|
| Production of the Crop in
the Company’s Target Markets (in million ton) |
|
|
20,809 |
|
|
|
4,660 |
|
|
|
24,608 |
|
|
|
4,811 |
|
|
|
9,516 |
|
|
|
63,976 |
|
|
|
7,013 |
|
|
|
9,337 |
|
|
|
2,958 |
|
|
|
54,113 |
|
| Production of the Crop in
the Company’s Target Markets (in %) |
|
|
18 |
% |
|
|
61 |
% |
|
|
20 |
% |
|
|
45 |
% |
|
|
27 |
% |
|
|
41 |
% |
|
|
26 |
% |
|
|
17 |
% |
|
|
21 |
% |
|
|
29 |
% |
| |
1. |
Average global production
for the years 2018, 2019, 2020 and 2021. |
| |
2. |
Our general target markets
include Brazil, Chile, Colombia, Egypt, Israel, Italy, Mexico, Morocco, Peru, Philippines, South Africa, Spain, Thailand, Turkey
and the United States. |
Turkey
While
Turkey is not a member of the EU, the EU estimates that more than 42 percent of all Turkish exports go to EU member states, which will
soon be bound by stricter rules about the origin of their imports. Turkey’s Ministry of Trade estimated that in 2020 the total
value of Turkish exports to the EU exceeded €120 billion.
Since
August 2021, we have been working with a local post-harvest agent to introduce us to local Turkish packers. Our focus in Turkey is the
citrus sector, and as of December 2021, we had three pilots ongoing with leading packers in Turkey. Following these pilots, Kalyoncu
began implementing our solution in their citrus line next to Mersin.
Unfortunately,
the war in Ukraine as well as the earthquake that hit Turkey during February 2023 had a negative impact on the citrus packers that we
worked with for the 2022-2023 season. In addition, the war in Israel and the political atmosphere between Israel and Turkey have a negative
impact on our business with Turkey.
Mexico
To
promote our activities in Mexico, we are collaborating with Agrinet S. A., an agritech consultancy firm with expertise in introducing
new products into Mexico. Agrinet has initiated a pilot program across Mexico to demonstrate the benefits of Save Foods solution. The
program included several packing house companies in Mexico that export mainly to the United States. In mid-2022, we decided, together
with Agrinet, that it would be economically advantageous to focus on sales with lime packing companies.
Following
successful pilots conducted between August and October of 2020 on Persian lime, SiCar, one of the largest packers of Persian lime in
Mexico, is applying our solution in all of their packing houses in Mexico. Mexico is the largest producer of Persian limes.
Israel
From
January 2022 until January 2023, Mehadrin was applying our solutions on produce in one of its packing-lines in Ashkelon, Israel, in which
Mehadrin had reported a reduction of 50% of pesticide usage. Due to technical reasons, our commercial implementation with Mehadrin recently
transitioned to a packing-line in Netanya, Israel, for additional pilots. These pilots are expected to continue during the 2023-2024
season.
Over
the course of 2022, we ran additional pilots with large packing houses in Israel on pears, berries, pomegranate and tomatoes. Following
several successful pilots on pears, a leading Israeli pear packing company elected to use our solutions as their commercial applications
and started to implement our solutions in its facilities by mid-2023.
On
September 11, 2020, we signed a five-year exclusive distribution agreement with Safe-Pack Products Ltd., according to which we granted
Safe-Pack an exclusive right to resell, distribute, advertise, and market our products in the citrus industry in Israel and the Palestinian
territories. Following review and careful consideration, this agreement was not profitable for both parties as initially expected and
was mutually terminated in September 2022.
United
States
The
first market we target for the sale and distribution of SavePROTECT is the post-harvest citrus industry in the
State of California, which according to the 2022 USDA report on citrus fruit accounts for 62% of total United States citrus production.
Over
the last three years, we have treated more than 200,000 tons of citrus fruit with the different version of our SavePROTECT product. Under
the supervision of a world leading packing house to the citrus fruit industry, we evidenced the Company’s solutions utility as
having a good safety profile, ensuring food safety and in controlling microbial spoilage. We plan to leverage this collaboration in order
to further penetrate the citrus based fruit packing industry, both in California and beyond.
The
Post-harvest treatment market for fruits and vegetables, which is projected to grow from $1.5 billion in 2019 to $2.3 billion by 2026,
growing at a CAGR of 6.5% during the forecast period, is led globally by select companies, including DECCO U.S. Post-Harvest, Inc., (United
States), Pace International, (United States), Xeda International (France), John Bean Technologies (United States) and Agrofresh (United
States).
During
October 2021, we secured the appropriate regulatory approvals and, accordingly, we plan to further penetrate this market for the upcoming
citrus seasons. We currently focus on post-harvest treatment for the citrus industry in addition to pilot studies with leading packers
expected to begin during the 2023-2024 season, to evaluate and validate the efficiency of our solutions in their packing facilities.
Spain
Following
a collaboration with one of the world’s leading post-harvest treatment service vendors in Spain during 2020, in which we examined
our product on citrus fruit, we began the registration process of our product, PeroStar. We believe our product could be an improved
alternative to current fungicides that will soon be significantly reduced in this market.
Intellectual
Property
We
rely on patents and trade secret protection laws to protect our proprietary products and intellectual property. We entered into confidentiality
agreements with our employees, consultants, customers, service providers and vendors that cover, inter alia, our technology and proprietary
manufacturing processes.
As
of January 9, 2024, we owned eleven issued patents which protect our technology. They were granted in Israel, the United States and Europe
and expire between 2031 and 2041. In addition, eleven patent applications are pending.
Compositions
and Methods of Treating Edible Matter and Substrates Therefor
This
patent family includes patents in the United States, Israel, and an allowed application in Europe and relate to a method for protecting
edible matter from decay by applying to the edible matter a disinfecting composition containing, among other things, (1) phosphonic or
phosphoric acid, (2) a carboxylic acid, (3) performic acid, (4) a performic acid source (such as formic acid) and an oxidizer (such as
hydrogen peroxide).
| File
Number |
|
Country |
|
Type |
|
Status |
|
Application/Patent
Number |
|
Priority
Date |
| SVF-P-001-DE |
|
Germany |
|
Patent |
|
Issued |
|
DE 602011071750.2 |
|
September 14, 2010 |
| SVF-P-001-ES |
|
Spain |
|
Patent |
|
Issued |
|
11825901.9 |
|
September 14, 2010 |
| SVF-P-001-FR |
|
France |
|
Patent |
|
Issued |
|
11825901.9 |
|
September 14, 2010 |
| SVF-P-001-GB |
|
Britain |
|
Patent |
|
Issued |
|
11825901.9 |
|
September 14, 2010 |
| SVF-P-001-IL |
|
Israel |
|
Patent |
|
Issued |
|
225247 |
|
September 14, 2010 |
| SVF-P-001-IL1 |
|
Israel |
|
Patent |
|
Issued |
|
254909 |
|
September 14, 2010 |
| SVF-P-001-US1 |
|
United States |
|
Patent |
|
Issued |
|
10,212,956 |
|
September 14, 2010 |
| SVF-P-001-US2 |
|
United States |
|
Patent |
|
Issued |
|
11,632,971 |
|
September 14, 2010 |
| SVF-P-001-US3 |
|
United States |
|
Patent |
|
Pending |
|
18/082,810 |
|
September 14, 2010 |
An
opposition was filed for Patent No. 11825901.9 by Ecolab USA Inc. We overcame two grounds for rejection in the EP Patent office’s
preliminary opinion with the third ground to be considered in an oral hearing scheduled for November 2024. The Company believes that
such patent does not relate to Save Foods Ltd.’s core business.
Methods
for Improving the Appearance of Edible Plant Matter
This
patent family includes a patent in Israel and relates to a method of improving the appearance of edible plant matter either during the
pre-harvest or post-harvest stage. The method includes applying a composition based on phosphonic acid to the edible plant matter.
| File
Number |
|
Country |
|
Type |
|
Status |
|
Application/Patent
Number |
|
Priority
Date |
| SVF-P-002-IL |
|
Israel |
|
Patent |
|
Issued |
|
229724 |
|
May 30, 2011 |
Method
and Apparatus for Maintaining Fresh Produce in a Transportation Container
This
patent family includes patents in Israel and the United States and relate to a method for maintaining fresh produce stored in a transportation
container. The apparatus is configured to generate an aerosol of one or more liquid pesticides, thereby reducing pathogenic contamination
within the transportation container. This patent family covers any liquid pesticide for use in the above-mentioned apparatus.
| File
Number |
|
Country |
|
Type |
|
Status |
|
Application/Patent
Number |
|
Priority
Date |
| SVF-P-003-IL |
|
Israel |
|
Patent |
|
Issued |
|
227328 |
|
June 23, 2013 |
| SVF-P-003-US |
|
United States |
|
Patent |
|
Issued |
|
9,487,350 |
|
June 23, 2013 |
Sterilization
Compositions and Methods for Use Thereof
This
patent is related to compositions and methods for reducing pathogen load within a container or on a surface, including inter alia the
surface of an edible plant matter, and for disinfection of cooling systems.
| File
Number |
|
Country |
|
Type |
|
Status |
|
Application/Patent
Number |
|
Priority
Date |
| SVF-P-004-USP |
|
United States |
|
Patent |
|
Pending |
|
63/605,514 |
|
December 3, 2023 |
Sterilization
Devices and Methods for Use Thereof
This
patent is related to a device for controlling pathogen load within a container or on a surface by spraying a disinfecting composition
in response to a trigger, such as increased pathogenic contamination.
| File
Number |
|
Country |
|
Type |
|
Status |
|
Application/Patent
Number |
|
Priority
Date |
| SVF-P-005-USP |
|
United States |
|
Patent |
|
Pending |
|
63/605,516 |
|
December 3, 2023 |
Compositions
Comprising of Several Organic Acids and Use Thereof
This
patent family is directed to kits and methods for controlling pathogen load within or on the surface of edible plant matter.
| File
Number |
|
Country |
|
Type |
|
Status |
|
Application/Patent
Number |
|
Priority
Date |
| SVF-P-006-EP |
|
Europe |
|
Patent |
|
Pending |
|
21763868.3 |
|
March 1, 2020 |
| SVF-P-006-MX |
|
Mexico |
|
Patent |
|
Pending |
|
MX/a/2022/010828 |
|
March 1, 2020 |
| SVF-P-006-PE |
|
Peru |
|
Patent |
|
Pending |
|
001876-2022/DIN |
|
March 1, 2020 |
| SVF-P-006-US |
|
United States |
|
Patent |
|
Pending |
|
17/908,624 |
|
March 1, 2020 |
| SVF-P-006-ZA |
|
New Zealand |
|
Patent |
|
Pending |
|
2022/09840 |
|
March 1, 2020 |
Combined
Fungicidal Preparations and Methods for Use Thereof
This
patent family is related to compositions and to methods for reducing pathogen load on a substrate.
| File
Number |
|
Country |
|
Type |
|
Status |
|
Application/Patent
Number |
|
Priority
Date |
| SVF-P-007-EP |
|
Europe |
|
Patent |
|
Pending |
|
21829736.4 |
|
June 23, 2020 |
| SVF-P-007-CA |
|
Canada |
|
Patent |
|
Pending |
|
3,184,215 |
|
June 23, 2020 |
| SVF-P-007-US |
|
United States |
|
Patent |
|
Pending |
|
18/012,486 |
|
June 23, 2020 |
We
cannot be sure that any patent will be granted with respect to any of our pending patent applications or with respect to any patent applications
filed by us in the future. There is also a significant risk that any issued patents will have substantially narrower claims than those
that are currently sought.
Competition
Given
that the market for the use of green and “residue free” solutions is evolving, we are continually facing growing competition.
The market for post-harvest solutions is fragmented and includes various regional suppliers. The market of post-harvest treatments for
fruits and vegetables is dominated by five large players with wide reach across the globe. We believe that a market edge will be given
to a company that can solidify its reputation, product quality, customer service and customer intimacy, product innovation, technical
service and value creation. Based on these variables, we believe that we compete favorably when compared with the global competition
in this market.
Currently,
our main competitors are companies providing PAA, chlorine and other sanitization solutions, such as ozone as well as technology companies
developing new biorational fungicides.
We
also compete with heavily diversified multi-national chemical conglomerates, which produce various biocide formulations designed to kill
or deactivate pathogenic micro-organisms. Of these, two companies are the most significant:
| |
● |
Evonik Active Oxygens,
LLC: A subsidiary of Evonik Industries, AG (Germany). It is a significant worldwide producer of hydrogen peroxide, persulfates
and PAA. These products are part of the “Smart Materials” division of Evonik which generated 4.8B Euro in sales in 2022;
and |
| |
● |
Solvay S.A. (Belgium):
Similar to Evonik Industries, Solvay is a heavily diversified multinational chemical conglomerate. During the fiscal year 2022, Solvay
had approximately €13.4 billion in net sales, spread across the breadth of their product lines. Most relevant to us is their
blends of PAA and hydrogen peroxide, sold in two primary formulations - OXYSTRONG for water treatment and PROXITANE for the food
industry. |
In
addition, we have several indirect competitors, which are companies with whom we seek to make strategic partnerships - large companies
specializing in post-harvest solutions for the agricultural industry. This has been more difficult than initially anticipated due to
our solutions reducing these companies’ revenues from certain fungicides used on produce. Such companies include:
| |
● |
Decco US Post-Harvest:
Decco is a subsidiary of Decco Worldwide, which itself is a division of United Phosphorous Ltd. Decco provides a variety of solutions,
both mechanical and chemical, for the post-harvest industry. They produce conventional fungicides (imazalil, thiabendizole, etc.),
as well as produce coatings; and |
| |
|
|
| |
● |
Pace International:
Pace International is a subsidiary of the Sumitomo Chemical Company. Similar to Decco, it provides a variety of solutions - primarily
in the realm of conventional fungicides and carnauba wax coatings for fruit. |
We
also consider Citrosol, Xeda International, JBT and Agrofresh as our indirect competitors (and current or potential collaborators).
We
believe that the organic market offers a huge trade and income potential for producers, processors and trading companies globally and
that the rising demand of various organic products has driven the demand of organic post-harvest treatments. Green and organic technologies
are increasingly being developed in a global market and several conventional post-harvest product and equipment suppliers, such as Citrosol,
Fomesa, Decco and JBT, have taken the opportunity and are starting to develop natural products.
Government
Regulation and Product Approval
Our
products are subject to national, state and local government regulations. Based on the product claims and classification, different regulatory
and registration requirements may apply at the state, provincial or federal level.
Regulation
of Our Processing Aid - SavePROTECT or PeroStar
In
the United States, our SavePROTECT product does not make any pesticidal claims and is not intended for use as a pesticide and, therefore,
is not subject to the registration requirements of FIFRA. However, since the product is used on raw agricultural commodities in food
processing facilities, the product is subject to regulation under the FFDCA. We believe that the product is in compliance with the FFDCA
since every ingredient in the product can be considered GRAS when used as intended and the product does not have pesticidal activity
per se.
Although
SavePROTECT is not a pesticide under FIFRA, it is still required to be registered in California because the California statute requires
the registration of both pesticide and adjuvant products.
On
July 31, 2020, we submitted an “Application for Registration of Adjuvant” for SavePROTECT to the California Department of
Pesticide Regulation (the “CDPR”). The dossier submitted included the following studies: (i) acute oral toxicity and acute
dermal toxicity studies, (ii) physico-chemical property testing (determination of color, physical state, odor, density, pH, viscosity
and oxidation/reduction chemical incompatibility), (iii) validation of the high-performance liquid chromatography method assay, (iv)
stability test, and (iv) efficacy data.
Based
on the intended use and claims for SavePROTECT, our product was registered with CDPR on October 27, 2021, as an adjuvant.
In
addition, based on the opinion of our U.S. regulatory experts, all SavePROTECT ingredients are GRAS when used as intended and the product
does not have pesticidal activity.
In
December 2021, we submitted an application for certification for our SavePROTECT to the Organic Materials Review Institute (“OMRI”),
an international nonprofit organization that determines which input products are allowed for use in organic production and processing.
OMRI Listed® products are allowed for use in certified organic operations under the United States Department of Agriculture “(USDA”)
National Organic Program. OMRI reviews input products to verify that they meet the organic standards for use on organic farms or in organic
processing. OMRI is recognized by the USDA National Organic Program as a reputable third-party input reviewer in Interim Instruction
3012 of the USDA’s NOP Handbook. In addition, OMRI is accredited under the International Organization for Standardization ISO 17065
by the USDA Quality Assessment Division.
In
June 2022, our SavePROTECT Organic was listed by OMRI allowing us to address the certified organic industry as well.
In
Europe, processing aids are defined as substances that are added to exert a technological function during food processing and which may
end up in the finished product. According to Regulation (EC) No. 1333/2008, processing aids means any substance which (i) is not consumed
as food by itself; (ii) is intentionally used in the processing of raw materials, foods or their ingredients, to fulfil a certain technological
purpose during treatment or processing; and (iii) may result in the unintentional but technically unavoidable presence in the final product
as residues of the substance or its derivatives, provided they do not present any health risk and do not have any technological effect
on the final product.
Processing
aids are differentiated from food additives, which are substances that are added to food with the intention to exert a technological
function within the final food product. Therefore, processing aids are not required to follow the EFSA guideline of “Data Requirements
for the Evaluation of Food Additive Applications.”
In
Europe, our PeroStar is not considered a processing aid in the enzymatic preparation category and, therefore, PeroStar is only regulated
at the national level. While there are no harmonized requirements regarding the registration of a processing aids, some data (such as
full composition and some toxicological data) must be disclosed and discussed with the competent authorities before the submission of
a registration request.
In
Spain, the guidelines for precise documentation for evaluation of technological adjuvants intended to be used in human food, state specific
conditions for the assessment, authorization and use of all other types of processing aids, which are not processing aids in the enzymatic
preparation category. During the third quarter of 2020, we submitted a regulatory dossier as a processing aid for PeroStar in Spain and
Italy with very similar information as the regulatory dossier submitted in California. In December 2022, our European regulatory consultant
informed us that we satisfied the safety requirement and that no further registration is required at this time.
In
Mexico, based on the product composition and the legal status of the substances to be used as food additives, our PeroStar/SavePROTECT
can be marketed and used in Mexico as a food additive (processing aid) and no registration is required.
In
Israel, the guidelines of the National Food Services, Ministry of Health, define the requirements for cleaning and disinfectant agents
used with food. These guidelines state that such cleaning and disinfectant agents applied to the cleaning equipment which comes into
direct contact with food, must not contain carcinogens. Specifically, List A and List B published by the Inter-ministerial Committee
on Carcinogens, Mutagens and Teratogens of the Ministry of Health identify products and ingredients with carcinogenic, mutagenic and
teratogenic properties. Our regulatory consultant in Israel has confirmed that our PeroStar does not contain carcinogens, mutagens and/or
teratogens, and, therefore, is considered approved in terms of the relevant regulations of the National Food Services, Ministry of Health,
and can be used as an additive to cleaning and disinfectant agents for fresh produce.
On
January 22, 2022, we received an approval from Peru’s Ministry of Agricultural Development and Irrigation to sell our products
in Peru.
Registration
of Our SpuDefender and FreshProtect
We
currently have registrations for our SpuDefender (EPA Reg. No. 86381-1) and our FreshProtect (EPA Reg. No. 86381-2), at both the federal
level and in the individual states where the products are sold for the use in post-harvest settings. To allow the utilization of our
FreshProtect in pre-harvest settings, we submitted to the EPA an updated product label in January 2023.
Regulation
of Our Sanitizers - SF3H and SF3HS
In
the United States, the primary federal laws that regulate the sale and distribution of our sanitizer products are the Federal Insecticide,
Fungicide and Rodenticide Act (“FIFRA”) and the Federal Food, Drug and Cosmetic Act (“FFDCA”).
FIFRA
is the federal law that regulates the sale and distribution of pesticides and is administered by the EPA. Products that claim or are
otherwise intended to control microorganisms on inanimate surfaces, in water and on raw agricultural commodities are regulated, under
FIFRA, as pesticides. FIFRA generally requires the pre-market registration of pesticide products. To register a pesticide product, we
are required to provide test data and related information to demonstrate that the product is safe and effective under the conditions
of use, as specified on the product label. The cost and timeframe to achieve EPA product registration depends on the type of product
and the claims made for the product. Registered products are also subject to a number of recordkeeping and reporting obligations which
require constant product oversight by companies.
Pursuant
to FIFRA and Section 408 of the FFDCA, the EPA establishes tolerances for pesticide chemical residues that could remain in or on food,
including raw agricultural commodities. A tolerance is the EPA established maximum residue level of a specific pesticide chemical that
is permitted in or on a human or animal food in the United States. Generally, any pesticide chemical residue must have either a tolerance
or an exemption from the requirement to have a tolerance in order to be permitted in or on human or animal food. The FDA enforces the
tolerances pursuant to its authority under the FFDCA.
The
FFDCA regulates the sale and distribution of drugs, medical devices, cosmetics and foods (including substances added to and found in
food such as pesticide residues) and is administered by the FDA. Under the FFDCA, the FDA does not register or approve products that
are used on food commodities and certain food-contact surfaces, such as food packaging. However, all substances that are used on food
or food-contact surfaces need to be subject to an FDA regulation or permitted through other clearance mechanisms, such as a Food-Contact
Notification, Threshold of Regulation opinion, by Prior Sanction or be “Generally Recognized as Safe” or “GRAS”.
If all the substances or ingredients in a particular product are cleared for use on food or food-contact surfaces or are GRAS, then a
company can market a product without obtaining any additional clearances. GRAS substances do not require pre-market approval or clearance
by the FDA although the FDA does have a notification process for GRAS substances.
At
the federal level, antimicrobial agents are subject to regulation by the FDA and/or EPA, either singly or jointly, depending upon the
intended use of the product. Antimicrobial products applied to processed food are solely regulated by the FDA per longstanding FDA and
EPA policy outlined in an EPA Notice titled “Legal and Policy Interpretation of the Jurisdiction Under the Federal Food, Drug,
and Cosmetic Act of the Food and Drug Administration and the Environmental Protection Agency Over the Use of Certain Antimicrobial Substances”
(63 Fed. Reg. 54,532 at 54,536 & 54,541 (Oct. 9, 1998)) and EPA’s Pesticide Registration Manual, Chapter 18. Antimicrobial
products applied to raw agricultural commodities (e.g. fruits and vegetables) are jointly regulated by the EPA and the FDA if their application
takes place in a food-processing facility. If the antimicrobial product is applied to a raw agricultural commodity in a treatment facility
that solely washes and packs food commodities, and the treatment does not change the status of the food as a raw agricultural commodity,
then the EPA has sole federal regulatory jurisdiction.
Since
our sanitizers will be and are intended to be used solely to treat raw agricultural commodities in post-harvest washing and packing facilities,
at the federal level they are regulated solely by the EPA (as opposed to FDA): product registration is required under FIFRA and any food
residues are regulated under the FFDCA. To complete the registration process, we will be required to submit a number of studies in the
form of a registration application or dossier, which has not yet been submitted to EPA. These studies will specifically include: (i)
safety studies - six acute toxicity studies (already finalized), (ii) physio-chemical properties testing (already finalized), (iii) one-year
storage stability and corrosion (ongoing), and (iv) an efficacy study to demonstrate that the product is an effective sanitizer (studies
conducted under non-good laboratory practices already performed and they show the product meets EPA performance standards). We have already
identified and engaged with a third-party company in the United States to perform our good laboratory practices efficacy studies.
In
addition, every state has its own laws that regulate pesticides and these laws require registration of pesticide products at the state
level. Accordingly, products must also be registered in the states in which they are distributed prior to any sale.
Employees
As
of January 9, 2024, we (together with our wholly owned subsidiary, Save Foods Ltd.) have two full-time employees and one part-time employee.
Our executive officers, David Palach and Lital Barda, are responsible for the day-to-day operations of our company.
Description
Of Property
Our
commercialization and manufacturing operations are currently conducted at Neve Yarak (Israel) where we lease approximately 230 square
meters of space to run our trials. The lease expired on August 31, 2023 and was extended for an additional one-year period. Our current
monthly rent payment is NIS 9,900 (approximately U.S. $2,600).
We
lease office space in Miami, Florida. We renewed our lease in December 2023 for one year until December 2024, with an option to renew
for an additional one-year term. Our current monthly rent payment is $630.
Legal
Proceedings
There
are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner
of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to
the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.
MANAGEMENT
Directors
and Executive Officers
The
following table sets forth information regarding our current directors and executive officers:
| Name
|
|
Age
|
|
Position |
| |
|
|
|
|
| Amitay Weiss (1) (6) |
|
61 |
|
Chairman of the Board of Directors |
| |
|
|
|
|
| David Palach |
|
58 |
|
Chief Executive Officer |
| |
|
|
|
|
| Lital Barda |
|
37 |
|
Chief Financial Officer |
| |
|
|
|
|
| Ronen Rosenbloom (1) (2) (3) (4) (5) |
|
52 |
|
Director |
| |
|
|
|
|
| Israel Berenshtein (1) (2) (4) (5) |
|
52 |
|
Director |
| |
|
|
|
|
| Eliahou Arbib (1) (2) (3) (4) (7) |
|
57 |
|
Director |
| |
|
|
|
|
| Udi Kalifi (1) (3) (7) |
|
45 |
|
Director |
| |
|
|
|
|
| Liat Sidi (1)(6) |
|
48 |
|
Director |
| |
|
|
|
|
| Asaf Itzhaik (1)(6) |
|
51 |
|
Director |
| (1) |
Independent Director |
| |
|
| (2) |
Member of the Compensation
Committee |
| |
|
| (3) |
Member of the Audit Committee |
| |
|
| (4) |
Member of the Nominating
and Corporate Governance Committee. |
| |
|
| (5) |
Member of Class I with
a term ending at the 2025 annual meeting of stockholders. |
| |
|
| (6) |
Member of Class II with
a term ending at the 2026 annual meeting of stockholders. |
| |
|
| (7) |
Member
of Class III with a term ending at 2024 annual meeting of stockholders.
|
Amitay
Weiss, Director
Mr.
Weiss has served as a member of our board of directors since August 2020 and as our chairman of the board of directors since May
24, 2021. Mr. Weiss also serves as a director in other public companies, including but not limited to Gix Internet Ltd., Arazim Investments
Ltd. and Upsellon Brands Holdings Ltd. Mr. Weiss also serves as Chairman of the Board for Automax Motors Ltd., Clearmind Medicine Inc.,
SciSparc Ltd., Internet Golden Lines Ltd and Maris-Tech Ltd. amongst others. In April 2016, Mr. Weiss founded Amitay Weiss Management
Ltd., an economic consulting company and serves as its chief executive officer. Mr. Weiss holds a B.A in economics from New England College,
an M.B.A. in business administration from Ono Academic College in Israel, an Israeli branch of University of Manchester and an LL.B from
the Ono Academic College.
David
Palach, Chief Executive Officer
Mr.
Palach has served as our chief executive officer since January 2021. Mr. Palach has owned and served as chief executive officer of
S.T. Sporting LTD and Sun Light Lightning Solutions LTD, companies operating in the environmental industry since 2009 and 2015, respectively.
Mr. Palach holds a BBA in Accounting from Baruch College/City University of New York and completed a Directors Course at Bar Ilan University
in Israel. Mr. Palach previously maintained a certified public accounting license in the State of Maryland.
Lital
Barda, Chief Financial Officer
Lital
Barda has served as our chief financial officer since April 2022. In addition to her role as chief financial officer, Ms. Barda currently
serves as an accountant and financial controller for Shlomo Zakai, CPA, a position she has held since November 2017, and provided a wide
range of accounting and controlling services for publicly traded and private companies, including for the Company. Ms. Barda holds a
B.A. in accounting from the Ono Academic College in Kiryat Ono, Israel. Ms. Barda is also a certified public accountant in Israel.
Ronen
Rosenbloom, Director
Mr.
Rosenbloom has served as a member of our board of directors since August 2020. Mr. Rosenbloom is an independent lawyer and has been
working out of a self-owned law firm specializing in white collar offences since 2004. Mr. Rosenbloom has served on the board of directors
of Medigus (Nasdaq and TASE: MDGS) since September 2018 and ScoutCam Inc. (OTC: SCTC) since December 2019. Prior to that, Mr. Rosenbloom
served as chairman of the Israeli Money Laundering Prohibition committee and the Prohibition of Money Laundering Committee of the Tel
Aviv District, both of the Israel Bar Association from November 2015 to December 2019. Mr. Rosenbloom holds an LL.B. from the Ono Academic
College, an Israeli branch of University of Manchester.
Israel Berenshtein, Director
Mr.
Berenshtein has served as a member of our board of directors since August 2020. Mr. Berenshtein has also served on the board of directors
of Upsellon Brands Holdings Ltd (TASE: UPSL) since May 2019 and on the board of directors of Plantify (STXV: PTFY) since July 2023. Mr.
Berenshtein has been working as an independent attorney since 2023. From 2020 to 2022, Mr. Berenshtein worked as an attorney at Ben Yakov,
Shvimer, Dolev - Law Office. Prior thereto from April 2010 to December 2020, Mr. Berenshtein was an attorney at Sonol Israel Ltd. and
a commercial lawyer and litigator for a leading Israeli law firm from July 2000 to April 2010. Mr. Berenshtein earned an LL.B. in law
and an M.A. in Political Science from Bar Ilan University, Israel. Mr. Berenshtein was admitted to the Israel Bar Association in 2000.
Eliahou
Arbib, Director
Mr.
Arbib has served as a member of our board of directors since January 2021. Mr. Arbib has served as chairman of the board of directors
of Chiron Refineries Ltd. (TASE: CHR) since September 2016and has been the owner and manager of Eliahou Arbib Law Offices, since May
2013. Prior to that, from 1993 until 2000, Mr. Arbib was the managing director of AA Arbib Agriculture Supply Ltd. Mr. Arbib holds an
LLB from the Law and Business Academic Center of Ramat Gan, Israel. Mr. Arbib has been an active member of the Israeli Bar Association
since 2013 and served as deputy chairman of the Security and Defense Committee of the Israeli Bar Association since 2014.
Udi
Kalifi, Director
Mr.
Kalifi has served as a member of our board of directors since May 18, 2021. Mr. Kalifi is the owner and manager of Udi Kalifi Law
Offices since 2006. He has also served as a member of the board of directors of Matomi Media Group Ltd. (TASE: MTMY) since May 2020.
Mr. Kalifi holds an LLB, BSc in Accounting and LLM from the Tel Aviv University, Israel and a master’s degree in law and economics
from the University of Bologna, Humbourg and Roterdam. Mr. Kalifi has been an active member of the Israeli Bar Association since 2006.
Liat
Sidi, Director
Liat
Sidi has served as a member of our board of directors since November 12, 2023. Ms. Sidi has
served as manager of the accounting department for Foresight Autonomous Holdings Ltd. (Nasdaq and TASE: FRSX) since 2010. Additionally,
since 2010, Ms. Sidi has served as an accountant at Sidi Liat Accounting Services. Since August 2020, Ms.Sidi has served as a director
of Plantify since September 2023, and Scisparc Ltd. (Nasdaq: SPRC) since June 2020. Ms. Sidi previously served as an accountant for Panaxia
Labs Israel Ltd. (TASE: PNAK) from 2015 to 2020 and as an accountant for Soho Real Estate Ltd. from 2015 to 2016. Ms. Sidi also served
as an accountant for Feldman-Felco Ltd. from 2006 to 2010 and as an accountant for Eli Abraham Accounting Firm from 2000 to 2006. Ms.
Sidi completed tax, finance and accounting studies in Ramat Gan College of Accounting. Ms. Sidi is a certified public accountant in Israel.
Asaf
Itzhaik, Director
Mr.
Itzhaik has served as a member of our board of directors since December 20, 2023. Mr. Itzhaik has served as the chief executive officer
of A.K.A Optics Ltd., a manufacturer of adaptive optics, since 1994 and as a member of the board of directors of A.K.A Optics Ltd. since
1998. Mr. Itzhaik has served as a director of Plantify since August 2023, as a director of Jeffs’ Brands Ltd. (Nasdaq: JFBR) from
August 2022 until November 2023, as a director of Clearmind Medicine Inc. (Nasdaq: CMND) since November 2022, as a director of Rani Zim
Shopping Centers Ltd. (TASE: RANI) since August 2022, and as a director of Gix Internet Ltd. (TASE: GIX) since August 2021. Mr. Itzhaik
is a certified optometrist and graduated from a program in corporate board leadership in Merkaz Hashilton Hamkomi, Israel.
Family
Relationships
There
are no family relationships between our directors and executive officers.
Involvement
in Certain Legal Proceedings
There
are no legal proceedings that have occurred within the past ten years concerning our directors, or control persons which involved a criminal
conviction, a criminal proceeding, an administrative or civil proceeding limiting one’s participation in the securities or banking
industries, or a finding of securities or commodities law violations.
Composition
of Board of Directors
Our
board of directors consists of six directors. When considering whether directors have the experience, qualifications, attributes or skills,
taken as a whole, to enable our board of directors to satisfy its oversight responsibilities effectively in light of our business and
structure, the board of directors focuses primarily on each person’s background and experience as reflected in the information
discussed in each of the directors’ individual biographies set forth above. We believe that our directors provide an appropriate
mix of experience and skills relevant to the size and nature of our business.
Director
Independence
Our
board of directors has determined that Ronen Rosenbloom, Israel Berenshtein, Amitay Weiss, Eliahou Arbib, Udi Kalifi, Liat Sidi and Asaf
Itzhaik do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director and that each of these directors is “independent” as that term is defined under the rules of The Nasdaq Stock
Market LLC.
Committees
of the Board of Directors
Our
board of directors directs the management of our business and affairs, as provided by Nevada law, and conducts its business through meetings
of the board of directors and standing committees. We have established three committees under the
board of directors: an audit committee, a compensation committee and a nominating and corporate governance committee. We have adopted
a charter for each of the three committees. Each committee’s members and functions are described below.
Audit
Committee
Our
audit committee is responsible for, among other things:
| |
● |
appointing, compensating,
retaining, evaluating, terminating and overseeing our independent registered public accounting firm; |
| |
|
|
| |
● |
discussing with our independent
registered public accounting firm their independence from management; |
| |
|
|
| |
● |
reviewing with our independent
registered public accounting firm the scope and results of their audit; |
| |
|
|
| |
● |
approving all audit and
permissible non-audit services to be performed by our independent registered public accounting firm; |
| |
|
|
| |
● |
overseeing the financial
reporting process and discussing with management and our independent registered public accounting firm the quarterly and annual consolidated
financial statements that we file with the SEC; |
| |
|
|
| |
● |
overseeing our financial
and accounting controls and compliance with legal and regulatory requirements; |
| |
|
|
| |
● |
reviewing our policies
on risk assessment and risk management; |
| |
|
|
| |
● |
reviewing related person
transactions; and |
| |
|
|
| |
● |
establishing procedures
for the confidential anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters. |
Our
audit committee consists of Udi Kalifi, Eliahou Arbib and Ronen Rosenbloom, with Udi Kalifi serving as chair. Each member of our audit
committee meets the financial literacy requirements of Nasdaq listing standards. In addition, our board of directors has determined that
Udi Kalifi will qualify as an “audit committee financial expert,” as such term is defined in Item 407(d)(5) of Regulation
S-K. Our board of directors adopted a written charter for the audit committee, which is available on our website at www.savefoods.co.
Nominating
and Corporate Governance Committee
Our
nominating and corporate governance committee is responsible for, among other things:
| |
● |
identifying individuals
qualified to become members of our board of directors, consistent with criteria approved by our board of directors; |
| |
|
|
| |
● |
overseeing our succession
plan for the CEO and other executive officers; |
| |
|
|
| |
● |
overseeing the evaluation
of the effectiveness of our board of directors and its committees; and |
| |
|
|
| |
● |
developing and recommending
to our board of directors a set of corporate governance guidelines. |
Our
nominating and corporate governance committee consists of Ronen Rosenbloom, Israel Berenshtein and Eliahou Arbib, with Ronen Rosenbloom
serving as chair. Our board of directors adopted a written charter for the nominating and corporate governance committee, which is available
on our principal corporate website at www.savefoods.co.
Compensation
Committee
Our
compensation committee is responsible for, among other things:
| |
● |
reviewing
and approving the compensation of our chief executive officer and other executive officers; |
| |
|
|
| |
● |
reviewing
and making recommendations to the board of directors regarding director compensation; and |
| |
|
|
| |
● |
appointing
and overseeing any compensation consultants. |
Our
compensation committee consists of Ronen Rosenbloom, Israel Berenshtein and Eliahou Arbib, with Israel Berenshtein serving as chair.
Our board has determined that Ronen Rosenbloom, Israel Berenshtein and Eliahou Arbib meet the definition of “independent director”
for purposes of serving on the compensation committee under Nasdaq Rules, including the heightened independence standards for members
of a compensation committee, and are “non-employee directors” as defined in Rule 16b-3 of the Exchange Act. Our board of
directors adopted a written charter for the compensation committee, which is available on our principal corporate website at www.savefoods.co.
Risk
Oversight
Our
board of directors is responsible for overseeing our risk management process. Our board of directors focuses on our general risk management
strategy, the most significant risks facing us, and oversees the implementation of risk mitigation strategies by management. Our audit
committee is also responsible for discussing our policies with respect to risk assessment and risk management.
Code
of Business Conduct and Ethics
We
adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal
executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions.
A copy of the code is posted on our website, www.savefoods.co. In addition, we post on our website all disclosures that are required
by law or Nasdaq listing standards concerning any amendments to, or waivers from, any provision of the code.
Change
in Procedures for Nominating Directors
There
have been no material changes to the procedures by which our stockholders may recommend nominees to our board of directors from those
procedures set forth in our Proxy Statement for our 2023 Annual Meeting of Stockholders, filed with the SEC on July 31, 2023.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following table sets forth certain information concerning the compensation awarded to, earned by or paid to of our Chief Executive Officer
and our other executive officer receiving annual remuneration in excess of $100,000 during 2023 (each, a “Named Executive Officer”).
| Name
and principal position | |
Fiscal
Year | | |
Salary
($) | | |
Bonus
($) | | |
Stock
awards
($) | | |
Option
awards ($) | | |
All
other compensation ($) | | |
Total
($) | |
| David Palach | |
| 2023 | | |
| 72,368 | | |
| 15,000 | | |
| 305,820 | (1) | |
| - | | |
| - | | |
| 393,187 | |
| Chief
Executive Officer | |
| 2022 | | |
| 134,844 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| 134,844 | |
| | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| Lital Barda | |
| 2023 | | |
| 60,976 | | |
| 7,500 | | |
| 119,035 | (2) | |
| - | | |
| - | | |
| 187,510 | |
| Chief Financial Officer | |
| 2022 | | |
| 63,244 | | |
| 12,500 | | |
| - | | |
| - | | |
| - | | |
| 75,744 | |
(1)
Represents 42,858 shares and 57,142 shares of Common Stock at $4.742 per share and $1.795 per share issued on March 29, 2023 and December
20, 2023, respectively.
(2)
Represents 14,286 shares and 28,571 shares of Common Stock at $4.742 per share and $1.795 per share issued on March 29, 2023 and
December 20, 2023, respectively.
Outstanding
Equity Awards at Fiscal Year-End
There
were no unexercised options, stock that has not vested or equity incentive plan awards for our Named Executive Officers as of December
31, 2023.
Agreements
with Executive Officers
We,
and through our Israeli subsidiary, have entered into written agreements with certain of our executive officers.
Consulting
Agreement - David Palach
On
November 6, 2020, we entered into a consulting agreement with S.T Sporting (1996) Ltd., for the services of David Palach (the “CEO
Consulting Agreement”). Pursuant to the terms of the CEO Consulting Agreement, Mr. Palach provides us services as chief executive
officer. Pursuant to the terms of the CEO Consulting Agreement, Mr. Palach was entitled to a monthly fee in the amount of $8,000 plus
value added tax per month and a grant of options to purchase shares of our Common Stock, which amount shall be determined by good faith
negotiations by the board of directors on a future date.
On
June 23, 2021, our board of directors approved updated compensation for Mr. Palach pursuant to which Mr. Palach is entitled to a monthly
fee of $14,000 plus value added tax; reimbursement of expenses not exceeding $500 per month; a grant of an option to purchase shares
of Common Stock representing 4.5% of the Company’s outstanding capital stock as of June 23, 2021; the immediate repayment of $8,000,
representing debt payable to Mr. Palach that accrued from November 2020 until April 2021. In lieu of such option, our board of directors
approved the issuance of 42,858 shares of Common Stock to Mr. Palach in March 2023.
On
August 29, 2022, the monthly fee of Mr. Palach was reduced to $6,000.
Following
the compensation committee’s recommendation of December 19, 2023, the board of directors approved a monthly fee increase of $1,000,
starting January 1, 2024.
Consulting
Agreement -Lital Barda
On
April 18, 2022, Save Foods Ltd., our operating subsidiary, entered into a consulting agreement with Shlomo Zakai CPA (“Consultant”)
for, among other things, chief financial officer services to be provided to Save Foods Ltd. exclusively by Lital Barda. for a monthly
base salary of NIS 25,000 to be paid for Ms. Barda’s services The agreement may be terminated by either party upon 30 day’s
written notice and by Save Foods Ltd. upon the occurrence of certain events as set forth in the agreement.
Director
Compensation
The
following table sets forth the compensation we paid our non-executive directors during the fiscal year ended December 31, 2023.
| Name | |
Fees earned
or paid in
cash ($) | | |
Option
awards
($) | | |
All other
compensation
($) | | |
Total
($) | |
| Amitay Weiss | |
| 129,870 | | |
| - | | |
| 179,500 | | |
| 309,370 | |
| Eliahou Arbib | |
| 45,996 | | |
| - | | |
| 26,028 | | |
| 72,024 | |
| Udi Kalifi | |
| 45,996 | | |
| - | | |
| 26,028 | | |
| 72,024 | |
| Israel Berenshtein | |
| 45,996 | | |
| - | | |
| 26,028 | | |
| 72,024 | |
| Ronen Rosenbloom | |
| 45,996 | | |
| - | | |
| 26,028 | | |
| 72,024 | |
| Roy Borochov (1) | |
| 37,825 | | |
| - | | |
| - | | |
| 37,825 | |
| Asaf Itzhaik (2) | |
| 1,692 | | |
| - | | |
| - | | |
| 1,692 | |
| Liat Sidi(3) | |
| 2,925 | | |
| - | | |
| - | | |
| 2,295 | |
| (1)
|
Represents
100,000 shares of Common Stock at $1.795 per share issued on December 20, 2023. |
| (2) |
Represents
14,500 shares of Common Stock at $1.795 per share issued on December 20, 2023. |
| (3) |
Roy
Borochov resigned as a director on December 15, 2023 |
| (4) |
Asaf
Itzhaik was appointed as a director on December 20, 2023 |
| (5)
|
Liat
Sidi was appointed as a director on November 12, 2023 |
Long-Term
Incentive Plans
There
are no arrangements or plans in which we provide pension, retirement or similar benefits.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
table below provides information regarding the beneficial ownership of our Common Stock as of January 9, 2024, of (i) each of our current
directors, (ii) each of the Named Executive Officers, (iii) all of our current directors and executive officers as a group, and (iv)
each person (or group of affiliated persons) known to us who owns more than 5% of our outstanding Common Stock.
The
beneficial ownership of our Common Stock is determined in accordance with the rules of the SEC. Under these rules, a person is deemed
to be a beneficial owner of a security if that person directly or indirectly has or shares voting power, which includes the power to
vote or to direct the voting of the security, or investment power, which includes the power to dispose of or to direct the disposition
of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial
ownership within 60 days. Under the SEC rules, more than one person may be deemed to be a beneficial owner of the same securities, and
a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary interest.
The
percentage of shares of Common Stock beneficially owned is based on 2,955,490 shares of Common Stock outstanding as of January 9, 2024.
Unless
otherwise indicated below each person has sole voting and investment power with respect to the shares beneficially owned and the address
for each beneficial owner listed in the table below is c/o Save Foods, Inc., HaPardes 134 (Meshek Sander), Neve Yarak, Israel.
| Owner | |
Number
of Shares Beneficially Owned | | |
Percentage
Beneficially Owned | |
| 5% or more stockholders | |
| | | |
| | |
| Yaaran Investments
Ltd.(1) | |
| 223,008 | | |
| 7.55 | % |
| 7 Harsit Street, Sheary-Tikva, Israel | |
| | | |
| | |
| Plantify Foods, Inc.(2) | |
| 166,340 | | |
| 5.63 | % |
| 2264 East 11th
Avenue | |
| | | |
| | |
| Vancouver, V5N1Z6, British Columbia, Canada. | |
| | | |
| | |
| Directors | |
| | | |
| | |
| Amitay Weiss | |
| 100,000 | | |
| 3.38 | % |
| Eliahou Arbib | |
| 14,500 | | |
| * | |
| Udi Kalifi | |
| 18,546 | | |
| * | |
| Israel Berenshtein | |
| 14,500 | | |
| * | |
| Ronen Rosenbloom | |
| 14,500 | | |
| * | |
| Asaf Itzhaik | |
| - | | |
| - | |
| Liat Sidi | |
| - | | |
| - | |
| Executive Officers | |
| | | |
| | |
| David Palach | |
| 100,000 | | |
| 3.38 | % |
| Lital Barda | |
| 42,857 | | |
| 1.45 | % |
| | |
| | | |
| | |
| All directors and executive
officers as a group (9 persons) | |
| 304,903 | | |
| 10.32 | % |
|
* |
Less
than 1%. |
| |
|
| (1) |
Shamuel
Yannay, chief executive officer of Yaaran Investments Ltd. (“Yaaran”) has sole voting and dispositive power over shares
owned by Yaaran. |
| (2) |
Gabi
Kabazo, chief financial officer of Plantify, has sole voting and dispositive power over shares owned by Plantify. |
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related
Party Transactions
The
following is a description of transactions since January 1, 2021, to which we were a party or will be a party, in which the amount involved
exceeded or will exceed the lesser of $120,000 or 1% of the average of our total assets at year-end for the last three completed fiscal
years, and in which any of our directors, executive officers or holders of more than 5% of our outstanding capital stock, or any immediate
family member of, or person sharing the household with, any of these individuals or entities, had or will have a direct or indirect material
interest.
Plantify
Transactions
On
March 31, 2023, we entered into a securities exchange agreement with Plantify pursuant to which each of the respective parties agreed
to issue to the other party 19.99% of its issued and outstanding capital stock. Upon
the closing of the transaction on April 5, 2023, we issued 166,340 shares of Common Stock to Plantify, which amount represented 19.99%
of our outstanding capital stock as of immediately prior to the closing (and 16.66% of our outstanding capital stock as of immediately
following the closing), and Plantify issued 30,004,349 of its common shares to us which represented
19.99% of Plantify’s outstanding capital stock as of immediately prior to the closing (and 16.66% of Plantify’s outstanding
capital stock as of immediately following the closing). In connection with the execution
of the agreement, Plantify issued us a convertible debenture (the “Debenture”) in the principal amount of CDN$1,500,000 (approximately
$1,124,000) which accrues interest at the rate of 8% annually and matures and is due and payable by Plantify on October 4, 2024.
The outstanding principal may be converted, at our sole discretion, into common shares of Plantify
at a price per share of CDN$0.05 until the first anniversary of the Debenture issuance date and CDN$0.10 per share thereafter. Accrued
interest under the Debenture is convertible at the market price of Plantify’s common shares, subject to Toronto Stock Exchange
-Venture Exchange (“TSXV”) approval, at the time of conversion. Payment and other obligations under the Debenture are secured
by all of the property and assets of Plantify’s subsidiary, Peas of Bean Ltd.
On
September 18, 2023, the Company purchased an additional 55,004,349 common shares of Plantify. As a result, the Company currently owns
23.13% of Plantify’s issued and outstanding share capital.
Asaf
Itzhaik and Liat Sidi are each a director of Plantify.
Director
Independence
Our
board of directors has determined that Ronen Rosenbloom, Israel Berenshtein, Amitay Weiss, Eliahou Arbib, Udi Kalifi, Liat Sidi and Asaf
Itzhaik do not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities
of a director and that each of these directors is “independent” as that term is defined under the rules of The Nasdaq Stock
Market LLC.
DESCRIPTION
OF SECURITIES
General
The
following description of our capital stock is intended as a summary only. We refer you to our Articles of Incorporation and Bylaws which
have been filed as exhibits to the registration statement of which this prospectus is a part, and to the applicable provisions of the
Nevada Revised Statutes.
Common
Stock
The
Company’s Articles of Incorporation authorizes 495,000,000 shares of common stock, par value $0.0001 per share.
On
October 5, 2023, our 1-for-7 reverse stock split, became effective. As of January 9, 2024, there were 2,955,490 shares of Common
Stock outstanding.
Voting
Rights
Holders
of our Common Stock are entitled to one vote for each share held on all matters submitted to a vote of our stockholders. Holders of our
Common Stock have no cumulative voting rights, preemptive, conversion, redemption or subscription rights and there are no sinking fund
provisions applicable to our Common Stock.
Liquidation
Rights
In
the event of our liquidation, dissolution or winding-up, holders of our Common Stock have the right under Section 78.590 of the Nevada
Revised Statutes to a ratable portion of assets remaining after satisfaction in full of the prior rights of our creditors, all liabilities
and the total liquidation preferences of any outstanding shares of preferred stock.
Dividends
Subject
to preferences that may be applicable to any outstanding shares of preferred stock, holders of our Common Stock are entitled to receive
dividends, if any, as may be declared from time to time by our board of directors, or board, out of our assets which are legally available.
Preferred
Stock
Our
Articles of Incorporation authorizes 5,000,000 shares of preferred stock, par value $0.0001 per share. As of January 9, 2024,
there were no shares of preferred stock outstanding. The board of directors is authorized to provide for the issuance of these unissued
shares of preferred stock in one or more series, and to fix the number of shares and to determine the rights, preferences and privileges
thereof.
Anti-Takeover
Provisions
The
provisions of Nevada Revised Statutes, our Articles of Incorporation and our Bylaws may have the effect of delaying, deferring or discouraging
another person from acquiring control of the Company. These provisions, which are summarized below, may have the effect of discouraging
takeover bids. They are also designed, in part, to encourage persons seeking to acquire control of us to negotiate first with our board
of directors. We believe that the benefits of increased protection of our potential ability to negotiate with an unfriendly or unsolicited
acquirer outweigh the disadvantages of discouraging a proposal to acquire us because negotiation of these proposals could result in an
improvement of their terms.
Articles
of Incorporation and Bylaw Provisions
Our
Articles of Incorporation and our Bylaws include a number of provisions that could deter hostile takeovers or delay or prevent changes
in control of our management team, including the following:
| ● |
Board
of directors’ vacancies. Our Articles of Incorporation provide that vacancies on the board of directors may be filled only
by the affirmative vote of a majority of the directors then in office, irrespective of whether there is a quorum. Additionally, the
number of directors to serve on our board of directors is fixed solely and exclusively by resolution duly adopted by our board of
directors. This would prevent a stockholder from increasing the size of our board of directors and then gaining control of our board
of directors by filling the resulting vacancies with its own nominees. This makes it more difficult to change the composition of
our board of directors but promotes continuity of management. |
| ● |
Special
meetings of stockholders. Our Articles of Incorporation and By-laws provide that special meetings of our stockholders may be
called by the board of directors acting pursuant to a resolution approved by the affirmative vote of a majority of the directors
then in office, and special meetings of stockholders may not be called by any other person or persons. |
| |
|
| ● |
No
cumulative voting. Nevada Revised Statutes provide that a Nevada corporation may provide for cumulative voting.in the election
of directors so long as certain procedures are followed. Our Articles of Incorporation do not provide for cumulative voting. |
| |
|
| ● |
Amendment
of Articles of Incorporation. Any amendment of our Articles of Incorporation require the affirmative vote of the majority of
the outstanding shares of capital stock entitled to vote on such amendment, and the affirmative vote of the majority of the outstanding
shares of each class entitled to vote thereon as a class. Amendments to the Bylaws may be executed pursuant to a resolution by the
board of directors pursuant to an affirmative vote of a majority of the directors then in office, or by the affirmative vote of at
least 75% of the outstanding shares of capital stock entitled to vote. |
| ● |
Issuance
of undesignated preferred stock. Our board of directors has the authority, without further action by the stockholders, to issue
up to 5,000,000 shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time
to time by our board of directors. The existence of authorized but unissued shares of preferred stock, which may be converted into
large numbers of shares of Common Stock, would enable our board of directors to render more difficult or to discourage an attempt
to obtain control of us by means of a merger, tender offer, proxy contest or other means. |
| |
|
| ● |
Nevada
Business Combination Statute. We are subject to the “business combination” provisions of Nevada Revised Statutes.
In general, Sections78.411 to 78.444 of the Nevada Revised Statutes prohibits a Nevada corporation with at least 200 stockholders
from engaging in a business combination with an interested stockholder for a period of two years following the date such person becomes
an interested stockholder, unless the business combination or the transaction in which such person becomes an interested stockholder
is approved in a prescribed manner. Generally, a “business combination” includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested stockholder. Generally, an “interested stockholder” is
a person that, together with affiliates and associates, owns, or within two years prior to the determination of interested stockholder
status did own, 10% or more of a corporation’s voting stock. The existence of this provision may have an anti-takeover effect
with respect to transactions not approved in advance by our board of directors, and the anti-takeover effect includes discouraging
attempts that might result in a premium over the market price for the shares of our Common Stock. |
| |
|
| ● |
Exclusive
forum. Unless we consent in writing to the selection of an alternative forum, the state and federal courts of the State of Nevada
are the sole and exclusive forums for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a
claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (iii) any
action asserting a claim arising pursuant to any provision of the Nevada Revised Statutes, our Articles of Incorporation or our By-laws,
or (iv) any action asserting a claim against us governed by the internal affairs doctrine. This choice of forum provision may limit
a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors,
officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. |
SHARES
ELIGIBLE FOR FUTURE SALE
Market
sales of shares of our Common Stock after this Offering and from time to time, and the availability of shares for future sale, may reduce
the market price of our Common Stock. Sales of substantial amounts of our Common Stock, or the perception that these sales could occur,
could adversely affect prevailing market prices for our Common Stock and could impair our future ability to obtain capital, especially
through an offering of equity securities. After the effective date of the registration statement of which this Prospectus is a part,
all of the shares registered in this Offering will be freely tradable without restrictions or further registration under the Securities
Act of 1933, unless the shares are purchased by our affiliates, as that term is defined in Rule 144 under the Securities Act. The balance
of shares which are not being registered will be eligible for sale pursuant to exemptions from registration. However, these shares not
being registered are held by our management and other affiliates who are limited to selling only 1% of our issued and outstanding shares
every 90 days.
LEGAL
MATTERS
The
validity of the shares of common stock being offered by this prospectus has been passed upon for us by The Crone Law Group, P.C. Mark
Crone, the principal of The Crone Law Group, P.C., indirectly owns 23,568 shares of our Common Stock.
EXPERTS
The
consolidated financial statements of Save Foods, Inc. as of December 31, 2022 and 2021, and for each of the years in the two-year period
ended December 31, 2022, have been incorporated by reference herein in reliance upon the report of Somekh Chaikin, a member firm of KPMG
International, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The
consolidated financial statements of Plantify Foods, Inc. as of and for the year ended December 31, 2022 incorporated by reference in
this registration statement have been so incorporated in reliance on the report of Ziv Haft, BDO member firm, an independent registered
public accounting firm, incorporated herein by reference, given on the authority of said firm as experts in auditing and accounting.
The report on the financial statements contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
DISCLOSURE
OF COMMISSION POSITION ON
INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
In
the opinion of the Securities and Exchange Commission, indemnification for liabilities arising under the Securities Act is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. Insofar as indemnification for liabilities arising under
the Securities Act may be permitted to directors, officers or persons controlling the registrant pursuant to the foregoing provisions,
the registrant has been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
WHERE
YOU CAN FIND MORE INFORMATION
This
prospectus is part of a Registration Statement on Form S-1 we have filed with the SEC. We have not included in this prospectus all of
the information contained in the Registration Statement and you should refer to our Registration Statement and its exhibits for further
information. You can obtain a copy of the Registration Statement, including the exhibits filed with it, from the SEC as indicated below.
We
will file annual, quarterly and current reports, proxy statements and other information with the SEC. You may read and copy any materials
we file with the SEC at their Public Reference Room at 100 F Street, NE, Washington, DC 20549, on official business days during the hours
of 10 a.m. to 3 p.m. You may obtain information about the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Our filings are also available to the public from commercial document retrieval services and at the website maintained by the SEC at
www.sec.gov.
You
should rely only on the information contained in this prospectus. We have not authorized anyone to provide you with different information.
Therefore, if anyone gives you different or additional information, you should not rely on it. The information contained in this prospectus
is correct as of its date. It may not continue to be correct after this date.
INCORPORATION
OF DOCUMENTS BY REFERENCE
The
SEC allows us to incorporate by reference the information and reports we file with it, which means that we can disclose important information
to you by referring you to these documents. The information incorporated by reference is an important part of this prospectus and information
that we file after the date hereof with the SEC will automatically update and supersede the information already incorporated by reference.
We are incorporating by reference the documents listed below, which we have already filed with the SEC, and any future filings we make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, except as to any portion of any future report or document
that is not deemed filed under such provisions, after the date of this prospectus and prior to the termination of this offering:
1.
Our Annual Report on Form
10-K for the year ended December 31, 2022, as filed with the SEC on March 27, 2023;
2.
Our Definitive Proxy Statements on Schedule
14A (other than information furnished rather than filed), filed with the SEC on August 15, 2023 and on January 9, 2024;
3.
Our Quarterly Reports on Form 10-Q for the quarters ended March
31, 2023, June
30, 2023 and September
30, 2023 as filed with the SEC on May 15, 2023, August 14, 2023 and November 14, 2023, respectively;
4.
Our Current Reports on Form 8-K as filed with the SEC on April
5, 2023, April
6, 2023, April
11, 2023, April
27, 2023, July
12; 2023, July
18, 2023, July
27, 2023, July
28, 2023. August
16, 2023, September
25, 2023, October
5, 2023, October
23, 2023, November
2, 2023, November
9, 2023, November
11, 2023, December
18, 2023 and December
26, 2023 and our Current Report on Form
8K/A as filed with the SEC on June 22, 2023; and
5.
The description of our common stock contained in Exhibit
4.1 to our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 29, 2021, and any amendment
or report filed with the SEC for the purpose of updating such description.
Pursuant
to Rule 412 under the Securities Act, any statement contained in a document incorporated or deemed to be incorporated by reference into
this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained
in this prospectus or any other subsequently filed document that is deemed to be incorporated by reference into this prospectus modifies
or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute
a part of this prospectus. None of the information that we disclose under Item 7.01 of any Current Report on Form 8-K or any corresponding
information, either furnished under Item 9.01 or included as an exhibit therein, that we may from time to time furnish to the SEC will
be incorporated by reference into, or otherwise included in, this prospectus, except as otherwise expressly set forth in the relevant
document. Subject to the foregoing, all information appearing in this prospectus is qualified in its entirety by the information appearing
in the documents incorporated by reference.
Upon
request, in writing or by telephone, we will provide, without charge, to each person, including any beneficial owner, to whom a copy
of this prospectus is delivered, a copy of the documents incorporated by reference into this prospectus but not delivered with the prospectus.
Any such request should be directed to:
Save
Foods, Inc.
HaPardes
134 (Meshek Sander)
Neve
Yarak, Israel
(347)
468-9583
You
should rely only on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide
you with different information. You should not assume that the information in this prospectus or in the documents incorporated by reference
is accurate as of any date other than the date on the front of this prospectus or those documents.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
ITEM
13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The
following table sets forth the expenses payable by the registrant, in connection with the sale of Common Stock being registered under
this registration statement. All amounts shown are estimates except for the SEC registration fee.
| SEC Registration fee |
|
$ | 2,046.72 | |
| Legal fees and expenses |
|
$ | 45,000
.00 | |
| Accountant’s fees and expenses |
|
$ | 17,000
.00 | |
| |
|
| | |
| Total |
|
$ | 64,046.72 | |
ITEM
14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section
78.7502 of the Nevada Revised Statutes provides that a Nevada corporation may indemnify any person who was, is or is threatened to be
made, party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of such corporation), by reason of the fact that such person is or was an officer, director,
employee or agent of such corporation or is or was serving at the request of such corporation as a director, officer, employee or agent
of another corporation or enterprise. The indemnity may include expenses (including attorneys’ fees), judgments, fines and amounts
paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he reasonably believed to be in or not opposed to the corporation’s best interests and,
with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was illegal. A Nevada corporation
may indemnify any persons who are, were or are a party to any threatened, pending or completed action or suit by or in the right of the
corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation or enterprise.
The indemnity may include expenses (including attorneys’ fees) actually and reasonably incurred by such person in connection with
the defense or settlement of such action or suit, provided such person acted in good faith and in a manner he reasonably believed to
be in or not opposed to the corporation’s best interests, provided that no indemnification is permitted without judicial approval
if the officer, director, employee or agent is adjudged to be liable to the corporation. Where an officer or director is successful on
the merits or otherwise in the defense of any action referred to above, the corporation must indemnify him against the expenses which
such officer or director has actually and reasonably incurred.
Section
78.752 further authorizes a corporation to purchase and maintain insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent
of another corporation or enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising
out of his or her status as such, whether or not the corporation would otherwise have the power to indemnify him under Section 78.7502.
Our
Bylaws provide that we must indemnify our directors and officers to the fullest extent permitted by the Nevada Revised Statutes and must
also pay expenses incurred in defending any such proceeding in advance of its final disposition upon delivery of an undertaking, by or
on behalf of an indemnified person, to repay all amounts so advanced if it should be determined ultimately that such person is not entitled
to be indemnified.
We
entered into indemnification agreements with certain of our executive officers and directors pursuant to which we have agreed to indemnify
such persons against all expenses and liabilities incurred or paid by such person in connection with any proceeding arising from the
fact that such person is or was an officer or director of the Company, and to advance expenses as incurred by or on behalf of such person
in connection therewith.
The
indemnification rights set forth above are not exclusive of any other right which an indemnified person may have or hereafter acquire
under any statute, provision of our Articles of Incorporation, Bylaws, agreement, vote of stockholders or disinterested
directors or otherwise.
We
maintain standard policies of insurance that provide coverage (1) to our directors and officers against loss rising from claims made
by reason of breach of duty or other wrongful act and (2) to us with respect to indemnification payments that we may make to such directors
and officers.
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES.
The
following information represents securities sold by us within the past three years which were not registered under the Securities
Act.
On
May 11, 2021 and May 12, 2021, we issued 3,369 shares and 6,186 shares of Common Stock, respectively, to noteholders upon the
conversion of convertible promissory notes.
On
June 20, 2021, we issued 1,715 shares of Common Stock to a consultant in exchange for investor relation services.
On
August 2, 2021, we issued 2,041 shares of Common Stock to a consultant in exchange for investor and public relations services.
On
each of August 5, 2021, September 30, 2021 and November 3, 2021, we issued 286 shares of Common Stock to a consultant in exchange for
strategic consulting services, which included digital marketing campaigns.
On
November 3, 2021, and May 2, 2022, we issued 100 and 86 shares of Common Stock, respectively, to a consultant for investor relations
and public relations services provided to us pursuant to an agreement between the parties dated June 15, 2021.
On
November 3, 2021, January 27, 2022 and May 2, 2022, we issued 1,286, 1,786 and 1,786 shares, of Common Stock, respectively, to a consultant
for investor relations services provided to us pursuant to an agreement between the parties dated October 24, 2021.
On
March 10, 2022, we issued 2,000 shares of Common Stock to a consultant for investor relations services provided to the Company pursuant
to an agreement between the parties dated March 10, 2022.
On
March 24, 2022, we issued 1,286 shares of Common Stock to Joachim Fuchs, chairman of the board of directors of our subsidiary, Save
Foods Ltd., for consulting services provided to us pursuant to a consulting agreement between the parties dated February 10,
2022.
On
May 18, 2022, we issued 1,286 shares of Common Stock to a consultant for services provided to us in connection with its cross-listing
on the Frankfurt Stock Exchange pursuant to a board resolution dated May 11, 2022.
On
July 11, 2022, September 7, 2022 and October 11, 2022 we issued 858 shares, 1,072 shares and 1,442 shares of Common
Stock, respectively, to a consultant for consulting services provided to us pursuant to a consulting agreement, dated January
9, 2022.
On
each of May 2, 2022 and August 22, 2022, we issued 1,715 shares of Common Stock to a consultant in for consulting services provided to
us pursuant to an amended consulting agreement dated June 26, 2022.
On
September 7, 2022, we issued 429 shares of Common Stock to Joachim Fuchs, under the Company’s 2022 Share Incentive Plan.
On
September 7, 2022, we issued 7,143 shares of Common Stock to a consultant for services provided to us pursuant to an amended
consulting agreement, dated September 6, 2022.
On
November 16, 2022, we issued 7,143 shares of Common Stock to a consultant for investor relations services provided to us pursuant
to a consulting agreement and we made quarterly issuances of 1,286 shares of Common Stock on January 1, 2023, April 3, 2023, August 7,
2023 and November 8, 2023 to such consultant.
On
January 2, 2023, April 3, 2023 and August 7, 2023, we issued 1,430 shares of Common Stock to each of two consultants for consulting services
provided to us. In addition, on August 7, 2023, we issued a one-time bonus of 22,143 shares of Common Stock to each such consultant.
On
February 13, 2023 and April 27, 2023, we issued 3,572 and 2,143 shares of Common Stock, respectively, to a consultant for services provided
to us pursuant to a consulting agreement dated January 20, 2023.
On
April 4, 2023 we issued 71,430 shares of Common Stock to four consultants, 42,858 shares of Common Stock to David Palach, the Company’s
Chief Executive Officer, 14,286 shares of Common Stock to Lital Barda, the Company’s Chief Financial Officer, 7,143 shares of Common
Stock to Dan Sztybel, Save Foods Ltd.’s chief executive officer and 7,143 shares of Common Stock to Joachim Fuchs.
On
April 3, 2023, we issued 21,009 shares of Common Stock to EU Agritech for services provided to us pursuant to an amended
consulting agreement dated March 29, 2023.
In
connection with the securities exchange agreement with Plantify, on April 5, 2023, we
issued 166,340 shares of Common Stock to Plantify.
On
June 21, 2023, we issued 32,143 shares of Common Stock to a consultant for services provided to us pursuant to a consulting agreement
dated June 14, 2023. On November 20, 2023, we issued 20,000 shares of Common Stock pursuant to an amendment to the consulting agreement,
dated November 15, 2023.
On
June 21, 2023, we issued 25,715 shares of Common Stock to a consultant for services provided to us pursuant to a consulting agreement
dated May 28, 2023.
On
June 21, 2023, we issued 35,715 shares of Common Stock to a consultant for services provided to us pursuant to a consulting agreement
dated May 28, 2023.
During
June 2023, we issued an aggregate of 16,485 shares of Common Stock to a consultant for services provided to us pursuant to a consulting
agreement dated June 15, 2023.
We
issued a five-year warrant to purchase 228,572 shares of Common Stock at an exercise price of $26.25 to ThinkEquity, LLC in connection
with an underwriting agreement with Think Equity for our public offering of shares of Common Stock in August 2022.
On
July 6, 2023, we issued 4,945 shares of Common Stock to a consultant for legal services provided to the Company pursuant to a consulting
agreement dated June 21, 2023. In addition, on September 6, 2023, we issued 6,123 shares of Common Stock pursuant to retainer legal services
agreement dated August 7, 2023.
On
July 27, 2023, we issued 223,008 shares of Common Stock to Yaaran in connection with the stock exchange agreement.
On
September 27, 2023, in connection with the Purchase Agreement with the Investor, we issued 26,224 shares of Common Stock as a commitment
fee to a subsidiary of the Investor.
On
December 7, 2023, we issued 1,755 shares of Common Stock to a consultant for investor relations and public relations services provided
to us pursuant to an agreement, dated November 23, 2023.
On
December 21, 2023, we issued an aggregate of 369,124 shares of Common Stock to six consultants for services provided to us.
On
December 21, 2023, we issued 57,142 shares of Common Stock to David Palach, our Chief Executive Officer, 28,571 shares of Common
Stock to Lital Barda, our Chief Financial Officer, 100,000 shares of Common Stock to Amitay Weiss, a director, and 14,500
shares of Common Stock to each of Messrs. Arbib, Berenshtein, Kalifi and Rosenbloom, members of the board of directors.
On
December 28, 2023, in connection with the Purchase Agreement with the Investor dated December 22, 2023, we issued 110,554 Commitment
Shares.
On
December 28, 2023, we issued 12,500 shares of Common Stock to the designee of a law firm for professional services rendered to us
by such firm.
The
issuances of the shares described above were exempt from registration under Section 4(a)(2) and/or Rule 506(b) of Regulation D as promulgated
by the Securities and Exchange Commission under the Securities Act, as transactions by an issuer not involving any public offering.
ITEM
16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a)
Exhibits.
| Exhibit
No. |
|
Exhibit
Description |
| 3.1.1 |
|
Amended
and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to our Registration Statement on Form 10 filed
with the SEC on September 26, 2019). |
| 3.1.2 |
|
Certificate
of Amendment of the Certificate of Incorporation, effective as of June 12, 2019 (incorporated by reference to Exhibit 3.3 to our
Amendment No. 2 to Registration Statement on Form 10 filed with the SEC on December 11, 2019). |
| 3.1.3 |
|
Certificate
of Amendment of the Certificate of Incorporation of Save Foods, Inc., effective as of November 24, 2020 (incorporated by reference
to Exhibit 3.1.3 to our Registration Statement on Form S-1 filed with the SEC on March 16, 2021). |
| 3.1.4 |
|
Certificate
of Amendment of the Certificate of Incorporation of Save Foods, Inc., dated February 23, 2021 (incorporated by reference to Exhibit
3.1 to our Current Report on Form 8-K filed with the SEC on February 25, 2021). |
| 3.1.5 |
|
Amended
and Restated Certificate of Incorporation of Save Foods, Inc., effective as of March 16, 2021 (incorporated by reference to Exhibit
3.1.1 to our Registration Statement on Form S-3 filed with the SEC on July 15, 2022). |
| 3.1.6 |
|
Certificate
of Amendment to the Amended and Restated Certificate of Incorporation of Save Foods, Inc., effective as of October 5, 2023 (incorporated
by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the SEC on October 5, 2023). |
| 3.1.7 |
|
Articles
of Incorporation of Save Foods, Inc., dated November 3, 2023 (incorporated by reference to Exhibit 3.1 to our Current Report on Form
8-K filed with the SEC on November 9, 2023). |
| 3.2.1 |
|
Amended
and Restated Bylaws of Save Foods, Inc. (incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed with the
SEC on August 24, 2022). |
| 3.2.2 |
|
Bylaws
of Save Foods, Inc., adopted November 3, 2023 (incorporated by reference to Exhibit 3.2 to our Current Report on Form 8-K filed with
the SEC on November 9, 2023). |
| 3.3.1 |
|
Certificate
of Merger filed with the Secretary of State of the State of Delaware, dated November 6, 2023 (incorporated by reference to Exhibit
3.3 to our Current Report on Form 8-K filed with the SEC on November 9, 2023). |
| 3.3.2 |
|
Articles
of Merger filed with the Secretary of State of the State of Nevada, dated November 6, 2023 (incorporated by reference to Exhibit
3.4 to our Current Report on Form 8-K filed with the SEC on November 9, 2023). |
| 4.1 |
|
Description
of the Registrant’s Securities (incorporated by reference to Exhibit 4.1 of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2020, filed with the SEC on March 29, 2021). |
| 4.2 |
|
Form
of Promissory Note from the Company to YA II PN Ltd. (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K
filed with the SEC on July 27, 2023). |
4.3
4.4
|
|
CDN
$1,500,000 Debenture, dated April 4, 2023, incorporated by reference to Exhibit 1.2 to our
Current Report on Form 8-K filed with the SEC on April 6, 2023).
Promissory
Note issued by the Company to YA II PN Ltd. (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with
the SEC on November 2, 2023). |
| 4.5 |
|
Form
of Promissory Note from the Company to YA II PN Ltd. (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K
filed with the SEC on December 26, 2023). |
| 5.1* |
|
Consent
of The Crone Law Group, P.C. |
| 10.1+ |
|
2018
Equity Incentive Plan (incorporated by reference to Exhibit 10.1 to our Registration Statement on Form 10 filed with the SEC on September
26, 2019). |
| 10.2+ |
|
Services
Agreement, dated October 10, 2018, by and between Pimi Agro Cleantech Ltd., Dan Sztybel and Dan Sztybel Consulting Group Ltd. (incorporated
by reference to Exhibit 10.4 our Registration Statement on Form S-1 filed with the SEC on March 16, 2021). |
| 10.3+ |
|
Services
Agreement, dated January 15, 2019, by and between Pimi Agro Cleantech Ltd. and NSNC Consulting Ltd. (incorporated by reference to
Exhibit 10.5 to our Registration Statement on Form S-1 filed with the SEC on March 16, 2021). |
| 10.4+ |
|
Addendum
No. 1 to Services Agreement, dated March 28, 2019, by and between Pimi Agro Cleantech Ltd., Dan Sztybel and Dan Sztybel Consulting
Group Ltd. (incorporated by reference to Exhibit 10.6 to our Registration Statement on Form S-1 filed with the SEC on March 16, 2021). |
| 10.5 |
|
Non-Exclusive
Commission Agreement, dated September 22, 2020, by and among Save Foods, Inc. and Earthbound Technologies, LLC (incorporated by reference
to Exhibit 10.10 to our Registration Statement on Form S-1 filed with the SEC on March 16, 2021). |
| 10.6 |
|
Distribution
Agreement, dated September 22, 2020, by and among Save Foods Ltd. and Safe-Pack Products Ltd. (incorporated by reference to Exhibit
10.11 to our Registration Statement on Form S-1 filed with the SEC on March 16, 2021). |
| 10.7 |
|
Securities
Purchase Agreement, dated September 23, 2020, by and among Save Foods, Inc. and Medigus Ltd. (incorporated by reference to Exhibit
10.12 to our Registration Statement on Form S-1 filed with the SEC on March 16, 2021). |
| 10.8+ |
|
Consulting
Agreement, dated November 6, 2020, by and between Save Foods, Inc. and S.T. Sporting (1996) Ltd. (incorporated by reference to Exhibit
10.13 to our Registration Statement on Form S-1 filed with the SEC on March 16, 2021). |
| 10.9 |
|
Underwriting
Agreement, between ThinkEquity LLC, a division of Fordham Financial Management, Inc., as representative of the several underwriters,
and Save Foods, Inc. (incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K filed with the SEC on August 18,
2022). |
| 10.11+ |
|
The
Save Foods, Inc. 2022 Share Incentive Plan (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with
the SEC on August 30, 2022). |
| 10.12 |
|
Stock
Exchange Agreement, by and among Save Foods, Inc., Save Foods Ltd., Yaaran Investments Ltd., and NewCo, Ltd., dated July 11, 2023
(incorporated by reference to Exhibit 1.1 to our Current Report on Form 8-K filed with the SEC on July 12, 2023). |
| 10.13 |
|
First
Amendment to Stock Exchange Agreement, dated July 24, 2023, by and among Save Foods, Inc., Save Foods Ltd., Yaaran Investments Ltd.,
and NewCo, Ltd. (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K, filed with the SEC on July 28, 2023). |
| 10.14 |
|
Standby
Equity Purchase Agreement, dated July 23, 2023, by and between Save Foods, Inc. and YA II PN, Ltd. (incorporated by reference to
Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on July 27, 2023). |
| 10.15 |
|
Securities
Exchange Agreement, dated March 31, 2023, between Plantify Foods, Inc. and Save Foods, Inc. (incorporated by reference to Exhibit
1.1 to the Current Report on Form 8-K filed by Save Foods with the SEC on April 6, 2023). |
| 10.16 |
|
Second
Amendment to Stock Exchange Agreement, dated August 13, 2023 (incorporated by reference to Exhibit 10.3 to our Current Report on
Form 8-K, filed with the SEC on August 16, 2023). |
| 10.17 |
|
Agreement
of Merger between Save Foods, Inc., a Delaware corporation and Save Foods, Inc., a Nevada corporation, dated November 6, 2023 (incorporated
by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on November 9, 2023). |
| 10.18 |
|
Standby
Equity Purchase Agreement, dated December 22, 2023, between Save Foods, Inc. and YA II PN, Ltd. (incorporated by reference to Exhibit
10.1 to our Current Report on Form 8-K filed with the SEC on December 26, 2023). |
| 21.1 |
|
List
of Subsidiaries (incorporated by reference to Exhibit 21.1 to our Registration Statement on Form S-1 filed with the SEC on October
11, 2023). |
| 23.1* |
|
Consent
of Somekh Chaikin, a member firm of KPMG International. |
| 23.2* |
|
Consent
of Ziv Haft, a member of BDO International Limited, independent registered public accounting firm of Plantify Foods, Inc. |
| 23.3* |
|
Consent of The Crone Law Group, P.C. (included in Exhibit 5.1). |
| 24.1 |
|
Power of Attorney (included in the signature page hereto to our Registration Statement on Form S-1 filed with the SEC on October 11, 2023). |
| 107.1 |
|
Calculation
of Registration Fee. |
| 104* |
|
Cover
Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101). |
*
Filed herewith
+
Management contract or compensatory plan or arrangement
ITEM
17. UNDERTAKINGS.
| (a) |
The
undersigned registrant hereby undertakes: |
| |
(1) |
To file, during any period
in which offers or sales are being made, a post-effective amendment to this registration statement: |
| |
(i) |
To include any prospectus
required by section 10(a)(3) of the Securities Act of 1933; |
| |
(ii) |
To reflect in the prospectus
any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation
of Registration Fee” table in the effective registration statement. |
| |
(iii) |
To include any material
information with respect to the plan of distribution not previously disclosed in the registration statement or any material change
to such information in the registration statement; provided, however, that paragraphs (a)(1)(i), (a)(1)(ii), and (a)(1)(iii)
of this section do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained
in reports filed with or furnished to the SEC by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange
Act of 1934 that are incorporated by reference in the registration statement. |
| |
(2) |
That, for the purpose of
determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof. |
| |
|
|
| |
(3) |
To remove from registration
by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
| |
|
|
| |
(4) |
That, for the purpose of
determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of
a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses
filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first
used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the
registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or
prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first
use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date of first use. |
| |
(5) |
That, for the purpose of
determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities,
the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold
to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and
will be considered to offer or sell such securities to such purchaser: |
| |
(i) |
Any preliminary prospectus
or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424; |
| |
(ii) |
Any free writing prospectus
relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant; |
| |
(iii) |
The portion of any other
free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities
provided by or on behalf of the undersigned registrant; and |
| |
(iv) |
Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser. |
| (b) |
That,
insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion
of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue. |
| (c) |
The
undersigned registrant hereby undertakes: |
| |
(1) |
That, for the purpose of
determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof. |
| |
(2) |
That, for purposes of determining
any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. |
SIGNATURES
Pursuant
to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the
undersigned thereunto duly authorized, in the City of Tel Aviv, Israel, on January 11, 2024.
| |
SAVE
FOODS INC. |
| |
|
|
| |
By: |
/s/
David Palach |
| |
Name: |
David
Palach |
| |
Title: |
Chief
Executive Officer |
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE
PRESENTS, that each person whose signature appears below constitutes and appoints David Palach, his true and lawful attorney-in-fact
and agent, acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments to this Registration Statement, including post-effective amendments and registration statements
filed pursuant to Rule 462(b) and otherwise, and to file the same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorney-in-fact full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises, as such person, hereby ratifying and confirming all
that said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities
and on the dates indicated.
| Signature |
|
Title |
|
Date |
| |
|
|
|
|
| /s/
David Palach |
|
Chief
Executive Officer |
|
January
11, 2024 |
| David
Palach |
|
(Principal
Executive Officer) |
|
|
| |
|
|
|
|
| /s/
Lital Barda |
|
Chief
Financial Officer |
|
January
11, 2024 |
| Lital
Barda |
|
(Principal
Financial Officer and Principal Accounting Officer) |
|
|
| |
|
|
|
|
| /s/
Amitay Weiss |
|
Chairman
of the Board of Directors |
|
January
11, 2024 |
| Amitay
Weiss |
|
|
|
|
| |
|
|
|
|
| /s/
Ronen Rosenbloom |
|
Director |
|
January
11, 2024 |
| Ronen
Rosenbloom |
|
|
|
|
| |
|
|
|
|
| /s/
Israel Berenshtein |
|
Director |
|
January
11, 2024 |
| Israel
Berenshtein |
|
|
|
|
| |
|
|
|
|
| /s/
Eliahou Arbib |
|
Director |
|
January
11, 2024 |
| Eliahou
Arbib |
|
|
|
|
| |
|
|
|
|
| /s/
Liat Sidi |
|
Director |
|
January
11, 2024 |
| Liat
Sidi |
|
|
|
|
| |
|
|
|
|
| /s/
Asaf Itzhaik |
|
Director |
|
January
11, 2024 |
| Asaf
Itzhaik |
|
|
|
|
*
| By: |
/s/
David Palach |
|
| |
David
Palach |
|
| |
Attorney-in-fact |
|
Exhibit
5.1
January
11, 2024
Save
Foods, Inc.
HaPardes
134 (Meshek Sander)
Neva
Yarak, Israel 4994500
| Re: |
Save
Foods, Inc. |
| |
Registration
Statement on Form S-1 |
Ladies
and Gentlemen:
We
have acted as securities counsel to Save Foods, Inc., a Nevada corporation (the “Company”), in connection with its preparation
and filing with the Securities and Exchange Commission (“SEC”) of its Registration Statement on Form S-1 (the “Registration
Statement”) pursuant to the Securities Act of 1933, as amended (the “Act”). The Registration Statement relates to the
proposed resale from time to time of up to 6,666,667 shares (the “Shares”) of common stock of the Company, par value $0.0001
per share (the “Common Stock”), to be offered pursuant to the prospectus which is part of the Registration Statement (the
“Prospectus”) by the selling stockholder named in the Prospectus (the “Selling Stockholder”). The Shares consist
of (i) 110,554 shares of Common Stock issued and outstanding (the “Outstanding Shares”) held by the Selling Stockholder and
(ii) 6,556,113 shares of Common Stock issuable pursuant to a Standby Equity Purchase Agreement (the “Equity Purchase Agreement”)
the Company entered into with YA II PN, Ltd. on December 22, 2023.
This
opinion is being furnished in connection with the requirements of Item 601(b)(5) of Regulation S-K under the Act, and no opinion is expressed
herein as to any matter pertaining to the contents of the Registration Statement or the related Prospectus, other than as expressly stated
herein with respect to the issue of the Shares. It is understood that the opinions set forth below are to be used only in connection
with the offer while the Registration Statement is in effect.
In
connection therewith, in rendering this opinion, we have examined and relied upon original, certified, conformed or other copies of (a)
the Company’s Articles of Incorporation and Bylaws, as currently in effect, (b) resolutions of the Board of Directors of the Company,
(c) the Registration Statement and the exhibits thereto, (d) the Equity Purchase Agreement, and (e) such corporate records of the Company,
certificates of public officials, certificates of officers of the Company and other documents, agreements and instruments as we have
deemed necessary as to matters of fact and have made such examinations of laws as we have deemed relevant as a basis for the opinions
herein contained. In such examination, we have assumed the genuineness of all signatures, the legal capacity of all natural persons,
the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us
as certified, conformed or photostatic copies and the authenticity of the originals of such latter documents. In providing these opinions,
we have further relied as to certain matters on information obtained from officers of the Company and filings made by the Company with
the SEC.
Based
upon and subject to the foregoing and the other matters set forth herein, it is our opinion that, as of the date hereof, (a) the issuance
of the Shares has been duly authorized by all necessary corporate action of the Company, and (b) (i) the Outstanding Shares are validly
issued, fully paid and non-assessable; and (ii) when issued and sold by the Company and delivered by the Company against payment therefor
in accordance with the terms and conditions of the Equity Purchase Agreement in the manner described in the Registration Statement, will
be validly issued, fully paid and non-assessable.
We
are attorneys admitted to practice in New York. We are familiar with the applicable provisions of the Nevada Revised Statutes and reported
judicial decisions interpreting those laws, and we have made such inquiries with respect thereto as we consider necessary to render this
opinion with respect to a Nevada corporation. This opinion letter is opining upon and is limited to the current federal securities laws
of the United States and Nevada law, as such laws presently exist, and to the facts as they presently exist. We express no opinion with
respect to the effect or applicability of the laws of any other jurisdiction. Our opinion is based on these laws as in effect on the
date hereof and as of the effective date of the Registration Statement, and we assume no obligation to revise or supplement this opinion
after the effective date of the Registration Statement should the law be changed by legislative action, judicial decision or otherwise.
Where our opinions expressed herein refer to events to occur at a future date, we have assumed that there will have been no changes in
the relevant law or facts between the date hereof and such future date. Our opinions expressed herein are limited to the matters expressly
stated herein, and no opinion is implied or may be inferred beyond the matters expressly stated. Not in limitation of the foregoing,
we are not rendering any opinion as to the compliance with any other federal or state law, rule, or regulation relating to securities
or to the sale or issuance thereof.
This
opinion is for your benefit in connection with the Registration Statement and may be relied upon by you and by persons entitled to rely
upon it pursuant to the applicable provisions of the Act. We hereby consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm in the Prospectus under the heading “Legal Matters.” In giving such consent, we
do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations
of the SEC thereunder.
| |
Sincerely, |
| |
|
| |
/s/
The Crone Law Group, P.C. |
| |
THE
CRONE LAW GROUP, P.C. |
Exhibit
23.1
CONSENT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We
consent to the use of our report dated March 27, 2023, with respect to the consolidated financial statements of Save Foods Inc., incorporated
herein by reference and to the reference to our firm under the heading “Experts” in the prospectus.
| /s/
Somekh Chaikin |
|
| Somekh Chaikin |
|
| Member Firm of KPMG International |
|
| Tel
Aviv, Israel |
|
| January
11, 2024 |
|
Exhibit
23.2
Plantify
Foods, Inc.
Vancouver,
British Columbia
We
hereby consent to the incorporation by reference in the registration statement on Form S-1 of Save Foods Inc. of our report dated June
14, 2023, relating to the consolidated financial statements of Plantify Foods, Inc. (“the Company”). Our report contains
an Emphasis of Matter paragraph regarding the Company’s ability to continue as a going concern.
We
also consent to the reference to us under the caption “Experts” in the registration statement.
| /S/Ziv
Haft |
|
| Ziv
Haft |
|
| BDO
Member Firm |
|
| January 11, 2024 |
|
Exhibit
107
Calculation
of Filing Fee Table
Form
S-1
Save
Foods, Inc.
Table
1: Newly Registered Securities
| Security
Type |
|
Security
Class Title |
|
Fee
Calculation Rule |
|
|
Amount
to be
Registered(1) |
|
|
Proposed
Maximum
Offering Price
per Share(2) |
|
|
Proposed
Maximum
Aggregate Offering
Price(2) |
|
|
Fee
Rate |
|
|
Amount
of
Registration
Fee |
|
| Equity |
|
Common
Stock, $0.0001 par value per share |
|
|
457(c) |
|
|
|
6,666,667 |
|
|
$ |
2.08 |
|
|
$ |
13,866,667.40 |
|
|
|
0.0001476 |
|
|
$ |
2,046.72 |
|
| Total
Offering Amount |
|
|
|
|
|
|
|
|
|
|
$ |
13,866,667.40 |
|
|
|
|
|
|
$ |
2,046.72 |
|
| Total
Fee Offsets(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
- |
|
| Net
Fee Due |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
2,046.72 |
|
| (1) |
Represents
110,554 shares previously issued to the selling stockholder identified in this registration statement and up to 6,556,113 shares
that are issuable at the option of the Registrant pursuant to a purchase agreement with the selling stockholder (the number of shares
reflects a 1-for-7 reverse stock split effected by the Company on October 5, 2023). The shares will be offered for resale by the
selling stockholder. Pursuant to Rule 416(a) under the Securities Act of 1933 (the “Securities Act”), the registration
statement of which this Exhibit 107 is a part also covers any additional number of shares of common stock issuable upon stock splits,
stock dividends, dividends or other distribution, recapitalization or similar events with respect to the shares of common stock being
registered pursuant to this registration statement. |
| |
|
| (2) |
Estimated
solely for purposes of calculating the registration fee pursuant to Rule 457(c) under the Securities Act, based on average of high
and low price per share of the common stock as reported on The Nasdaq Capital Market on January 9, 2024. |
| |
|
| (3) |
The
Registrant does not have any fee offsets. |
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