UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
For the transition period from __________ to ____________
Commission
File No.
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of | (I.R.S. Employer | |
| incorporation or organization) | Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
| (Registrant’s telephone number, including area code) |
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of exchange on which registered | ||
| The
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Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files).
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.
| ☐ | Large accelerated filer | ☐ | 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 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 15, 2025, the registrant had shares of common stock, par value $, outstanding.
N2OFF, Inc.
Quarterly Report on Form 10-Q
TABLE OF CONTENTS
| 2 |
FORWARD-LOOKING STATEMENTS
Certain information set forth in this Quarterly Report on Form 10-Q (the “Quarterly Report”) including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (set forth in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our business, including many assumptions regarding future events. Such forward-looking statements include statements regarding, among other things:
| ● | Our efforts to complete and integrate current and/or future acquisitions and joint ventures, which could disrupt our current business activities and adversely affect our results of operations or future growth. | |
| ● | 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 or Israel. | |
| ● | The evolution of our business strategy may not be successful and we may require additional financing, have increased operational costs or experience other financial harm to our business and financial condition. | |
| ● | Conditions in Israel, including Israel’s conflicts with Hamas and other parties in the region, as well as political and economic instability, may adversely affect our operations and limit our ability to market our products, which would lead to a decrease in revenues. | |
| ● | 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 ability to attract and retain sufficient, qualified personnel; | |
| ● | our ability to obtain or maintain patents or other appropriate protection for the intellectual property; | |
| ● | our ability to adequately support future growth; | |
| ● | potential product liability or intellectual property infringement claims; | |
| ● | The effect of climate change conditions, on our business operations and financial results; | |
| ● | portfolio concentration; | |
| ● | international expansion of our business and operations; | |
| ● | information with respect to any other plans and strategies for our business; |
These statements are only predictions and involve known and unknown risks, uncertainties and other factors. Readers are urged to carefully review and consider the various disclosures made by us in this Quarterly Report and in our other reports filed with the Securities and Exchange Commission (the “SEC”). We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results over time except as required by law. We believe that our assumptions are based upon reasonable data derived from and known about our business and operations. No assurances are made that actual results of operations or the results of our future activities will not differ materially from our assumptions.
As used in this Quarterly Report and unless otherwise indicated, the terms “N2OFF,” “we,” “us,” “our,” or “our company” refer to N2OFF, Inc., our 98.48% owned subsidiary, Save Foods Ltd., NTWO OFF Ltd., a company of which we previously owned 60% and sold on April 9, 2025, and our 100% owned subsidiary, NITO Renewable Energy, Inc.
| 3 |
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
N2OFF, INC.
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)
AS OF MARCH 31, 2025
USD IN THOUSANDS
TABLE OF CONTENTS
| Page | |
| CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED): | |
| Condensed Consolidated Interim Balance Sheets (unaudited) | 5 |
| Condensed Consolidated Interim Statements of Comprehensive Loss (unaudited) | 6 |
| Condensed Consolidated Interim Statements of Stockholders’ Equity (unaudited) | 7 |
| Condensed Consolidated Interim Statements of Cash Flows (unaudited) | 8 |
| Notes to Condensed Consolidated Interim Financial Statements | 9- 20 |
| 4 |
N2OFF, INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS
(U.S. dollars in thousands except share and per share data)
| March 31, | December 31, | |||||||
| 2025 | 2024 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | ||||||||
| Restricted cash | ||||||||
| Investment in marketable securities (Note 5 (2)) | ||||||||
| Accounts receivable, net of allowance for doubtful account of $ | ||||||||
| Short term loan (Note 4) | ||||||||
| Inventories | ||||||||
| Prepaid expenses | ||||||||
| Other current assets | ||||||||
| Total Current assets | ||||||||
| Long term prepaid expenses | ||||||||
| Right-of-use asset arising from operating leases | ||||||||
| Property and equipment, net | ||||||||
| Investment in nonconsolidated affiliate (Note 3) | ||||||||
| Long term loan (Note 5 (1)) | ||||||||
| Solar photovoltaic joint venture project (Note 6) | ||||||||
| Solar projects under development (Note 8) | ||||||||
| Total assets | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | ||||||||
| Current warrant liabilities | ||||||||
| Other liabilities | ||||||||
| Total current liabilities | ||||||||
| Non current operating lease liabilities | ||||||||
| Credit facility (Note 7) | ||||||||
| Stock purchase warrants liability (Note 9(1)) | ||||||||
| Total liabilities | ||||||||
| Stockholders’ Equity | ||||||||
| Common stock, $ par value (“Common Stock”): shares authorized as of March 31, 2025 and December 31, 2024; issued and outstanding and shares as of March 31, 2025 and December 31, 2024, respectively. | ||||||||
| Preferred stock, $ par value (“Preferred Stock”): shares authorized as of March 31, 2025 and December 31, 2024; issued and outstanding shares as of March 31, 2025 and December 31, 2024. | ||||||||
| Additional paid-in capital | ||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Company’s stockholders’ equity | ||||||||
| Non-controlling interests | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | ||||||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
| 5 |
N2OFF, INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS
(U.S, dollars in thousands except share and per share data)
| Three months ended | ||||||||
| March 31 | ||||||||
| 2025 | 2024 | |||||||
| Revenues from sales of products | ||||||||
| Cost of sales | ( | ) | ( | ) | ||||
| Gross profit | ||||||||
| Research and development expenses | ( | ) | ( | ) | ||||
| Selling and marketing expenses | ( | ) | ( | ) | ||||
| General and administrative expenses | ( | ) | ( | ) | ||||
| Operating loss | ( | ) | ( | ) | ||||
| Financing income (expenses), net | ( | ) | ||||||
| Other expenses, net | ( | ) | ||||||
| Changes in fair value of investments measured under the fair value option (Notes 3, 4,5,6), net | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Less: net loss attributable to non-controlling interests | ||||||||
| Net loss attributable to the Company’s stockholders’ equity | ( | ) | ( | ) | ||||
| Loss per share (basic) | ( | ) | ( | ) | ||||
| Weighted average number of shares of Common Stock outstanding- basic | ||||||||
| Loss per share (diluted) | ( | ) | ( | ) | ||||
| Weighted average number of shares of Common Stock outstanding - diluted | ||||||||
| Comprehensive loss: | ||||||||
| Net loss | ( | ) | ( | ) | ||||
| Other comprehensive income (loss) - Foreign currency translation adjustments | ( | ) | ||||||
| Comprehensive loss | ( | ) | ( | ) | ||||
| Net - loss attributable to non-controlling interests | ||||||||
| Other comprehensive income (loss) attributable to non-controlling interests -foreign currency translation adjustments | ||||||||
| Comprehensive loss attributable to the Company’s stockholders | ( | ) | ( | ) | ||||
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
| 6 |
N2OFF, INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(U.S, dollars in thousands, except share and per share data)
| Number of shares | Amount | Additional paid-in capital | Foreign currency translation adjustments | Accumulated deficit | Total Company’s stockholders’ equity | Non-controlling interests | Total equity | |||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2024 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Issuance of shares for private investment in public equity (PIPE) agreement | ||||||||||||||||||||||||||||||||
| Warrant exercises | * | |||||||||||||||||||||||||||||||
| Share based compensation | - | * | * | * | * | |||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| Comprehensive loss for the period | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| BALANCE AT MARCH 31, 2025 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Number of shares (*) | Amount | Additional paid-in capital | Foreign currency translation adjustments | Accumulated deficit | Total Company’s stockholders’ equity | Non-controlling interests | Total equity | |||||||||||||||||||||||||
| BALANCE AT DECEMBER 31, 2023 | * | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Issuance of shares for standby equity purchase agreement II | * | |||||||||||||||||||||||||||||||
| Issuance of shares to services providers | ||||||||||||||||||||||||||||||||
| Comprehensive loss for the period | - | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||
| BALANCE AT MARCH 31, 2024 | * | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| (*) |
The accompanying notes are an integral part of the condensed consolidated interim financial statements.
| 7 |
N2OFF, INC.
UNAUDITED CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(U.S, dollars in thousands except share and per share data)
| Three months ended | ||||||||
| March 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Loss for the period | ( | ) | ( | ) | ||||
| Adjustments required to reconcile net loss for the period to net cash used in operating activities: | ||||||||
| Depreciation | ||||||||
| Issuance of shares to employees and services providers | ||||||||
| Share based compensation to employees and directors | * | |||||||
| Expenses from standby equity purchase agreement II | ||||||||
| Interest on loans | ||||||||
| Change in fair value of warrant liability | ||||||||
| Change in fair value of credit facility liability | ( | ) | ||||||
| Change in fair value of PIPE’s warrant liability | ||||||||
| Change in fair value of investment in nonconsolidated affiliate | ( | ) | ( | ) | ||||
| Change in fair value of long term loan | ||||||||
| Change in fair value of solar project | ( | ) | ||||||
| Change in fair value of marketable securities | ||||||||
| Exchange rate differences on operating leases | ||||||||
| Increase in accounts receivable, net | ( | ) | ( | ) | ||||
| Decrease in inventory | ||||||||
| Decrease in prepaid expenses and other current assets | ||||||||
| Increase (decrease) in accounts payable | ( | ) | ||||||
| Decrease in other liabilities | ( | ) | ( | ) | ||||
| Decrease in operating lease expense | ||||||||
| Change in operating lease liability | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Short term loan granted | ( | ) | ||||||
| Investment in battery storage projects | ( | ) | ||||||
| Solar photovoltaic joint venture project | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from credit facility | ||||||||
| Repayment of credit facility | ( | ) | ||||||
| Proceeds from PIPE agreement | ||||||||
| Proceeds from exercise of warrants from PIPE agreement | ||||||||
| Proceeds from standby equity purchase agreement, net | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ||||||
| INCREASE (DECREASE) IN CASH , CASH EQUIVALENTS AND RESTRICTED CASH | ( | ) | ||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF YEAR | ||||||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD | ||||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the year for: | ||||||||
| Interest | ||||||||
| Non cash transactions: | ||||||||
| Initial recognition of operating lease liability | ||||||||
| Reclassification of warrant liabilities to equity upon exercise of warrants | ||||||||
| (*) |
The accompanying notes are an integral part of the condensed consolidated interim financial statements
| 8 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
NOTE 1 – GENERAL
| A. | Operations |
N2OFF, Inc. (the “Company”) was incorporated on April 1, 2009, under the laws of the State of Delaware.
On November 6, 2023, the Company (which at that time was known as Save Foods, Inc.) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with N2OFF, 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”). The Reincorporation Merger was approved by the Company’s stockholders on October 2, 2023 and became effective on The Nasdaq Capital Market on November 10, 2023. Upon the consummation of the Reincorporation Merger, the Company ceased its legal existence as a Delaware corporation, and the Surviving Corporation continued Company’s business as the surviving corporation. On February 8, 2024, the Company’s stockholders approved the Company’s name change to “N2OFF, Inc.” which became effective on The Nasdaq Capital Market on March 19, 2024.
On
April 27, 2009, the Company acquired from its stockholders
On March 31, 2023, the Company entered into a securities exchange agreement with Plantify Foods, Inc. (“Plantify”), a Canadian corporation traded on the TSX Venture Exchange (“TSXV”), which focuses on the development and production of “clean-label” plant-based products - see Note 3 below for further information.
On August 29, 2023, the Company entered into an exchange agreement with Yaaran Investments Ltd. and formed an Israeli subsidiary, NTWO OFF Ltd. (“NTWO OFF”) which focus on nitrous oxide (“N2O”), a potent greenhouse gas with significant global warming ramifications (the Company, Save Foods Ltd. and NTWO OFF Ltd collectively, the “Group”) - see Note 13(2).
On February 10, 2025 the Company’s wholly owned subsidiary, NITO Renewable Energy, Inc. was formed under the laws of the State of Nevada.
On
February 24, 2025, the Company entered into a shareholders agreement with Solterra Brand Services Italy SRL (“SB”) and
SB Impact 4 LTD (which on April 14, 2025 changed its name to SB Storage 1 S.R.L), a wholly owned subsidiary of SB (“SBI4”) pursuant to which the Company will purchase
The Company’s Common Stock is listed on The Nasdaq Capital Market under the symbol “NITO”.
| 9 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
NOTE 1 – GENERAL (continued)
| B. | Going concern uncertainty |
Since
inception, the Company has incurred significant losses and negative cash flows from operations and has an accumulated deficit of $
The Company’s management expects that the Company will continue to generate losses and negative cash flows from operations for the foreseeable future. Based on the projected cash flows and cash balances as of March 31, 2025, management currently is of the opinion that its existing cash will be sufficient to fund operations until the end of the fourth quarter of 2025. As a result, there is substantial doubt regarding the Company’s ability to continue as a going concern.
Management plans to continue securing sufficient financing through the sale of additional equity securities or capital inflows from strategic partnerships. Additional funds may not be available when the Company needs them, on favorable terms, or at all. If the Company is unsuccessful in securing sufficient financing, it may need to cease operations.
The financial statements do not include adjustments for measurement or presentation of assets and liabilities, which may be required should the Company fail to operate as a going concern.
| C. | Israel – Hamas war |
Following the October 7th attacks by Hamas terrorists in Israel’s southern border, Israel declared war against Hamas and since then, Israel has been involved in military conflicts with Hamas, Hezbollah, a terrorist organization based in Lebanon, and Iran, both directly and through proxies like the Houthi movement in Yemen and armed groups in Iraq and other terrorist organizations. Additionally, following the fall of the Assad regime in Syria, Israel has conducted limited military operations targeting the Syrian army, Iranian military assets and infrastructure linked to Hezbollah and other Iran-supported groups. Although certain ceasefire agreements have been reached with Hamas and Lebanon (with respect to Hezbollah), and some Iranian proxies have declared a halt to their attacks, there is no assurance that these agreements will be upheld, military activity and hostilities continue to exist at varying levels of intensity, and the situation remains volatile, with the potential for escalation into a broader regional conflict involving additional terrorist organizations and possibly other countries. Also, the fall of the Assad regime in Syria may create geopolitical instability in the region.
As most of Company’s operations are conducted in Israel and all members of Company’s board of directors, management, as well as a majority of Company’s employees and consultants, including employees of its service providers, are located in Israel, Company’s business and operations are directly affected by economic, political, geopolitical and military conditions affecting Israel. The factory of Plantify’s subsidiary, Piece of Bean, was located in Kibbutz Gonen in the Golan Heights, and its business operation was severely impacted by the war in Israel, which led Piece of Bean into voluntary insolvency proceedings. This, in turn, caused Plantify to essentially become a company with no business activity. Any escalation or expansion of the war could have a negative impact on both global and regional conditions and may adversely affect Company’s business, financial condition, and results of operations.
| 10 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
NOTE 1 – GENERAL (continued)
The Company is unable to predict how long the current conflict will last, as well as the repercussions these delays will have on its operations. If the Company is unable to renew its pilots or collaborations with packing houses its financial results may be affected.
The Company is continuing to regularly follow developments on the matter and is examining the effects on its operations and the value of its assets.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION
Basis of presentation
The condensed interim consolidated financial statements included in this Quarterly Report are unaudited. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting and reflect, in the opinion of management, all adjustments of a normal and recurring nature that are necessary for a fair statement of the Company’s financial position as of March 31, 2025, and its results of operations changes in stockholders’ equity, and cash flows for the three months ended March 31, 2025 and 2024. The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the year ending December 31, 2025 or for any other future annual or interim period. These financial statements should be read in conjunction with the audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC on March 31, 2025. The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended December 31, 2024 included in such Form 10-K. Since the date of such financial statements, there have been no changes to the Company’s significant accounting policies.
Use of Estimates
The preparation of unaudited condensed consolidated interim financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, certain revenues and expenses, and disclosure of contingent assets and liabilities as of the date of the financial statements. Actual results could differ from those estimates. As applicable to these financial statements, the most significant estimates and assumptions relate to calculation of fair value of the financial instruments.
Credit facility
Under the Fair Value Option Subsection of ASC Subtopic 825-10, Financial Instruments – Overall (“ASC 825”), the Company has an irrevocable option to designate certain financial assets and financial liabilities at fair value on an instrument-by-instrument basis, with changes in fair value reported in the statement of operations. The loans drawn under the credit facility are measured at fair value at each reporting date, with changes in fair value recognized in earnings. Fair value changes exclude accrued interest, which is recorded separately in interest expense. In accordance with ASC 825-10-45-5, the portion of the change in fair value attributable to changes in the instrument-specific credit risk is recognized in other comprehensive income (loss). The Company estimates changes in instrument-specific credit risk by calculating the difference between the total fair value change of the instrument and the portion attributable to changes in a relevant risk-free interest rate benchmark.
The Company elected the fair value option for its credit facility which includes an embedded prepayment option, see Note 7.
| 11 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued)
Project assets
The Company develops commercial solar power projects (“project assets”) for sale. Project assets consist primarily of costs relating to solar power projects in various stages of development that are capitalized prior to entering into a definitive sales agreement for the solar power project. These costs include certain acquisition costs, land costs and costs for developing and constructing a solar power project. Development costs can include legal, consulting, permitting, and other similar costs. Construction costs can include execution of field construction, installation of solar equipment, and solar modules and related equipment. The Company does not depreciate the project assets when they are considered held for sale. Any revenue generated from a solar power project connected to the grid would be considered incidental income and accounted for as a reduction of the capitalized project costs for development. In addition, the Company presents all expenditures related to the purchase, development and construction of project assets as a component of cash flows from investing activities.
During the development phase, these project assets are accounted for in accordance with the recognition, initial measurement and subsequent measurement subtopics of ASC 970-360, as they are considered in substance real estate. While the solar power projects are in the development phase, they are generally classified as non-current assets, unless it is anticipated that construction will be completed, and sale will occur within one year.
The Company reviews project assets and deferred project costs for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The Company considers a project commercially viable or recoverable if it is anticipated to be sold for a profit once it is either fully developed or fully constructed. The Company considers a partially developed or partially constructed project commercially viable or recoverable if the anticipated selling price is higher than the carrying value of the related project assets and the estimated costs to complete. The Company examines a number of factors to determine if the project will be recoverable, the most notable of which include whether there are any changes in environmental, ecological, permitting, market pricing or regulatory conditions that impact the project. Such changes could cause the costs of the project to increase or the selling price of the project to decrease. If a project is not considered recoverable, the Company impairs the respective project assets and adjusts the carrying value to the estimated recoverable amount, with the resulting impairment recorded within operations.
Fair value
Fair value of certain of the Company’s financial instruments including cash, accounts payable, accrued expenses, and other accrued liabilities approximate cost because of their short maturities. The Company measures and reports fair value in accordance with Accounting Standards Codification (“ASC”) 820, “Fair Value Measurements” which defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements.
Fair value, as defined by ASC 820, is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value of an asset should reflect its highest and best use by market participants, principal (or most advantageous) markets, and an in-use or an in-exchange valuation premise.
Valuation techniques are generally classified into three categories: (i) the market approach; (ii) the income approach; and (iii) the cost approach. The selection and application of one or more of the techniques may require significant judgment and are primarily dependent upon the characteristics of the asset or liability, and the quality and availability of inputs. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. ASC 820 also provides fair value hierarchy for inputs and resulting measurement as follows:
Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for identical assets or liabilities.
Level 2: Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability; and inputs that are derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and
Level 3: Unobservable inputs for the asset or liability that are supported by little or no market activity, and that are significant to the fair values.
Fair value measurements are required to be disclosed by the level within the fair value hierarchy in which the fair value measurements in their entirety fall. Fair value measurements using significant unobservable inputs (in level 3 measurements) are subject to expanded disclosure requirements including a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (i) total gains or losses for the period (realized and unrealized), (ii) segregating those gains or losses included in earnings, and (iii) a description of where those gains or losses included in earning are reported in the statement of operations.
| 12 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued)
Fair value (continued)
The Company’s financial assets that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| As of March 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Assets: | ||||||||||||||||
| Investment in Plantify | ||||||||||||||||
| Investment in Solterra | ||||||||||||||||
| Solar photovoltaic joint venture project | ||||||||||||||||
| Loan granted to MitoCareX | ||||||||||||||||
| Convertible loan to Solterra | ||||||||||||||||
| Total assets | ||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Assets: | ||||||||||||||||
| Investment in Plantify | ||||||||||||||||
| Investment in Solterra | ||||||||||||||||
| Solar photovoltaic joint venture project | ||||||||||||||||
| Loan granted to MitoCareX | ||||||||||||||||
| Convertible loan to Solterra | ||||||||||||||||
| Total assets | ||||||||||||||||
| 13 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (continued)
Fair value (continued)
The following table presents the changes in fair value of the level 3 assets for the period December 31, 2024 through March 31, 2025:
| Solar photovoltaic joint venture project | Loan granted to MitoCareX | Convertible loan to Solterra | Total | |||||||||||||
| US$ | ||||||||||||||||
| Assets: | ||||||||||||||||
| Outstanding at December 31, 2024 | ||||||||||||||||
| Additions during the period | ||||||||||||||||
| Changes in fair value | ( | ) | ( | ) | ||||||||||||
| Outstanding at March 31, 2025 | ||||||||||||||||
The Company’s financial liabilities that are measured at fair value on a recurring basis by level within the fair value hierarchy are as follows:
| As of March 31, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| Stock purchase warrants liability | ||||||||||||||||
| warrant liabilities to Pure Capital | ||||||||||||||||
| Credit facility | ||||||||||||||||
| Total liabilities | ||||||||||||||||
| As of December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| US$ | ||||||||||||||||
| Liabilities: | ||||||||||||||||
| warrant liabilities to Pure Capital | ||||||||||||||||
| Total liabilities | ||||||||||||||||
NOTE 3 – INVESTMENT IN NONCONSOLIDATED AFFILIATE
On
March 31, 2023, the Company entered into a Securities Exchange Agreement (the “Securities Exchange”) with Plantify Ltd.,
pursuant to which each party agreed to issue to the other
In
connection with the agreement, the Company executed a debenture in the amount of CAD
On
September 7, 2023, the Company increased its holdings in Plantify through participation in a rights offering. As of that date, the Company
held approximately
On
April 2, 2024, the Company’s board of directors approved a Credit Facility of up to $
On
December 5, 2024, the Company and Plantify completed a debt settlement agreement (the “Settlement Agreement”), whereby Plantify
issued of its common shares to the Company in full settlement of the outstanding Debenture and the utilized Credit Facility,
increasing the Company’s ownership interest to approximately
Following
additional share issuances by Plantify, including a private placement on December 20, 2024, and a debt settlement with another lender,
on January 12, 2025, the Company’s ownership interest in Plantify was reduced to approximately
The
investment in Plantify’s common shares is classified within Level 1 in the fair value hierarchy, based on quoted prices in
active markets. For the three months period ended March 31, 2025, the Company recorded gain from change in fair value of the
investment of $
| 14 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
(USD in thousands, except share and per share data)
NOTE 3 – INVESTMENT IN NONCONSOLIDATED AFFILIATE (continued)
The following tables present Plantify’s summarized financial information:
| Three months ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Revenue | ||||||||
| Gross loss | ( | ) | ||||||
| Net loss | ( | ) | ( | ) | ||||
| As of March 31, | As of December 31, | |||||||
| 2025 | 2024 | |||||||
| Current assets | ||||||||
| Noncurrent assets | ||||||||
| Current liabilities | ||||||||
| Stakeholders deficit | ( | ) | ( | ) | ||||
NOTE 4 – MITOCAREX TRANSACTION
In
December 2024, the Company entered into a loan agreement (the “First Loan”) with MitoCareX BioLtd. an Israeli private company (“MitoCareX”) in the principal amount of
$
On February 25, 2025, the Company, entered into a securities purchase and exchange agreement (the “Mito Agreement”) with MitoCareX, SciSparc Ltd., an Israeli public company (“SciSparc”), Dr. Alon Silberman (“Alon”) and Prof. Ciro Leonardo Pierri (“Ciro”) pursuant to which the Company will acquire from each of the Sellers their respective ordinary shares, nominal (par) value NIS each, of MitoCareX (the “Ordinary Shares”), thereby resulting in MitoCareX becoming a wholly-owned subsidiary of the Company.
The closing of the Mito Agreement is contingent upon, among other customary closing conditions, obtaining approval of the Company’s stockholders by the requisite majority. This approval has not yet been obtained.
On
the closing date, SciSparc shall transfer and sell Ordinary Shares to the Company, (the “Purchased
Shares”), in consideration for a cash payment of $
Following
the closing, until December 31, 2028, the Sellers will have the right to receive such number of additional shares of Common Stock, for
no additional consideration, in an aggregate amount of up to
| 15 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
(USD in thousands, except share and per share data)
NOTE 4 – MITOCAREX TRANSACTION (continued)
Immediately
prior to the closing date, Alon will enter into an amended employment agreement with the Company and MitoCareX in connection with his
employment as the Chief Executive Officer of MitoCareX, which provides, among other things, for a grant of restricted stock representing
As
additional consideration for the Exchanged Ordinary Shares, each of SciSparc, Alon and Ciro will receive, collectively,
Upon
closing of the transactions contemplated by the Mito Agreement, the Company has committed to an initial investment of $
On
March 12, 2025, the Company, entered into an additional Loan Agreement (the “Second Loan”) with MitoCareX, and Pure Capital
pursuant to which the Company agreed to lend $
Company’s chairman of the board of directors and one of Company’s directors are also members of the board of directors of SciSparc.
The Company elected to account for the loans under the fair value option
in accordance with ASC 825. The
Company estimated the fair value of the First Loan and Second Loan using a third-party appraiser by discounting the Principal and interest
at a discount rate of market interest for similar loans. The interest rate was determined, among other things, using the CAPM model,
at
NOTE 5 – INVESTMENT AND LOAN TO SOLTERRA
| 1. | On
June 30, 2024, the Company entered into a 24 month Loan Agreement with Solterra Renewable
Energy Ltd. (“Solterra”) and other lenders, under which the Company committed
€ |
The Company elected to account for the Loan Agreement under the fair value
option in accordance with ASC 825. As
of March 31, 2025, the Company estimated the fair value of the Loan Agreement at $
| 2. | During
2024, the Company acquired shares of SE for a total consideration of NIS |
The Company calculated the investment at fair value accordance with ASC 321.
As
of March 31, 2025, the Company recorded loss from the decrease in the fair value of the shares in the amount of $
| 16 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
(USD in thousands, except share and per share data)
NOTE 6 – SOLAR PHOTOVOLAIC JOINT VENTURE PROJECT
On
July 31, 2024, the Company entered into a Loan and Partnership Agreement with Horizons RES PE1 UG (haftungsbeschränkt) &
Co. KG a German partnership (the “Partnership”), Solterra, and other lenders, under which the Company committed
€
The Partnership was evaluated under ASC 810-10, and the Company determined it is not the primary beneficiary due to lack of power to direct significant activities and limited exposure to variable returns; accordingly, the Partnership is not consolidated.
The Company elected to account for the Loan and Partnership Agreement under
the fair value option in accordance with ASC 825. The
Company estimated the fair value of the Loan and Partnership Agreement using a third-party appraiser and various assumptions such as,
probability of completion of the project based on key milestones, scenarios for the expected project’s cash realization value (including
expected power of the project, selling price per megawatt, and loan repayment dates). The projected net cash flows were discounted using
an interest rate appropriate for similar projects. The result was adjusted to the probability for the completion of the project as of
the valuation date. The interest rate was determined at
NOTE 7 – CREDIT FACILITY
On
October 1, 2024, the Company entered into a facility agreement with L.I.A. Pure Capital Ltd. (the “Lender”) for financing
of up to €
The
facility will expire upon full drawdown or
In
connection with the facility, the Company issued a five-year
warrant to the Lender to purchase
On December 5, 2024, the Lender agreed, pursuant to a waiver agreement, not to convert the warrants shares unless and until the stockholder of the Company approve the issuance of the warrants. Such approval had not been received as of March 31, 2025.
The Company determined that the warrant is not considered indexed to the Company’s own stock. The Company elected to account for the Warrant Shares under the fair value option in accordance with ASC 825. The Company estimated the fair value of the Warrant Shares as of October 1, 2024, December 31, 2024 and March 31, 2025, using the Black-Scholes option pricing model.
| 17 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
NOTE 7 – CREDIT FACILITY (continued)
The assumptions used to perform the calculations are detailed below:
| Fair value of the conversion feature | October 1, 2024 | December 31, 2024 | March 31, 2025 | |||||||||
| Expected volatility (%) (*) | % | % | % | |||||||||
| Risk-free interest rate (%) | % | % | % | |||||||||
| Expected dividend yield | % | % | % | |||||||||
| Expected term of options (years) | ||||||||||||
| Exercise price (US dollars) | $ | $ | $ | |||||||||
| Share price (US dollars) | $ | $ | $ | |||||||||
| Fair value (U.S. dollars) | $ | $ | $ | |||||||||
| (*) |
On
January 6, 2025, and February 12, 2025, the Company drew down gross amounts of €
On
March 10, 2025, the Company repaid €
The Company elected to account for the loans drawn under the credit facility under the fair value option in accordance with ASC 825. The Company estimated the fair value of the loans drawn under the credit facility using a third-party appraiser and the assumptions were based on repayments scenario analysis that considered various possible outcomes regarding the timing of sale of the project and estimations regarding Company’s future fundraising.
The
interest rate was determined, among other things, using the Ba2 yield curve as of March 31, 2025, at
NOTE 8 – A CONSOLIDATED ENTITY
On
February 24, 2025, the Company entered into a shareholders agreement (the “Italy Agreement”) with Solterra Brand Services
Italy SRL (“SB”) and SB Impact 4 LTD, a wholly owned subsidiary of SB (“SBI4”) pursuant to which the Company purchased
The
Company will lend €
As of March 31, 2025, the Company has funded €
NOTE 9 – COMMON STOCK AND WARRANTS
| 1. | On
January 2, 2025, the Company consummated a Private Placement transactions contemplated
by the securities purchase agreement, dated December 10, 2024, and issued shares;
pre-funded warrants to purchase |
During
February and March 2025, the Company issued
The Company considered the guidelines of ASC 815 and determined that the warrants issued in the Private Placement meet the definition of a liability and were therefore classified as warrant liabilities in the balance sheet. The pre-funded warrants were classified as equity.
Upon
initial recognition, the Company calculated the warrant liabilities at their fair value at $
On
March 14, 2025, holders of warrants to purchase
| 18 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
NOTE 9 – COMMON STOCK (continued)
As
of March 31, 2025, the Company calculated the fair value of the remaining warrant liabilities, resulting in a non-cash gain of approximately
$
The fair value of the warrant liabilities was determined using a Black-Scholes option pricing module. The assumptions used to perform the calculations are detailed below:
| Fair value of the conversion feature | January 2, 2025 | March 14, 2025 | March 31, 2025 | |||||||||
| Expected volatility (%) (*) | % | % | % | |||||||||
| Risk-free interest rate (%) | % | % | % | |||||||||
| Expected dividend yield | % | % | % | |||||||||
| Expected term of options (years) | ||||||||||||
| Exercise price (US dollars) | $ | $ | $ | |||||||||
| Share price (US dollars) | $ | $ | $ | |||||||||
| Fair value (U.S. dollars) | $ | $ | $ | |||||||||
| (*) |
| 2. | During the three months ended March 31, 2025, the Company recorded share base compensation expenses in General and Administrative expenses in the amount of $ related to shares issued by the company to service providers by December 31, 2023. |
| Number of Options | Weighted Average Exercise Price | |||||||
| Outstanding at December 31, 2024 | ||||||||
| Granted | ||||||||
| Exercised | ||||||||
| Forfeited or expired | ( | ) | ||||||
| Outstanding at March 31, 2025 | ||||||||
| Number of options exercisable at March 31, 2025 | ||||||||
The aggregate intrinsic value of the awards outstanding as of March 31, 2025 was $. These amounts represent the total intrinsic value, based on the Company’s stock price of $ as of March 31, 2025, less the weighted exercise price. This represents the potential amount received by the option holders had all option holders exercised their options as of that date.
Costs incurred in respect of stock-options compensation for employees and directors for the three months ended March 31, 2025 and 2024 were less than $ and $, respectively.
NOTE 11 – RELATED PARTIES
| A. | Transactions and balances with related parties |
| Three months ended March 31 | ||||||||
| 2025 | 2024 | |||||||
| General and administrative expenses: | ||||||||
| Directors’ compensation | ||||||||
| Salaries and fees to officers | ||||||||
| Total General and administrative expenses | ||||||||
| B. | Balances with related parties and officers: |
| As of March 31, | As of December 31, | |||||||
| 2025 | 2024 | |||||||
| Other accounts payables | ||||||||
| 19 |
N2OFF, INC.
NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS (unaudited)
NOTE 12 – SEGMENT REPORTING
| A. | Information about reported segment profit or loss and assets |
As
of December 31, 2024, the Company had
As
of March 31, 2025, management estimated that N2O emissions Global warming solutions activity
did not meet the quantitative thresholds for separate segment reporting under ASC 280 while additional investments
in Renewable energy projects, including new investments made during the period, meet the quantitative thresholds for separate segment reporting under ASC 280 the Company determined that it has
The chief operating decision maker evaluates segment performance primarily based on segment operating loss.
The following table presents information about the Company’s reportable segments for the year ended March 31, 2025 and 2024:
| Three months ended | ||||||||
| March 31 | ||||||||
| 2025 | 2024 | |||||||
| Revenue from pathogen prevention and prolong shelf life | ||||||||
| Cost related to pathogen prevention and prolong shelf life | ( | ) | ( | ) | ||||
| Operating loss from Pathogen prevention and prolong shelf life | ( | ) | ( | ) | ||||
| Revenue from renewable energy projects | ||||||||
| Cost related to renewable energy projects | ( | ) | ||||||
| Operating loss from Renewable energy projects | ( | ) | ||||||
| Research and development expenses | ( | ) | ||||||
| Professional services | ( | ) | ( | ) | ||||
| Share base compensation | ( | ) | ( | ) | ||||
| Depreciation | ( | ) | ( | ) | ||||
Interest of loans | ( | ) | ||||||
| Other general and administrative expenses | ( | ) | ( | ) | ||||
| Total Operating loss | ( | ) | ( | ) | ||||
| Financing (expenses) income, net | ( | ) | ||||||
| Other loss | ( | ) | ||||||
| Changes in fair value of investments measured under the fair value option | ||||||||
| Net loss | ( | ) | ( | ) | ||||
NOTE 13 – SUBSEQUENT EVENTS
| 1. |
During April, 2025 and May, 2025, the Company issued |
| 2. | On April 9, 2025, the Company entered into a share purchase agreement (the “SPA”), by and among the Company, Yaaran Investments Ltd., a company organized under the laws of the State of Israel (“Yaaran”), and NTWO OFF, which provides for the sale by the Company to Yaaran of ordinary shares of NTWO OFF, representing % of the Company’s shares of NTWO OFF, for NIS thousand. |
The SPA provides customary representations, warranties and covenants by the Company, NTWO OFF and Yaaran, and further provides that all obligations arising under the Stock Exchange Agreement, dated July 11, 2023, between the Company, Yaaran and NTWO OFF, as amended on July 24, 2023 and on August 13, 2023, will be null and void and of no further force and effect.
| 3. | On May 11, 2025 the board of directors of the Company approved the issuance of an equity grant to executive officers and consultants amounting to a total of and shares of common stock, par value $, respectively. |
| 4. | On May 12, 2025, the Company, entered into a Purchase Agreement (the “Agreement”)
with YA II PN, Ltd. (the “Investor”) pursuant to which the Investor committed to advance the Company the aggregate principal
amount of $ |
The Notes to be issued at each Closing will
be issued at a purchase price equal to
The Company paid the Investor a
structuring fee of $
| 20 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and related notes included elsewhere in this Quarterly Report. In addition to historical information, the following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements” for a discussion of the uncertainties and assumptions associated with these statements. Our actual results may differ materially from those discussed below.
Overview
We 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 majority-owned Israeli subsidiary and our joint venture:
(1) Save Foods Ltd. (“Save Foods”), 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.
(2) A joint venture with Solterra Renewable Energy Ltd. (“Solterra”), which operates in the solar energy industry and presents certain investment opportunities in solar PV projects.
Save Foods’ solutions are based on its proprietary blend of food acids combined with certain types of oxidizing agent-based sanitizers and in some cases with fungicides at low concentrations. Save Foods’ products have a synergistic effect when combined with these oxidizing agent-based sanitizers and fungicides. Save Foods’ “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 Save Foods’ products is that its ingredients do not leave any toxicological residues on the fresh produce it treats. In contrast, by forming a temporary protective shield around the fresh produce Save Foods treats, its products make it difficult for pathogens to develop and potentially provide protection which also reduces cross-contamination.
Solterra engages in the development of renewable energy projects through its subsidiaries. Currently, operations are conducted in Italy, Poland, and Germany, with potential expansion to additional countries in the future. Solterra’s business strategy primarily involves selling renewable energy projects to third parties at various stages of development, from the initial land identification and project advancement through construction, operation, or sale to a third party. Currently, most projects are expected to be sold at various development stages, with the possibility of a larger portion of projects being held long-term for operation by Solterra in the future.
Recent Developments
Purchase Agreement
On May 12, 2025, we entered into a Purchase Agreement (the “Agreement”) with YA II PN, Ltd. (the “Investor”) pursuant to which the Investor committed to advance us the aggregate principal amount of $3,000,000, of which (i) up to $1,500,000 will be made available within 60 days following the date a new registration statement has been filed by us with the SEC registering the resale of the shares of common stock issuable pursuant to the Standby Equity Purchase Agreement dated as of December 22, 2023 (the “SEPA”) between us and the Investor (the “First Closing”), and (ii) up to $1,500,000 will be made available within 60 days following the date that said registration statement is declared effective by the SEC (the “Second Closing,” and together with the First Closing, each, a “Closing”). A balance of approximately $16 million remains available under the SEPA, however, all of the shares of common stock previously registered under a registration statement which was declared effective by the SEC on February 6, 2025 (registration statement no. 333-276474) have been sold. In order to continue to access the SEPA, we need to register additional shares of common stock to be offered and sold to the Investor pursuant to the terms of the SEPA. The Second Closing must take place within 180 days of the First Closing.
| 21 |
Pursuant to the terms of the Agreement, among other things, we will not incur any additional debt other than as permitted by the Agreement and will not issue any securities with a conversion price that is based on the price of our shares of common stock, including any reset provisions or any equity line of credit or similar arrangements. We are further prohibited from selling securities at an implied discount to the market price in excess of 30%. Any equity financing permitted by the Investor will be used by us to repay the Notes.
The Notes to be issued at each Closing will be issued at a purchase price equal to 100% of the amount advanced to us, bear interest at 8% per annum and mature 12 months from issuance. Sixty days after the issuance of each Note, we will pay the Investor in ten equal monthly installments $150,000 of principal and accrued and unpaid interest thereon. Such monthly installments can be made, at our option, in cash or by submitting an advance notice pursuant to the SEPA, or any combination thereof. The Note provides for typical events of default, including our failure to remain on The Nasdaq Capital Market LLC or file with the SEC any periodic report; upon an event of default interest accrues at the rate of 18% per annum. We have the right to prepay all or a portion of the outstanding principal and accrued interest thereon by paying a prepayment premium of 5% of the principal amount of each prepayment.
We paid the Investor a structuring fee of $15,000 and will issue 675,675 shares of common stock to the Investor which represents $300,000 worth of shares of common stock based on the last closing price of the shares of common stock immediately before the execution and delivery of the Agreement.
Issuances to certain consultants and officers
On May 11, 2025, we issued (i) 300,000 shares of common stock to a consultant for accounting and controller services provided to the Company; (ii) 600,000 shares of common stock to David Palach, our Chief Executive Officer, and (iii) 300,000 shares of common stock to Lital Barda, our Chief Financial Officer, under our 2022 Share Incentive Plan and an aggregate of 3,200,000 shares of common stock outside of such Plan to consultants in consideration of various financial, investor relations and business development services provided to the Company.
NTWO OFF Ltd. Purchase Agreement
On April 9, 2025, we entered into a share purchase agreement (the “NTWO Agreement”), with Yaaran Investments Ltd., a company organized under the laws of the State of Israel (“Yaaran”), and NTWO OFF Ltd., our former 60% owned subsidiary (“NTWO”), pursuant to which we sold 4,200,000 ordinary shares, representing all of our share ownership in NTWO, toYaaran for NIS 15,000. The NTWO Agreement also provided that all obligations under the Stock Exchange Agreement, dated July 11, 2023, between us, Yaaran and NTWO, as amended on July 24, 2023 and August 13, 2023, are null and void and of no further force and effect. Upon the consummation of NTWO Agreement, each of our representatives on the board of directors of NTWO, David Palach and Udi Kalifi, resigned.
Results of Operations
Revenues and Cost of Revenues
Our total revenue consists of the sale of products and our cost of revenues consists of cost of products.
The following table sets forth our revenues and costs of revenues:
Three Months Ended March 31, | ||||||||
| U.S. dollars in thousands | 2025 | 2024 | ||||||
| Revenues from sales of products | 66,000 | 44,000 | ||||||
| Cost of sales | (14,000 | ) | (28,000 | ) | ||||
| Gross profit | 52,000 | 16,000 | ||||||
Operating Expenses
Our operating expenses consist of three components — research and development expenses, selling and marketing expenses and general and administrative expenses.
| 22 |
Research and Development Expenses
Our research and development expenses consist primarily of professional fees and other related research and development expenses.
Three Months Ended March 31, | ||||||||
| U.S. dollars in thousands | 2025 | 2024 | ||||||
| Subcontractors | 20,000 | 113,000 | ||||||
| Depreciation | - | 1,000 | ||||||
| Other expenses | - | 2,000 | ||||||
| Total | 20,000 | 116,000 | ||||||
Selling and Marketing Expenses
Selling and marketing expenses consist primarily of salaries and related expenses, professional fees, travel and other expenses.
Three Months Ended March 31, | ||||||||
| U.S. dollars in thousands | 2025 | 2024 | ||||||
| Salaries and related expenses | 14,000 | 25,000 | ||||||
| Professional fees | 15,000 | 2,000 | ||||||
| Travel expenses | - | 6,000 | ||||||
| Other expenses | 18,000 | 24,000 | ||||||
| Total | 47,000 | 57,000 | ||||||
General and Administrative Expenses
General and administrative expenses consist primarily of professional services, share based compensation, salaries, insurance and other non-personnel related expenses.
Three Months Ended March 31, | ||||||||
| U.S. dollars in thousands | 2025 | 2024 | ||||||
| Professional services | 425,000 | 442,000 | ||||||
| Share based compensation | 41,000 | 140,000 | ||||||
| Salaries and related expenses | 29,000 | 40,000 | ||||||
| Legal expenses | 39,000 | 50,000 | ||||||
| Insurance | 39,000 | 43,000 | ||||||
| Registration fees | 19,000 | 14,000 | ||||||
| Other expenses | 12,000 | 13,000 | ||||||
| Total | 604,000 | 742,000 | ||||||
Three months ended March 31, 2025 compared to three months ended March 31, 2024
Revenues
Revenues for the three months ended March 31, 2025 were $66,000, an increase of $22,000 or 50%, compared to $44,000 during the three months ended March 31, 2024. The increase is mainly a result of an increase in sales to our US client.
| 23 |
Cost of Sales
Cost of sales consists primarily of salaries, materials, and overhead costs of manufacturing our products. Cost of sales for the three months ended March 31, 2025 was $14,000, a decrease of $14,000, or 50%, compared to the cost of sales of $28,000 for the three months ended March 31, 2024. The decrease is mainly a result of an inventory write-off in Turkey in 2024 and a decrease in salaries.
Gross Profit
Gross profit for the three months ended March 31, 2025 was $52,000, an increase of $36,000, or 225%, compared to a gross profit of $16,000 for the three months ended March 31, 2024. The increase is mainly a result of the decrease in cost of sales.
Research and Development Expenses
Research and development expenses consist of service providers’ costs and overhead expenses. Research and development expenses for the three months ended March 31, 2025 were $20,000, a decrease of $96,000, or 83%, compared to research and development expenses of $116,000 for the three months ended March 31, 2024. The decrease is mainly attributable to decrease in professional fees associated with NTWO OFF Ltd.’s activities.
Selling and Marketing Expenses
Selling and marketing expenses consisted primarily of salaries and related costs for selling and marketing personnel, travel related expenses and services providers. Selling and marketing expenses for the three months ended March 31, 2025 were $47,000, a decrease of $10,000, or 19%, compared to total selling and marketing expenses of $57,000 for the three months ended March 31, 2024. The decrease is mainly attributable to the decrease in salaries, and related costs associated with our sales, resulting from a reduction in personnel following our cost reduction measures in 2024 offset by an increase in professional fees.
General and Administrative Expenses
General and administrative expenses consisted primarily of professional services, share based compensation and salaries and related expenses, as well as other non-personnel related expenses such as legal expenses, directors fees and insurance costs. General and administrative expenses for the three months ended March 31, 2025 were $604,000, a decrease of $138,000, or 19%, compared to general and administrative expenses of $742,000 for the three months ended March 31, 2024. The decrease is mainly a result of the decrease in share-based compensation, professional services and insurance costs.
Financing (expenses) Income, Net
Financing expenses, net for the three months ended March 31, 2025 was $813,000, an increase of $818,000, or 16,360%, compared to financing income, net of $5,000 for the three months ended March 31, 2024. The increase is mainly a result of an increase in financing expenses related to changes in the fair value of PIPE’s warrant liability and credit facility.
Total Comprehensive Loss
As a result of the foregoing, our total comprehensive loss for the three months ended March 31, 2025 was $1,257,000 compared to $822,000 for the three months ended March 31, 2024, an increase of $435,000, or 53%.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. Since our inception through March 31, 2025, we have funded our operations, principally with the issuance of equity and debt.
| 24 |
As of March 31, 2025, we had cash and cash equivalents of $2,724,000, as compared to $3,490,000 as of March 31, 2024. As of March 31, 2025, we had a working capital of $3,359,000, as compared to $3,861,000 as of March 31, 2024. The decrease in our cash balance is mainly attributable to cash used in operations and cash used in investing activities offset by cash provided by financing activities.
On August 18, 2022, we issued an aggregate of 228,572 shares of common stock at a public offering price of $21.00 per share in an underwritten offering for gross proceeds of approximately $4,800,000. In connection therewith, we granted the underwriter a 45-day option to purchase up to 34,286 additional shares of common stock at the public offering price of $21.00 per share, less underwriting discounts and commissions solely to cover over-allotments and issued ThinkEquity LLC a five-year warrant to purchase up to 11,429 shares of common stock, at a per share exercise price equal to 125% of the August 2022 Underwritten Offering price per share of common stock.
On July 23, 2023, we entered into a standby equity purchase agreement with the Investor, pursuant to which the Investor agreed to purchase up to $3,500,000 shares of our common stock for 40 months from the date of the purchase agreement at a price per share equal to 94% of the lowest volume-weighted average price (“VWAP”) of the common stock for the three days prior to the delivery of each advance notice from us, subject to certain limitations, including that (i) the Investor cannot purchase a number of shares that would result in it beneficially owning more than 4.99% of our outstanding shares of common stock. In December 2023, we completed an investment round in the aggregate amount of $3,500,000.
On December 22, 2023, we entered into an additional standby equity purchase agreement with the Investor, pursuant to which the Investor has agreed to purchase up to $20 million shares of our common stock for 36 months from the date of the purchase agreement at a price per share equal to 94% of the lowest VWAP of our common stock for the three trading days immediately following the delivery of each advance notice from us. The agreement will terminate automatically on the earlier of January 1, 2027, or when the Investor has purchased an aggregate of $20 million of our shares of common stock. We have the right to terminate the purchase agreement upon five trading days’ prior written notice to the Investor. As of May 15, 2025, we have sold 6,666,667 shares of common stock at an average purchase price of $0.47 to the Investor.
In connection with and subject to the satisfaction of certain conditions set forth in the purchase agreement, upon our request, the Investor pre-advanced to us up to $3,000,000 of the $20,000,000 commitment amount (a “Pre-Advance”), with each Pre-Advance to be evidenced by a promissory note (each, a “Note”). The Pre-Advance made to us will be subject to a 3% discount to the principal amount equal to each Note. Each Note accrues interest on the outstanding principal balance at the rate of 8% per annum. The Company is required to pay, on a monthly basis, one tenth of the outstanding principal amount of each Note, together with accrued and unpaid interest, either (i) in cash or (ii) by submitting an Advance notice pursuant to the purchase agreement and selling the Investor shares, or any combination of (i) or (ii) as determined by us. The initial repayment is due 60 days after the issuance of a Note, followed by subsequent payments due every 30 days after the previous payment. Unless otherwise agreed to by the Investor, any funds received by us pursuant to the purchase agreement for the sale of shares will first be used to satisfy any payments due under an outstanding.
A balance of approximately $16 million remains available under the standby equity purchase agreement, accordingly, as described above in Recent Developments, on May 12, 2025, we entered into a purchase agreement with the Investor pursuant to which the Investor committed to advance us the aggregate principal amount of $3,000,000.
The table below presents our cash flows for the periods indicated:
Three Months Ended March 31, | ||||||||
| 2025 | 2024 | |||||||
| Net cash used in operating activities | (809,000 | ) | (1,008,000 | ) | ||||
| Net cash used in investing activities | (1,176,000 | ) | - | |||||
| Net cash provided by financing activities | 2,532,000 | 40,000 | ||||||
| Effect of exchange rate changes on cash and cash equivalents and restricted cash | (9,000 | ) | 3,000 | |||||
| Increase (decrease) in cash and cash equivalents | 538,000 | (965,000 | ) | |||||
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Going Concern
Since our incorporation, we incurred losses from operations and net cash outflows from operating activities as disclosed in the consolidated statements of operations and cash flows, respectively. As of March 31, 2025, we had an accumulated deficit of $35,746,000, and we expect to incur losses for the foreseeable future. We have financed our operations mainly through fundraising from various investors and have limited revenue from our products and therefore are dependent upon external sources to finance our operations. There can be no assurance that we will succeed in obtaining the necessary financing to continue our operations. These factors raise substantial doubt about our ability to continue as a going concern through at least twelve months from the date of this Quarterly Report.
We believe that our existing capital resources will be sufficient to support our operating plan through the end of the fourth quarter of 2025; however, there can be no assurance of this. We will likely seek to raise additional capital to support our growth or other strategic initiatives through the issuance of debt, equity, or a combination thereof. There can be no assurance we will be successful in raising additional capital on favorable terms, or at all.
As a result, there is substantial doubt about our ability to continue as a going concern. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any of our equity, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If we issue debt securities, there may be negative covenants which may restrict our company’s activities. If adequate funds are not available to our company when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy. The financial statements included in this Quarterly Report do not include adjustments for measurement or presentation of assets and liabilities, which may be required should we fail to operate as a going concern.
Operating Activities
Net cash used in operating activities was $809,000 for the three months ended March 31, 2025, as compared to $1,008,000 for the three months ended March 31, 2024. The decrease is mainly attributable to a decrease in our cash operating expenses and decrease in the change in accounts payable compared to the three months ended March 31, 2024 .
Investing Activities
Net cash used in investing activities was $1,176,000 for the three months ended March 31, 2025, as compared to net cash used in investing activities of $0 for the three months ended March 31, 2024. The increase is mainly attributable to the investment in renewable energy projects and loans to Solterra.
Financing Activities
Net cash provided by financing activities was $2,532,000 for the three months ended March 31, 2025, as compared to net cash provided by financing activities of $40,000 for the three months ended March 31, 2024. The increase is the result of proceeds from a private offering of common stock and warrants and a credit facility.
Item 3. Quantitative And Qualitative Disclosures About Market Risk.
We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information required by this Item.
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Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and our Principal Financial Officer or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our management, including each of our Principal Executive Officer and our Principal Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of March 31, 2025. Based on such evaluation, each of our Principal Executive Officer and Principal Financial Officer has concluded that, as of March 31, 2025, our disclosure controls and procedures were effective.
Changes in Internal Control over Financial Reporting
During the period covered by this Quarterly Report, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. 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.
Item 1A. Risk Factors.
We are a smaller reporting company, as defined by Rule 12b-2 of the Exchange Act, and are not required to provide the information under this item.
Item 2. Unregistered Sales Of Equity Securities And Use Of Proceeds
There were no sales of equity securities during the period covered by this Quarterly Report that were not registered under the Securities Act and were not previously reported in a Current Report on Form 8-K filed by the Company.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure
Not applicable.
Item 5. Other Information
During
the three months ended March 31, 2025, none of the Company’s directors or officers
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Item 6. Exhibits.
| Exhibit | ||
| Number | Description | |
| 31.1* | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
| 31.2* | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act | |
| 32.1** | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2** | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.INS* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) |
| * | Filed herewith. |
| ** | Furnished herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: May 15, 2025 | N2OFF, INC. | |
| By: | /s/ David Palach | |
| Name: | David Palach | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| Dated: May 15, 2025 | By: | /s/ Lital Barda |
| Name: | Lital Barda | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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