Save Foods, Inc. — Q1 2022 Form 10-Q
Reporting period: Three months ended March 31, 2022; unaudited U.S. GAAP financial statements. The filing identifies Save Foods, Inc. (Nasdaq: SVFD), not Nexentis Technologies Inc., as the registrant. Save Foods develops produce treatments intended to improve food safety and shelf life.
Financial results and position
| Metric | Q1 2022 / March 31, 2022 | Comparable period / December 31, 2021 |
|---|---|---|
| Revenue | $87,630 | $123,074 in Q1 2021 |
| Gross profit | $45,781; approximately 52.3% margin | $120,141; approximately 97.6% margin in Q1 2021 |
| Operating loss | $1,345,674 | $246,879 in Q1 2021 |
| Net loss | $1,339,770 | $494,295 in Q1 2021 |
| Loss per share, basic and diluted | $0.47 | $0.31 in Q1 2021 |
| Cash from operating activities | $(1,087,463) | $(84,548) in Q1 2021 |
| Cash and cash equivalents | $5,644,466 | $6,750,938 at December 31, 2021 |
| Working capital | $5,215,677 | Positive at March 31, 2022; filing compares this with negative $202,401 at March 31, 2021 |
| Total liabilities | $1,255,450 | $1,184,668 at December 31, 2021 |
Operating expenses were $209,362 for research and development, $178,136 for selling and marketing, and $1,003,957 for general and administrative. The balance sheet reports $6,197 of short-term bank loans and $102,754 of operating lease liabilities. Cash, cash equivalents and restricted cash totaled $5,699,882 at quarter-end.
Changes versus Q1 2021
- Revenue declined about 28.8%; management attributed the decrease mainly to weather-related lower citrus production.
- Cost of sales rose to $41,849 from $2,933, which, alongside lower sales, reduced gross profit.
- Research and development expense increased 200% to $209,362; selling and marketing rose 302% to $178,136; and general and administrative expense increased 297% to $1,003,957.
- Net loss increased about 171% to $1,339,770. Management cited higher operating expenses, partly offset by a $5,904 net financing income versus $247,416 of net financing expense in Q1 2021.
- Operating cash use increased to $1,087,463. Investing activities used $16,342; financing activities used $2,019, compared with $207,345 of financing cash provided in Q1 2021.
Outlook, risks and notable items
- No quantified revenue or earnings guidance is provided. Management expects research and development and selling and marketing expenses to increase as product development, trials, commercial validation and market expansion continue.
- The company reports no backlog or firm customer commitments. It warns that sales depend on commercial success, market acceptance and regulatory approvals.
- Management identifies continuing operating losses, future capital needs and ability to raise funds as risks. COVID-19 and supply-chain uncertainty remain difficult to assess; manufacturing was continuing without interruption at the time of the filing.
- Revenue was concentrated: three customers accounted for the reported Q1 2022 sales, with sales of $40,469, $35,948 and $11,213. The filing also cites reliance on limited suppliers, competition, regulatory requirements, product trials, and Nasdaq listing compliance as risks.
- During the quarter, the company issued shares to consultants and a director and entered into consultant and investor-relations arrangements involving shares, warrants or fees. The CFO changed after quarter-end: an interim CFO resigned April 18, and a new CFO was appointed effective that date.
- Disclosure controls and procedures were assessed as effective as of March 31, 2022. The filing reports no material change in internal control over financial reporting during the quarter.
Important facts to verify
- Issuer identity: The supplied metadata names Nexentis Technologies Inc., but this filing is for Save Foods, Inc. (SVFD).
- Gross-profit inconsistency: The financial statements and narrative report Q1 2022 gross profit of $45,781, while a table in MD&A displays it with a negative sign. Confirm the intended presentation; the margin above uses the positive value reported in the statements and narrative.
- Customer concentration and sales drivers: Verify the durability of demand given the small revenue base, customer concentration, and weather-related citrus-production impact.
- Cash runway and funding needs: Assess liquidity against the reported operating cash burn and management’s stated need for capital to fund ongoing operations.
- Commercialization and regulatory progress: Track product trials, approvals, market acceptance and the expected increase in development and selling costs.