Save Foods, Inc. — 2019 Form 10-K
Entity and period: The filing is for Save Foods, Inc., not Nexentis Technologies Inc. It covers the fiscal year ended December 31, 2019, rather than a standalone 2019 fourth quarter, and was signed March 30, 2020.
Business context
Save Foods develops produce sanitizing products intended to improve food safety, extend shelf life and reduce food waste. Its newer SF3 products, based on food acids and an oxidizer, remained under development and regulatory review. The company reported that its commercial focus had shifted toward research, product development and approvals; it had no significant customer agreements and stated that it had no paying customers, while also reporting product revenue and paid pilots.
Financial performance and liquidity
| Metric (US dollars unless noted) | 2019 | 2018 |
|---|---|---|
| Revenue | $175,823 | $426,591 |
| Gross profit (loss), audited statements | $31,275 | $315,500 |
| Operating loss | $(1,931,305) | $(518,659) |
| Net loss | $(1,990,403) | $(444,985) |
| Loss per share, basic and diluted | $(0.20) | $(0.05) |
| Cash and cash equivalents at year-end | $290,815 | $439,806 |
| Net cash used in operating activities | $(1,244,772) | $(506,499) |
| Working capital | $(150,230) | $192,982 |
| Total assets / total liabilities | $664,670 / $1,066,789 | $859,211 / $647,696 |
Revenue fell 59%, while operating costs and losses increased substantially. Research and development expense rose to $615,623 from $357,077; selling and marketing expense to $342,058 from $140,727; and general and administrative expense to $1,004,899 from $336,355. The audited statements report gross profit of $31,275; the MD&A gives $31,378 and reports several expense figures that differ slightly from the audited statements.
At year-end, liabilities included $623,826 of current liabilities, $285,917 of convertible loans, and $22,185 of bank loans, of which $7,230 was current. Financing activities provided $1,177,436, including $840,693 from stock issuance and $379,000 in convertible loans. Outstanding common shares increased to 10,209,487 from 9,228,339. The company reported an accumulated deficit of $10,684,508 and stockholders’ deficit of $402,119.
Outlook, risks and unusual items
- Going concern and funding: The auditor’s report highlights substantial doubt about the company’s ability to continue as a going concern. Management said existing resources, including private-placement proceeds, would not fund planned operations for the next 12 months and estimated a minimum $2 million requirement. Additional financing was not assured.
- Regulatory milestones: The SF3 registration dossier had not yet been submitted to the EPA or FDA; studies remained in progress. Management expected CDPR and FDA approvals by the end of 2020, subject to completion and review. Israel had authorized field efficacy testing. These were expectations, not assured outcomes.
- Commercialization: The company planned pilots and market entry for SF3, SpuDefender and FreshProtect, but disclosed limited sales infrastructure, no firm customer commitments and material dependence on regulatory clearance and market acceptance.
- COVID-19: The filing describes potential effects on 2020 sales, financing, supply and staffing; the impact was unknown and not reasonably estimable at filing.
- Controls and governance: Management concluded disclosure controls were ineffective at December 31, 2019 because of material weaknesses. The company had no audit committee, no directors classified as independent and no code of ethics applicable to senior financial officers.
- Other risks: The filing highlights continuing losses, potential dilution, supplier concentration, foreign-exchange exposure, regulatory and patent risks, geopolitical risks related to Israel, and the illiquidity and volatility of its OTC-traded shares.
Important facts for investors to verify
- Confirm the issuer identity: the supplied filing names Save Foods, Inc., despite the request metadata naming Nexentis Technologies Inc.
- Reconcile audited financial-statement figures with the differing MD&A amounts, particularly cost of sales, gross profit and operating expense totals.
- Clarify the reported revenue and paid-pilot activity against the statement that the company had no paying customers.
- Review cash runway, subsequent financing, conversion terms and dilution; the company reported $290,815 cash at year-end, a $2 million minimum funding need and $135,000 of additional convertible-loan proceeds received in January and March 2020.
- Track submission and review of SF3 regulatory materials, completion of studies, and the status of commercial pilots and customer commitments.
- Assess remediation of the disclosed material weaknesses and the implications of the going-concern warning.