Business Context and Reporting Period
Company: N2OFF, Inc. (Ticker: NITO)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended June 30, 2025
Business Overview: N2OFF operates in two primary segments: (1) Pathogen prevention and shelf-life extension for fresh produce via its subsidiary Save Foods Ltd., and (2) Renewable energy projects (solar and battery storage) via NITO Renewable Energy, Inc. The company sold its N2O emissions subsidiary (NTWO OFF) in April 2025, classifying it as a discontinued operation. The company is headquartered in Israel and listed on the Nasdaq Capital Market.
Key Financial Metrics
| Metric (USD in thousands) | Six Months Ended June 30, 2025 | Three Months Ended June 30, 2025 |
|---|---|---|
| Revenues | $66 | $0 |
| Gross Profit | $49 | $(2) |
| Operating Loss | $(3,452) | $(2,832) |
| Net Loss (Continuing Ops) | $(5,809) | $(4,552) |
| Net Loss (Total) | $(5,765) | $(4,508) |
| Cash and Cash Equivalents | $3,138 (as of June 30, 2025) | N/A |
| Working Capital | $3,956 (as of June 30, 2025) | N/A |
| Accumulated Deficit | $(40,255) | N/A |
Debt and Liquidity: The company holds a credit facility with L.I.A. Pure Capital Ltd. with a fair value of $699,000 as of June 30, 2025. Cash provided by financing activities for the six months ended June 30, 2025, was $3,934,000, primarily from a PIPE agreement and credit facility drawdowns.
Material Changes vs. Prior Period
- Revenue: Six-month revenue increased slightly to $66,000 from $61,000 in the prior year period, driven by US client sales. However, Q2 2025 revenue was $0 compared to $17,000 in Q2 2024 due to decreased sales in Israel.
- Expenses: General and Administrative (G&A) expenses surged to $3,377,000 for the six months ended June 30, 2025, from $1,522,000 in the prior year. This 122% increase was primarily driven by $2,029,000 in share-based compensation and increased legal fees.
- Financing Expenses: Net financing expenses increased dramatically to $2,011,000 (six months) from $74,000 (prior year), largely due to non-cash losses from changes in the fair value of warrant liabilities and credit facilities.
- Investment Impairment: The company recorded a full impairment of $602,000 on its investment in Plantify Foods Inc. due to the insolvency of Plantify's operating subsidiary and lack of market data.
- Discontinued Operations: The sale of NTWO OFF resulted in a $44,000 gain, reclassifying the segment as discontinued operations.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern: Management has expressed substantial doubt about the company's ability to continue as a going concern. Cash is projected to be sufficient only until the end of Q1 2026. Additional financing is required to continue operations.
- Geopolitical Risk: Operations in Israel are significantly impacted by ongoing conflicts (Hamas, Hezbollah, Iran). A temporary shutdown occurred in June 2025 due to "Operation Rising Lion." The war has also severely impacted the company's investment in Plantify Foods.
- Strategic Transactions:
- MitoCareX Acquisition: Pending stockholder approval (scheduled for September 25, 2025) to acquire MitoCareX Bio Ltd. The deal involves cash and significant equity issuance (40% of fully diluted capital).
- Renewable Energy: Active development of solar and battery storage projects in Italy, Poland, and Germany via joint ventures and loans.
- Unusual Items: Significant non-cash losses were recorded due to fair value adjustments on warrant liabilities (approx. $7 million loss for the six months) and credit facilities. The company also issued substantial shares for services and commitment fees.
Investor Verification Checklist
- Cash Runway: Verify the accuracy of the projection that cash will last only until Q1 2026 and the status of the $3,000,000 pre-advance commitment from YA II PN, Ltd.
- MitoCareX Deal: Confirm the outcome of the stockholder vote on September 25, 2025, regarding the acquisition of MitoCareX, which would result in significant dilution.
- Plantify Impairment: Review the valuation methodology used to write down the Plantify investment to zero and assess remaining exposure to the subsidiary.
- Warrant Liability Volatility: Monitor the fair value of outstanding warrant liabilities, as fluctuations in stock price and volatility assumptions create significant non-cash earnings volatility.
- Israel Operations: Assess the current operational status of the Israeli subsidiary and the impact of regional conflict on revenue generation and supply chains.