Attached files
file | filename |
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EX-31.2 - EX-31.2 - PIMI AGRO CLEANTECH, INC. | d28230_ex31-2.htm |
EX-31.1 - EX-31.1 - PIMI AGRO CLEANTECH, INC. | d28230_ex31-1.htm |
EX-32.2 - EX-32.2 - PIMI AGRO CLEANTECH, INC. | d28230_ex32-2.htm |
EX-32.1 - EX-32.1 - PIMI AGRO CLEANTECH, INC. | d28230_ex32-1.htm |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
| (Mark One) |
þ | QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|
| For the quarterly period ended March 31, 2011 |
| or |
|
|
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|
|
| For the transition period from to |
Commission file number 333-158986
PIMI AGRO CLEANTECH, INC.
(Exact name of registrant as specified in its charter )
Delaware | 26-4684680 |
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
269 South Beverly Drive suite 1091
Beverly Hills California 90212 USA
(Address of principal executive offices)
(310) 203-8278
(Registrants telephone number, including area code)
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. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months ). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company þ
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act) Yes o No þ
The number of shares of common stock outstanding as of March 31, 2011 was 7,660,964.
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
Condensed Consolidated Financial Statements
as of March 31, 2011 (Unaudited)
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
Condensed Consolidated Financial Statements
as of March 31, 2011 (Unaudited)
Table of Contents
Page | ||||||
---|---|---|---|---|---|---|
Condensed
Consolidated Financial Statements |
||||||
Condensed
Consolidated Balance Sheets |
2 |
|||||
Condensed
Consolidated Statements of Operations |
3 |
|||||
Condensed
Consolidated Statements of Changes in Stockholders Deficit |
4
9 |
|||||
Condensed
Consolidated Statements of Cash Flows |
10 |
|||||
Notes to
Condensed Consolidated Financial Statements |
11
15 |
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
|
US dollars (except share data) |
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
|
March 31, 2011 |
|
December 31, 2010 |
||||||||
(unaudited) | (audited) | ||||||||||
A S S E
T S |
|||||||||||
Current
Assets |
|||||||||||
Cash and cash
equivalents |
251,933 | | |||||||||
Accounts
receivable |
61,312 | 128,695 | |||||||||
Other current
assets |
52,911 | 54,194 | |||||||||
Total
current assets |
366,156 | 182,889 | |||||||||
Property
and Equipment, Net |
35,186 | 36,720 | |||||||||
Funds in
Respect of Employee Rights Upon Retirement |
67,845 | 61,967 | |||||||||
Total
assets |
469,187 | 281,576 | |||||||||
LIABILITIES AND STOCKHOLDERS DEFICIT |
|||||||||||
Current
Liabilities |
|||||||||||
Credit from
banking institution |
| 63,216 | |||||||||
Accounts
payable: |
|||||||||||
Trade |
127,941 | 164,729 | |||||||||
Other |
324,044 | 285,609 | |||||||||
Convertible
Bonds |
144,676 | 126,275 | |||||||||
Total
current liabilities |
596,661 | 639,829 | |||||||||
Liability
for employee rights upon retirement |
71,364 | 60,106 | |||||||||
Total
liabilities |
668,025 | 699,935 | |||||||||
Stockholders Deficit |
|||||||||||
Common stocks
of US$ 0.01 par value (Common stocks): |
|||||||||||
30,000,000
shares authorized as of March 31, 2011 and December 31, 2010; issued and outstanding 7,660,564 shares and 7,160,564 shares as of March 31, 2011 and
December 31, 2010, respectively |
76,604 | 71,604 | |||||||||
Additional
paid in capital |
3,687,287 | 3,284,728 | |||||||||
Accumulated
other comprehensive loss |
(69,780 | ) | (69,882 | ) | |||||||
Accumulated
deficit |
(3,892,949 | ) | (3,704,809 | ) | |||||||
Total
stockholders deficit |
(198,838 | ) | (418,359 | ) | |||||||
Total
liabilities and stockholders deficit |
469,187 | 281,576 |
The accompanying notes are an integral part of the consolidated financial statements.
- 2 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|
US dollars (except share data) |
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three month period ended March 31, |
Cumulative period from January 14, 2004 (date of inception) through March 31, |
||||||||||||||
|
2011 |
|
2010 |
|
2011(*) |
||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Revenues from
sales of products |
93,411 | 37,708 | 637,204 | ||||||||||||
Research and
development expenses |
(177,309 | ) | (156,213 | ) | (3,029,825 | ) | |||||||||
General and
administrative expenses |
(80,131 | ) | (87,470 | ) | (1,311,953 | ) | |||||||||
Operating
loss |
(164,029 | ) | (205,975 | ) | (3,704,574 | ) | |||||||||
Financing
expenses, net |
(24,111 | ) | 991 | (108,041 | ) | ||||||||||
Loss from
continuing operation |
(188,140 | ) | (204,984 | ) | (3,812,615 | ) | |||||||||
Loss from
discontinued operation, net |
| | (80,334 | ) | |||||||||||
Loss for the
period |
(188,140 | ) | (204,984 | ) | (3,892,949 | ) | |||||||||
Loss per
share (basic and diluted) |
(0.03 | ) | (0.03 | ) | |||||||||||
Weighted
average number of shares outstanding (basic and diluted) |
7,055,686 | 6,597,223 |
(*)
As described in Note 1A, the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the Company from its stockholders on April 27, 2009.
The accompanying notes are an integral part of the consolidated financial statements.
- 3 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT (*)
|
US Dollars (except share data) |
|
|||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common stock | Accumulated | ||||||||||||||||||||||||||||||
|
Number of shares |
|
Amount |
|
Additional paid in capital |
|
other comprehensive income (loss) |
|
Receipts on account of shares |
|
Accumulated deficit |
|
Total stockholders equity (deficit) |
||||||||||||||||||
January
14, 2004 (date of inception) |
| | | | | | | ||||||||||||||||||||||||
120,000
common stock issued for cash of US$ 0.002 per share |
120,000 | 1,200 | (932 | ) | | | | 268 | |||||||||||||||||||||||
Balance as
of December 31, 2004 |
120,000 | 1,200 | (932 | ) | | | | 268 | |||||||||||||||||||||||
Loss for the
year |
| | | | | (223,285 | ) | (223,285 | ) | ||||||||||||||||||||||
Gain on
translation of subsidiary functional currency to the reporting currency |
| | | 5,989 | | | 5,989 | ||||||||||||||||||||||||
Total
comprehensive loss |
(217,296 | ) | |||||||||||||||||||||||||||||
Receipts on
account of shares |
| | | | 100,000 | | 100,000 | ||||||||||||||||||||||||
Balance as
of December 31, 2005 |
120,000 | 1,200 | (932 | ) | 5,989 | 100,000 | (223,285 | ) | (117,028 | ) | |||||||||||||||||||||
Loss for the
year |
| | | | | (831,415 | ) | (831,415 | ) | ||||||||||||||||||||||
Loss on
translation of subsidiary functional currency to the reporting currency |
| | | (12,748 | ) | | | (12,748 | ) | ||||||||||||||||||||||
Total
comprehensive loss |
(844,163 | ) | |||||||||||||||||||||||||||||
Issuance of
25,200 common stock for cash of US$ 7.50 per share on January 2, 2006 |
25,200 | 252 | 188,748 | | (100,000 | ) | | 89,000 | |||||||||||||||||||||||
Issuance of
24,000 common stock for cash of US$ 7.56 per share on July 19, 2006 |
24,000 | 240 | 181,293 | | | | 181,533 | ||||||||||||||||||||||||
Issuance of
72,000 common stock for cash of US$ 7.53 per share on December 28, 2006 |
72,000 | 720 | 541,600 | | | | 542,320 | ||||||||||||||||||||||||
Issuance of
1,688 common stock for cash of US$ 8.33 per share on December 28, 2006 |
1,688 | 17 | 14,043 | | | | 14,060 | ||||||||||||||||||||||||
Receipts on
account of shares |
| | | | 33,644 | | 33,644 | ||||||||||||||||||||||||
Balance as
of December 31, 2006 |
242,888 | 2,429 | 924,752 | (6,759 | ) | 33,644 | (1,054,700 | ) | (100,634 | ) |
(*)
As described in Note 1A, the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the Company from its stockholders on April 27, 2009.
The accompanying notes are an integral part of the consolidated financial statements.
- 4 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT (*) (cont.)
|
US Dollars (except share data) |
|
|||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common stock | Accumulated | ||||||||||||||||||||||||||||||
|
Number of shares |
|
Amount |
|
Additional paid in capital |
|
other comprehensive income (loss) |
|
Receipts on account of shares |
|
Accumulated deficit |
|
Total stockholders equity (deficit) |
||||||||||||||||||
Loss for the
year |
| | | | | (341,453 | ) | (341,453 | ) | ||||||||||||||||||||||
Loss on
translation of subsidiary functional currency to the reporting currency |
| | | (23,206 | ) | | | (23,206 | ) | ||||||||||||||||||||||
Total
comprehensive loss |
(364,659 | ) | |||||||||||||||||||||||||||||
Issuance of
8,708 common stock for cash of US$ 2.37 per share, 30,006 common stock for cash of US$ 3.28 per share, 7,754 common stock for cash of US$ 0.0025 per
share and 591 common stock for cash of US$ 3.45 per share in April 2007 |
47,059 | 471 | 119,375 | | (33,644 | ) | | 86,202 | |||||||||||||||||||||||
Issuance of
6,937 common stock for cash of US$ 4.10 per share in June 2007 |
6,937 | 69 | 28,339 | | | | 28,408 | ||||||||||||||||||||||||
Issuance of
747,390 common stock for cash of US$ 0.078 per share in July 2007 |
747,390 | 7,474 | 51,061 | | | | 58,535 | ||||||||||||||||||||||||
Issuance of
996,520 common stock for cash of US$ 0.024 per share in August 2007 |
996,520 | 9,965 | 14,007 | | | | 23,972 | ||||||||||||||||||||||||
Issuance of
996,520 common stock for cash of US$ 0.024 per share in November 2007 |
996,520 | 9,965 | 15,212 | | | | 25,177 | ||||||||||||||||||||||||
Issuance of
996,520 common stock for cash of US$ 0.0026 per share in December 2007 |
996,520 | 9,965 | (7,405 | ) | | | | 2,560 | |||||||||||||||||||||||
Receipts on
account of shares |
| | | | 100,000 | | 100,000 | ||||||||||||||||||||||||
Balance as
of December 31, 2007 |
4,033,834 | 40,338 | 1,145,341 | (29,965 | ) | 100,000 | (1,396,153 | ) | (140,439 | ) |
(*)
As described in Note 1A, the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the Company from its stockholders on April 27, 2009.
The accompanying notes are an integral part of the consolidated financial statements.
- 5 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT (*) (cont.)
|
US Dollars (except share data) |
|
|||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common stock | Accumulated | ||||||||||||||||||||||||||||||
|
Number of shares |
|
Amount |
|
Additional paid in capital |
|
other comprehensive income (loss) |
|
Receipts on account of shares |
|
Accumulated deficit |
|
Total stockholders equity (deficit) |
||||||||||||||||||
Loss for the
year |
| | | | | (602,994 | ) | (602,994 | ) | ||||||||||||||||||||||
Gain on
translation of subsidiary functional currency to the reporting currency |
| | | 109 | | | 109 | ||||||||||||||||||||||||
Total
comprehensive loss |
(602,885 | ) | |||||||||||||||||||||||||||||
Issuance of
716,589 common stock for cash of US$ 0.041 per share in February 2008 |
716,589 | 7,166 | 22,370 | | | | 29,536 | ||||||||||||||||||||||||
Issuance of
235,334 common stock for cash of US$ 0.72 per share in February 2008 |
235,334 | 2,353 | 166,600 | | (100,000 | ) | | 68,953 | |||||||||||||||||||||||
Issuance of
291,515 common stock for cash of US$ 0.69 per share in June 2008 |
291,515 | 2,915 | 197,085 | | | | 200,000 | ||||||||||||||||||||||||
Issuance of
310,382 common stock for cash of US$ 0.71 per share in September 2008 |
310,382 | 3,104 | 216,161 | | | | 219,265 | ||||||||||||||||||||||||
Issuance of
444,004 common stock for cash of US$ 0.74 per share in November 2008 |
444,004 | 4,440 | 323,548 | | | | 327,988 | ||||||||||||||||||||||||
Stock based
compensation |
| | 43,767 | | | | 43,767 | ||||||||||||||||||||||||
Balance as
of December 31, 2008 |
6,031,658 | 60,316 | 2,114,872 | (29,856 | ) | | (1,999,147 | ) | 146,185 |
(*)
As described in Note 1A, the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the Company from its stockholders on April 27, 2009.
The accompanying notes are an integral part of the consolidated financial statements.
- 6 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT (*) (cont.)
|
US Dollars (except share data) |
|
|||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common stock | Accumulated | ||||||||||||||||||||||||||||||
|
Number of shares |
|
Amount |
|
Additional paid in capital |
|
other comprehensive income (loss) |
|
Receipts on account of shares |
|
Accumulated deficit |
|
Total stockholders equity (deficit) |
||||||||||||||||||
Loss for the
year |
| | | | | (1,076,624 | ) | (1,076,624 | ) | ||||||||||||||||||||||
Loss on
translation of subsidiary functional currency to the reporting currency |
| | | (11,810 | ) | | | (11,810 | ) | ||||||||||||||||||||||
Total
comprehensive loss |
(1,088,434 | ) | |||||||||||||||||||||||||||||
Issuance of
26,399 common stock for cash of US$ 1.33 per share in January 2009 |
26,399 | 264 | 34,721 | | | | 34,985 | ||||||||||||||||||||||||
Issuance of
3,373 common stock for cash of US$ 1.33 per share in March 2009 |
3,373 | 34 | 24,966 | | | | 25,000 | ||||||||||||||||||||||||
Issuance of
201,972 common stock for cash of US$ 0.73 per share in March 2009 |
201,972 | 2,020 | 122,980 | | | | 125,000 | ||||||||||||||||||||||||
Issuance of
45,328 common stock for cash of US$ 1.32 per share in March 2009 |
45,328 | 453 | 59,547 | | | | 60,000 | ||||||||||||||||||||||||
Issuance of
4,459 common stock for cash of US$ 1.32 per share in April 2009 |
4,459 | 45 | 5,516 | | | | 5,561 | ||||||||||||||||||||||||
Issuance of
45,328 common stock for cash of US$ 1.32 per share in June 2009 |
45,328 | 453 | 59,547 | | | | 60,000 | ||||||||||||||||||||||||
Issuance of
40,000 common stock for cash of US$ 1.35 per share in June 2009 |
40,000 | 400 | 53,600 | | | | 54,000 | ||||||||||||||||||||||||
Issuance of
20,000 common stock for cash of US$ 1.35 per share in August 2009 |
20,000 | 200 | 26,800 | | | | 27,000 | ||||||||||||||||||||||||
Issuance of
20,000 common stock for cash of US$ 1.35 per share in September 2009 |
20,000 | 200 | 26,800 | | | | 27,000 | ||||||||||||||||||||||||
Issuance of
35,000 common stock for cash of US$ 1.35 per share in October 2009 |
35,000 | 350 | 46,900 | | | | 47,250 | ||||||||||||||||||||||||
Issuance of
45,330 common stock for cash of US$ 1.32 per share in October 2009 |
45,330 | 453 | 59,547 | | | | 60,000 | ||||||||||||||||||||||||
Issuance of
54,263 common stock for cash of US$ 1.35 per share in November 2009 |
54,263 | 542 | 68,193 | | | | 68,735 | ||||||||||||||||||||||||
Stock based
compensation |
| | 91,077 | | | | 91,077 | ||||||||||||||||||||||||
Balance as
of December 31, 2009 |
6,573,110 | 65,730 | 2,795,066 | (41,666 | ) | | (3,075,771 | ) | (256,641 | ) |
(*)
As described in Note 1A, the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the Company from its stockholders on April 27, 2009.
The accompanying notes are an integral part of the consolidated financial statements.
- 7 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT (*) (cont.)
|
US Dollars (except share data) |
|
|||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common stock | Accumulated | ||||||||||||||||||||||||||||||
|
Number of shares |
|
Amount |
|
Additional paid in capital |
|
other comprehensive income (loss) |
|
Receipts on account of shares |
|
Accumulated deficit |
|
Total stockholders equity (deficit) |
||||||||||||||||||
Loss for the
year |
| | | | | (629,038 | ) | (629,038 | ) | ||||||||||||||||||||||
Loss on
translation of subsidiary functional currency to the reporting currency |
| | | (28,216 | ) | | | (28,216 | ) | ||||||||||||||||||||||
Total
comprehensive loss |
(657,254 | ) | |||||||||||||||||||||||||||||
Issuance of
3,225 common stock for cash of US$ 1.55 per share in February 2010 |
3,225 | 32 | 4,968 | | | | 5,000 | ||||||||||||||||||||||||
Issuance of
35,000 common stock for cash of US$ 1.35 per share in February 2010 |
35,000 | 350 | 46,900 | | | | 47,250 | ||||||||||||||||||||||||
Issuance of
common stock and warrants, net of issuance costs in August 2010 |
385,108 | 3,851 | 197,215 | | | | 201,066 | ||||||||||||||||||||||||
Issuance of
134,121 common stock for cash of US$ 0.6 per share in December 2010 |
134,121 | 1,341 | 76,118 | | | | 77,459 | ||||||||||||||||||||||||
Amounts
attributed to detachable warrants issued in connection with convertible bonds |
| | 41,208 | | | | 41,208 | ||||||||||||||||||||||||
Beneficial
conversion feature on convertible bonds |
| | 41,207 | | | | 41,207 | ||||||||||||||||||||||||
Stock based
compensation (**) |
30,000 | 300 | 82,046 | | | | 82,346 | ||||||||||||||||||||||||
Balance as
of December 31, 2010 |
7,160,564 | 71,604 | 3,284,728 | (69,882 | ) | | (3,704,809 | ) | (418,359 | ) |
(*)
As described in Note 1A, the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the Company from its stockholders on April 27, 2009.
(**)
Including US$ 24,850 with respect to the issuance of 30,000 common stock to a service provider.
The accompanying notes are an integral part of the consolidated financial statements.
- 8 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS DEFICIT (*) (cont.)
|
US Dollars (except share data) |
|
|||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Common stock | Accumulated | ||||||||||||||||||||||||||||||
|
Number of shares |
|
Amount |
|
Additional paid in capital |
|
other comprehensive income (loss) |
|
Receipts on account of shares |
|
Accumulated deficit |
|
Total stockholders equity (deficit) |
||||||||||||||||||
Loss for the
period |
| | | | | (188,140 | ) | (188,140 | ) | ||||||||||||||||||||||
Loss on
translation of subsidiary functional currency to the reporting currency |
| | | 102 | | | 102 | ||||||||||||||||||||||||
Total
comprehensive loss |
(188,038 | ) | |||||||||||||||||||||||||||||
Issuance of
125,000 common stock for cash of US$ 0.8 per share in January 2011 |
125,000 | 1,250 | 98,750 | | | | 100,000 | ||||||||||||||||||||||||
Issuance of
125,000 common stock for cash of US$ 0.8 per share in February 2011 |
125,000 | 1,250 | 98,750 | | | | 100,000 | ||||||||||||||||||||||||
Issuance of
250,000 common stock for cash of US$ 0.8 per share in March 2011 |
250,000 | 2,500 | 197,500 | | | | 200,000 | ||||||||||||||||||||||||
Stock based
compensation |
| | 7,559 | | | | 7,559 | ||||||||||||||||||||||||
Balance as
of March 31, 2011 (unaudited) |
7,660,564 | 76,604 | 3,687,287 | (69,780 | ) | | (3,892,949 | ) | (198,838 | ) |
(*)
As described in Note 1A, the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the Company from its stockholders on April 27, 2009.
The accompanying notes are an integral part of the consolidated financial statements.
- 9 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|
US dollars (except for share data) |
|
|||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Three month period ended March 31, |
Cumulative period from January 14, 2004 (date of inception) through March 31, |
||||||||||||||
|
2011 |
|
2010 |
|
2011(*) |
||||||||||
(unaudited) | (unaudited) | ||||||||||||||
Cash flows
from operating activities: |
|||||||||||||||
Loss for the
period |
(188,140 | ) | (204,984 | ) | (3,892,949 | ) | |||||||||
Adjustments
to reconcile net loss for the period to net cash used in operating activities: |
|||||||||||||||
Depreciation |
2,178 | 1,527 | 33,170 | ||||||||||||
Increase in
liability for employee rights upon retirement |
9,751 | 2,680 | 63,975 | ||||||||||||
Stock based
compensation |
7,559 | 21,476 | 224,749 | ||||||||||||
Interest on
convertible bonds |
15,407 | | 57,747 | ||||||||||||
Interest on
stockholders loans |
| | (2,409 | ) | |||||||||||
Changes in
assets and liabilities: |
|||||||||||||||
Decrease
(increase) in accounts receivable |
67,587 | 4,960 | (53,030 | ) | |||||||||||
Decrease
(increase) in other current assets |
2,178 | (13,289 | ) | (145,035 | ) | ||||||||||
Increase
(decrease) in accounts payable trade |
(38,684 | ) | 64,838 | 113,098 | |||||||||||
Increase in
accounts payable other |
36,417 | 35,170 | 344,650 | ||||||||||||
Net cash used
in operating activities generated from continuing operations |
(85,747 | ) | (87,622 | ) | (3,256,034 | ) | |||||||||
Net cash
provided in operating activities generated from discontinued operations |
| | 80,334 | ||||||||||||
Net cash used
in operating activities |
(85,747 | ) | (87,622 | ) | (3,175,700 | ) | |||||||||
Cash flows
from investment activities: |
|||||||||||||||
Increase in
funds in respect of employee rights upon retirement |
| (3,755 | ) | (55,508 | ) | ||||||||||
Purchase of
property and equipment |
| | (62,651 | ) | |||||||||||
Net cash used
in investment activities |
| (3,755 | ) | (118,159 | ) | ||||||||||
Cash flows
from financing activities: |
|||||||||||||||
Credit from
banking institution |
(62,320 | ) | 39,612 | (2,303 | ) | ||||||||||
Proceeds from
issuance of common stock and warrants |
400,000 | 52,252 | 2,951,149 | ||||||||||||
Payment on
account of shares |
| | 233,644 | ||||||||||||
Proceeds from
issuance of convertible bonds and warrants, net |
| | 159,808 | ||||||||||||
Proceeds from
loans from stockholders |
| | 194,083 | ||||||||||||
Net cash
provided by financing activities |
337,680 | 91,864 | 3,536,381 | ||||||||||||
Effect of
exchange rate changes on cash and cash equivalents |
| (58 | ) | 9,411 | |||||||||||
Increase in
cash and cash equivalents |
251,933 | 429 | 251,933 | ||||||||||||
Cash and cash
equivalents at beginning of the period |
| | | ||||||||||||
Cash and cash
equivalents at end of the period |
251,933 | 429 | 251,933 |
(*)
As described in Note 1A, the financial statements were retroactively restated to reflect the historical financial statements of the subsidiary Pimi Agro Cleantech Ltd., which was acquired by the Company from its stockholders on April 27, 2009.
The accompanying notes are an integral part of the consolidated financial statements.
- 10 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1
-
GENERAL
A.
Pimi Agro Cleantech, Inc. (the "Company") was incorporated on April 1, 2009, under the laws of the State of Delaware. On April 27, 2009, the Company acquired from its stockholders all of the issued and outstanding shares of Pimi Agro Cleantech Ltd. (hereinafter: "Pimi Israel"), including preferred and ordinary shares. As a consideration for the transaction, the Company issued its stockholders an equal number of its common stock (6,313,589 shares). As a result of the acquisition, Pimi Israel became a wholly-owned subsidiary of the Company. The transaction involves companies under common control, and accordingly, the acquisition has been accounted for at historical cost in a manner similar to a pooling of interests. On this basis, the stockholders equity has been retroactively restated to reflect the equivalent number of shares of common stock of the Company issued for the acquisition of Pimi Israel as if such shares were issued at the dates they were issued by Pimi Israel to its stockholders on the basis of 1 common stock for each 1 preferred share or 1 ordinary share of Pimi Israel. The historical financial statements prior to April 27, 2009 were retroactively restated to reflect the activities of Pimi Israel.
Pimi Israel was incorporated in 2004 and commenced its operations in 2005. Pimi Israel develops, produces and markets products for improving the quality and extending the shelf-life of fruits and vegetables. Since its inception, Pimi Israel has devoted substantially all of its efforts to business planning, research and development and raising capital, and has not yet generated significant revenues. Accordingly, Pimi Israel and the Company are considered to be in the development stage as defined in FASB Accounting Standards Codification (ASC) Topic 915, "Development Stage Entities".
B.
Going concern uncertainty
Since its incorporation (April 1, 2009), the Company does not have any operations other than those carried out by Pimi Israel. The development and commercialization of Pimi Israel's product will require substantial expenditures. Pimi Israel has not yet generated sufficient revenues from its operations to fund its activities, and is therefore dependent upon external sources for financing its operations. There can be no assurance that Pimi Israel will succeed in obtaining the necessary financing to continue its operations. Since inception, Pimi Israel has incurred accumulated losses of US$ 3,892,949 and cumulative negative operating cash flow of US$ 3,175,700.
Continuation of the Company's current operations after utilizing its current reserves is dependent upon the generation of additional financial resources either through fund raising or by generating revenues from its products. The Company focuses its solutions towards vegetables and fruits which are considered the largest in terms of worldwide consumption. Among other things, the Company tries to cooperate with major fruit packing houses in Israel and abroad.
In addition the Company is exploring several options to raise funds. Among other things, in order to improve its liquidity the Company, issued certain service providers (including related parties) common stock as payment for accounts payables for services received, and subsequent to balance sheet date the Company entered into several agreements to issue common stock and warrants.
These factors raise substantial doubt about Pimi Israel and the Company's ability to continue as a going concern.
The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
- 11 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 1
-
GENERAL (cont.)
C.
Risk factors
The Company and Pimi Israel (the "Group") have a limited operating history and face a number of risks, including uncertainties regarding finalization of the development process, demand and market acceptance of the Group's products, the effects of technological changes, competition and the development of other new products. Additionally, other risk factors also exist, such as the ability to manage growth and the effect of planned expansion of operations on the Group's future results. Please see the Company’s annual report on Form 10-K for the year ended December 31, 2010 for a more comprehensive description of the risk factors faced by the Company.
In addition, the Group expects to continue incurring significant operating costs and losses in connection with the development of its products and increased marketing efforts.
As mentioned above, the Group has not yet generated significant revenues from its operations to fund its activities, and therefore the continuance of its activities as a going concern depends on the receipt of additional funding from its stockholders and investors.
D.
Use of estimates in the preparation of financial statements
The preparation of condensed consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
NOTE 2
-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America ("US GAAP").
A.
Basis of presentation
The accompanying unaudited financial statements of the Company have been prepared in accordance with generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements.
In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments necessary (consisting of normal recurring adjustments) for a fair presentation of the Companys financial position at March 31, 2011 and the results of its operations and cash flow for each of the three month period then ended.
The unaudited interim financial statements were prepared on a basis consistent with the Companys annual financial statements on Form 10-K for the year ended December 31, 2010. Results of operations for the three month period ended March 31, 2011 are not necessarily indicative of the operating results that may be expected for the year ending December 31, 2011.
The consolidated balance sheet as of December 31, 2010 was derived from the audited financial statements at that date but does not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements. For further information, refer to the consolidated financial statements and notes thereto included in the Companys annual report on Form 10-K for the year ended December 31, 2010.
- 12 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 2
-
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.)
B.
Recently issued accounting pronouncements
1.
ASC Topic 605 - 25 Revenue Recognition - Multiple-Element Arrangements
In October 2009, the FASB issued amendments to the accounting and disclosure for revenue recognition. These amendments, effective for fiscal years beginning on or after June 15, 2010 (fiscal year 2011 for the Company), with early adoption permitted, modify the criteria for recognizing revenue in multiple element arrangements and require companies to develop a best estimate of the selling price to separate deliverables and allocate arrangement consideration using the relative selling price method. Additionally, the amendments eliminate the residual method for allocating arrangement considerations. The adoption of the amendments did not have a material impact on the Company's financial position, results of operations or cash flows.
2.
ASC Topic 718, Compensation - Stock Compensation
In April 2010, the FASB issued guidance to clarify that an employee share-based payment award that has an exercise price denominated in the currency of the market in which a substantial portion of the entitys equity shares trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity should not classify such an award as a liability if it otherwise qualifies as equity. The amended guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. (Fiscal year 2011 for the Company.)
The adoption of the new guidance did not have a material impact on the Company's financial position, results of operations or cash flows.
3.
ASC Topic 310, Receivables
In July 2010, the FASB issued Accounting Standards Update 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses ASU 2010-20). ASU 2010-20 provides guidance to enhance disclosures about the credit quality of a creditors financing receivables and the adequacy of its allowance for credit losses. Financial instruments that may subject the Company to significant concentrations of credit risk consist principally of trade receivable and account receivables.
For public entities, the disclosures as of the end of a reporting period became effective for interim and annual reporting periods ending on or after December 15, 2010 (the 2010 annual financial statements). The disclosures about activity that occurs during a reporting period became effective in the current interim period.
- 13 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 3
-
LOSS PER SHARE
Basic loss per share is computed by dividing net loss by the weighted average number of shares outstanding during the period.
The net loss and the weighted average number of shares used in computing basic and diluted loss per share for the three month periods ended March 31, 2011 and 2010 are as follows:
|
US dollars |
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Three month period ended March 31, |
|||||||||||
|
2011 |
|
2010 |
||||||||
Net loss used
for the computation of loss per share |
188,140 | 204,984 |
|
Number of shares |
|
|||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
March 31, | |||||||||||
|
2011 |
|
2010 |
||||||||
Weighted
average number of shares used in the computation of basic and diluted earnings per share |
7,055,686 | 6,597,223 |
(*)
The effect of the inclusion of options and convertible bonds for the three month period ended March 31, 2011 and 2010 is anti-dilutive.
NOTE 4
-
EVENTS DURING THE REPORTING PERIOD
A.
On December 28, 2010, the Company entered into an Agreement with a private individual residing in Israel or a company under his control (the "Investor"). Pursuant to the Agreement, the Investor shall invest a minimum of US$100,000 and up to an aggregate of US$400,000, at a purchase price of US$0.80 per share. The private placement shall take place in four tranches, provided an amount beyond the minimum is financed. The initial tranche of US$50,000 was made by the Investor on January 3, 2011. The second tranche in the sum of US$50,000 was made on February 5, 2011 and the third tranche of the sum of US$50,000 was made on March 10, 2011. In each such tranche, the Company issued the Investor 40,000 shares. Additional tranche may take place on April 30, 2011. In addition, for each share of common stock purchased, the Investor is entitled to receive warrants having an exercise price of US$0.80, exercisable for a period of two years from the date of issuance.
B.
On January 24, 2011, the Company entered into an Agreement with three private individuals residing in Israel (the Investors). Pursuant to the Agreement, the Investors shall invest a minimum of US$50,000 and up to an aggregate of US$500,000, at a purchase price of US$0.80 per share. For each share of common stock purchased, the Investors shall receive a warrant with an exercise price of US$0.80, exercisable until December 31, 2012. The private placement shall take place in five tranches, provided an amount beyond the minimum is financed. The first 3 tranches of US$50,000 each were made by the Investors on January 27, 2011, February 16, 2011 and March 16, 2011 respectively. The remaining tranches shall take place on or prior to April 15, 2011, and May 15, 2011. (See also Notes 5B and 5C)
C.
On March 2, 2011, the Company entered into subscription agreements with 4 individuals residing in Israel for the total sum of US$100,000 at a purchase price of US$0.80 per share. For each share of common stock purchased, the investor received a warrant with an exercise price of US$0.80, exercisable until March 2, 2013.
- 14 -
PIMI AGRO CLEANTECH, INC.
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (cont.)
NOTE 5
-
SUBSEQUENT EVENT
A.
On April 12, 2011 the Company entered into subscription agreements with an individual and two companies all of which are Israeli residents, under which the company issued 56,250 common stock shares for the total sum of $45,000 (a purchase price of $0.80 per share). For each share of Common Stock purchased, the company issued a warrant with an exercise price of $0.80, exercisable until April 12, 2013.
B.
On April 26, 2011, the Company issued to an individual and a joint company both of which are Israeli residents (the Investors) ,under an agreement which the company entered with these Investors on January 24, 2011, 312,500 common stock shares for the total sum of $250,000 (a purchase price of $0.80 per share). For each share of Common Stock purchased, the Investors received a warrant with an exercise price of $0.80, exercisable until December 31, 2012.
C.
On May 15, 2011, the Company issued to the Investors mentioned above, under an agreement which the company entered on January 24, 2011, 125,000 common stock shares for the total sum of $100,000 (a purchase price of $0.80 per share). For each share of Common Stock purchased, the Investors received a warrant with an exercise price of $0.80, exercisable until December 31, 2012.
=============================
===============
- 15 -
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
Statement of Forward-Looking Information
In this quarterly report, references to "Pimi Agro CleanTech, Inc.," "Pimi," "the Company," "we," "us," and "our" refer to Pimi Agro Cleantech, Inc. and its wholly owned subsidiary, Pimi Agro CleanTech, Ltd.
Except for the historical information contained herein, some of the statements in this Report contain forward-looking statements that involve risks and uncertainties. These statements are found in the sections entitled "Business," "Management's Discussion and Analysis of Financial Condition and Results of Operation," and "Risk Factors" In 2010 10K. They include statements concerning: our business strategy; expectations of market and customer response; liquidity and capital expenditures; future sources of revenues; expansion of our proposed product line; and trends in industry activity generally. In some cases, you can identify forward-looking statements by words such as "may," "will," "should," "expect," "plan," "could," "anticipate," "intend," "believe," "estimate," "predict," "potential," "goal," or "continue" or similar terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including, but not limited to, the risks outlined under "Risk Factors" in 2009 10K, that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. For example, assumptions that could cause actual results to vary materially from future results include, but are not limited to: our ability to successfully develop and market our products to customers; our ability to generate customer demand for our products in our target markets; the development of our target markets and market opportunities; our ability to manufacture suitable products at competitive cost; market pricing for our products and for competing products; the extent of increasing competition; technological developments in our target markets and the development of alternate, competing technologies in them; and sales of shares by existing shareholders. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Unless we are required to do so under federal securities laws or other applicable laws, we do not intend to update or revise any forward-looking statements.
Overview
Pimi was established in 2004 to develop and sell environmentally friendly alternative solutions to current methods for pre and post harvest treatments of fruits and vegetables. Current methods in practice use residue of harmful chemical pesticides. Pimi Israel and its Co- founder, Mr. Nimrod Ben Yehuda, have invested many years of research in developing eco-friendly solutions; the companys technology platform is based on a unique and patented formulation of Stabilized Hydrogen Peroxide (STHP) for the treatment of fruits and vegetables. Pimi has also developed a controlled distribution system to apply its solution while maintaining humidity at the highest required levels in storage rooms utilizing advanced technology to create micro droplets, in accordance with a special working protocol developed by Pimi.
Pimi is addressing the immediate need for developing treatment and season-long harvest storage that is chemical-free and environmentally friendly. As of the date of the filing of this report, Pimi is focusing on the treatment of potatoes, which is the second largest stored crop world-wide (after grains), and is therefore Pimis first sales target.
The market for Pimis products is divided into two sections: (i) stored potatoes (for both table and processed potatoes), where Pimis products prevent quality losses due to sprouting and diseases, and (ii) the market of seeds potatoes where our products aim to prevent diseases and pathogens.
Company History
Pimi Israel was established in 2004 with a vision towards developing environmentally friendly and organic alternative solutions to current chemical treatments of agricultural harvest, such as fruits, vegetables and grains, thereby improving the well-being of consumers, growers and the environment. Pimi Israel has devoted significant research in developing environmentally friendly solutions for pre and post harvest treatments of fruits and vegetables. The company's technology is based on a unique, patented formulation of Stabilized Hydrogen Peroxide, combined with a controlled distribution system used to apply it.
On April 27, 2009 we purchased all the issued and outstanding shares of Pimi Israel from Pimi Israels shareholders in consideration for 6,313,189 shares of our Common Stock. As a result, Pimi Israel became a wholly-owned subsidiary of the Company.
CRITICAL ACCOUNTING POLICIES
The Securities and Exchange Commission ("SEC") defines "critical accounting policies" as those that require application of management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently
- 16 -
uncertain and may change in subsequent periods. Our accounting policies are described in Note 2 to the financial statements appearing elsewhere in 2010 10K report. Not all of the accounting policies require management to make difficult, subjective or complex judgments or estimates. Due to the early stage of operations of the Company there are no accounting policies that are considered to be critical accounting policies by the management.
Recently issued accounting pronouncements
ASC Topic 605 - 25 Revenue Recognition - Multiple-Element Arrangements
In October 2009, the FASB issued amendments to the accounting and disclosure for revenue recognition. These amendments, effective for fiscal years beginning on or after June 15, 2010 (fiscal year 2011 for the Company), with early adoption permitted, modify the criteria for recognizing revenue in multiple element arrangements and require companies to develop a best estimate of the selling price to separate deliverables and allocate arrangement consideration using the relative selling price method. Additionally, the amendments eliminate the residual method for allocating arrangement considerations. The adoption of the amendments did not have a material impact on the Company's financial position, results of operations or cash flows.
ASC Topic 718, Compensation - Stock Compensation
In April 2010, the FASB issued guidance to clarify that an employee share-based payment award that has an exercise price denominated in the currency of the market in which a substantial portion of the entitys equity shares trades should not be considered to contain a condition that is not a market, performance, or service condition. Therefore, an entity should not classify such an award as a liability if it otherwise qualifies as equity. The amended guidance is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010. (Fiscal year 2011 for the Company).
The adoption of the new guidance did not have a material impact on the Company's financial position, results of operations or cash flows.
ASC Topic 310, Receivables
In July 2010, the FASB issued Accounting Standards Update 2010-20, Receivables (Topic 310): Disclosures about the Credit Quality of Financing Receivables and the Allowance for Credit Losses ASU 2010-20). ASU 2010-20 provides guidance to enhance disclosures about the credit quality of a creditors financing receivables and the adequacy of its allowance for credit losses. Financial instruments that may subject the Company to significant concentrations of credit risk consist principally of trade receivable and account receivables.
For public entities, the disclosures as of the end of a reporting period became effective for interim and annual reporting periods ending on or after December 15, 2010 (the 2010 annual financial statements). The disclosures about activity that occurs during a reporting period became effective in the current interim period.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2011 COMPARED TO THREE MONTHS ENDED MARCH 31, 2010
Total Net Sales: Total Net Sales increased $55,703 or 148% to $93,411 in the 3 months ended March 31, 2011 from $37,708 for the 3 months ended March 31, 2010.The increase is due to the commencing of sales of our products on small commercial scale in Israel.
R&D Expenses: Total net R&D Expenses for the 3 month ended March 31, 2011 of $177,309 increased $21,096 or 14% from $156,213 for the 3 months ended March 31, 2010, due to increase in cost of materials in the amount of $31,266, travel and other expenses in the amount of $3,100, partially balanced by decrease in cost of labor and professional services in the amount of $13,270.
General and Administrative Expenses: General and administrative expenses decreased by $7,339 or 8% in the 3 months ended March 31, 2011 to $80,131 from $87,470 in the 3 months ended March 31, 2010 due to decrease in labor and professional fee expenses ($7,758) partially balanced by increase in other expenses ($419).
Loss from Operations: Loss from operations for the 3 months ended March 31, 2011 of $164,029 was down $41,946 or 20% from the loss from operations in the 3 months ended March 31, 2010 of $205,975 as a result of growth in sales ($55,703),decrease in G&A expenses ($7,339) partially balanced by the increase in R&D expenses ($21,096).
- 17 -
Financing Expenses: Total financing expenses for the 3 months ended March 31, 2011 amounted to $24,111, which were $25,102 higher than our financing income of $991 in the 3 months ended March 31, 2010. This was mostly a result of convertible loans interest and beneficial, credit lines usage, higher bank expenses and the change in exchange rates.
Net Loss: Net loss of $188,140 in the 3 months ended March 31, 2011 was $16,844 or 8% lower than the net loss in the 3 months ended March 31, 2010 of $204,984 due to the growth of sales ($55,703), decrease in G&A expenses ($7,339), partially balanced by increase in R&D expenses ($21,096), and Financing expenses ($25,102).
Liquidity and Capital Resources
As of March 31, 2011, we had liabilities of $668,025 ($669,935 as of December, 2010), including $144,676 ($126,275 as of December 31,2010) of Convertible Bonds $348,187 ($375,529 as of December 31, 2010) of third party liabilities, and $175,162 ($198,131 as of December 31, 2010) was due to related parties. The amounts due to related parties are for consulting services and salaries
As of March 31, 2011 we had unused credit lines in the sum of $17,000 and have $251,933 in cash. As of May 1, 2011 we had unused credit lines in the sum of $17,000 and cash on hand in the net amount of $188,000. Currently our net burn rate is approximately $60,000 per month. Thus, we will need additional sums of approximately $400,000 through December 2011.
The Company has sustained operating losses and its cash needs extend beyond its current resources. Subsequent to May 2011, the Company will exhaust most of its liquidity. In addition, the Company does not have a reliable consistent source of future funding. These factors create an uncertainty about the Companys ability to continue as a going concern.
The Company anticipates that it will begin to realize material revenues starting with the potato season of 2011 (the third and fourth quarters of 2011), as clients will begin to utilize and pay for the Companys product and technology, and the Company determined that approximately $0.5 million of additional funding is necessary to bridge the Company to the larger revenue sales that are due to begin in 2011. Realization of revenues is subject to regulatory approval of the relevant regulator, in each country where we intend to deliver, distribute and sell our products, which we currently do not have, except for the state of Israel.
Net Cash Used in Operating Activities for the three months period ended March 31, 2011 and March 31, 2010
Net cash used in operating activities, generated from continuing operations was $85,747 and $87,622 for the three months period ended March 31, 2011 and 2010, respectively. Net cash used in operating activities primarily reflects the net loss for those periods $188,140 and $204,984 respectively, which was reduced in part by non-cash stock-based compensation of $7,559 and $21,476, respectively, interest and beneficial expenses on convertible bonds $15,407 and $0 respectively, and cash provided due to the adjustment to the net loss and changes in operating assets and liabilities in the amounts of $79,427 and $95,886, respectively.
Net Cash Used in Investing Activities for the three months periods ended March 31, 2011 and March 31, 2010
Net cash used in investing activities was $0, and $3,755 for the three month period ended March 31, 2011, and 2010, respectively, and was used primarily to purchase equipment (such as computers, R&D and office equipment), and fund deposits in respect of employees rights upon retirement.
Net Cash Used in Financing Activities for the three months periods ended March 31, 2011 and March 31, 2010
Net cash provided by financing activities was $337,680, and $91,864 for the three month period ended March 31, 2011 and 2010, respectively, which is primarily attributable to capital raised in the amounts of $400,000 and $52,252 respectively,( charge) usage of credit lines in the amount of ($62,320) and $39,612,respectively.
Management believes that as a result of anticipated financing in 2011, and with certain revenues to be received from the sale and delivery of its products to clients, there will be sufficient capital to meet cash needs for the year ended December 31, 2011,. Management believes that the funds received from the new investors will allow us to meet the regulatory requirements and to generate sales of its development stage products towards Potatoes, Citrus, Yams, Onions and others to come.
Off-Balance Sheet Arrangements
We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
- 18 -
ITEM 4T. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), as of March 31, 2011. Disclosure controls and procedures are those controls and procedures designed to provide reasonable assurance that the information required to be disclosed in our Exchange Act filings is (1) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commissions rules and forms, and (2) accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2011, our disclosure controls and procedures were not effective. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our disclosure controls and therefore may be considered material weaknesses.
Based on the size of the Company and depth of accounting personnel assignment of tasks does not allow for proper maintenance of segregation of duties. Additionally, the Company does not have an audit committee to oversee the financial reporting and disclosure process.
Management, including our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a 15(f). Management conducted an assessment as of March 31, 2011 of the effectiveness of our internal control over financial reporting based on the framework in Internal Control Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, management concluded that our internal control over financial reporting as of March 31, 2011, was not effective in the specific areas described in the Disclosure Controls and Procedures section above and as specifically described in the paragraphs below.
The material weaknesses we have identified include:
As of March 31, 2011, our Chief Executive Officer and Chief Financial Officer identified the following specific material weaknesses in the Companys internal controls over its financial reporting process:
- | There is a lack of sufficient accounting staff, which results in a lack of segregation of duties necessary for a good system of internal control. |
- | The Company does not have an audit committee to oversee the financial reporting and disclosure process. |
In light of the forgoing, once we have adequate funds, management plans to hire additional personnel and implement an audit committee charter for oversight of the financial reporting and disclosure process. We believe these actions will remediate the material weaknesses. However, the material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements should they occur. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the control procedure may deteriorate.
(b) Changes in Internal Control Over Financial Reporting. During the quarter ended March 31, 2011, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
From time to time, we may be a defendant and plaintiff in various legal proceedings arising in the normal course of our business. We are currently not a party to any material pending legal proceedings or government actions, including any bankruptcy, receivership, or similar proceedings. In addition, management is not aware of any known litigation or liabilities involving the operators of our properties that could affect our operations. Should any liabilities be incurred in the future, they will be accrued based on managements best estimate of the potential loss. As such, there is no adverse effect on our consolidated financial position, results of operations or cash flow at this time. Furthermore, management does not believe that there are any proceedings to which any director, officer, or affiliate of the Company, any owner of record of the beneficially or more than five percent of the common stock of the Company, or any associate of any such director, officer, affiliate of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company.
ITEM 1A. Risk Factors
In addition to other information set forth in this Report, you should carefully consider the risk factors previously disclosed in Item 1A to Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2010. There were no material changes from the risk factors during the three months ended March 31, 2011.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.
On December 28, 2010, the Company entered into an Agreement with a private individual residing in Israel or a company under his control (the "Investor"). Pursuant to the Agreement, the Investor shall invest a minimum of US$100,000 and up to an aggregate of US$400,000, at a purchase price of US$0.80 per share. The private placement shall take place in four tranches, provided an amount beyond the minimum is financed. The initial tranche of US$50,000 was made by the Investor on January 3, 2011. The second tranche in the sum of US$50,000 was made on February 5, 2011 and the third tranche of the sum of US$50,000 was made on March 10, 2011. In each such tranche, the Company issued the Investor 40,000 shares. Additional tranche may take place on April 30, 2011. In addition, for each share of common stock purchased, the Investor is entitled to receive warrants having an exercise price of US$0.80, exercisable for a period of two years from the date of issuance.
On January 24, 2011, the Company entered into an Agreement with three private individuals residing in Israel (the Investors). Pursuant to the Agreement, the Investors shall invest a minimum of US$50,000 and up to an aggregate of US$500,000, at a purchase price of US$0.80 per share. For each share of common stock purchased, the Investors shall receive a warrant with an exercise price of US$0.80, exercisable until December 31, 2012. The private placement shall take place in five tranches, provided an amount beyond the minimum is financed. The first 3 tranches of US$50,000 each were made by the Investors on January 27, 2011, February 16, 2011 and March 16, 2011 respectively. The remaining tranches shall take place on or prior to April 15, 2011, and May 15, 2011.
On March 2, 2011, the Company entered into subscription agreements with 4 individuals residing in Israel for the total sum of US$100,000 at a purchase price of US$0.80 per share. For each share of common stock purchased, the investor received a warrant with an exercise price of US$0.80, exercisable until March 2, 2013.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5.
None.
ITEM 6. Exhibits
EXHIBIT |
|
|
NUMBER |
| DESCRIPTION |
|
|
|
31.1 |
| Certification by Chief Executive Officer pursuant to Sarbanes Oxley Section 302 (1) |
|
|
|
31.2 |
| Certification by Chief Financial Officer pursuant to Sarbanes Oxley Section 302 (1) |
|
|
|
32.1 |
| Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (1) |
|
|
|
32.2 |
| Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (1) |
(1) Filed 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 on this 18th day of May 2011.
| PIMI AGRO CLEANTECH, INC. |
| |
|
|
|
|
| By: | /s/ Youval Saly |
|
|
| Youval Saly |
|
|
| Chief Executive Officer |
|
|
| Principal Executive Officer |
|
|
|
|
|
| By: | /s/ Avi Lifshitz |
|
|
| Avi Lifshitz |
|
|
| Chief Financial Officer |
|
|
| Principal Accounting and Financial Officer |
|
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